California’s Climate Disclosure Law: Paused but Not Forgotten

Today we’re tackling a major development in California’s climate disclosure landscape. The state’s ambitious climate disclosure law was set to usher in a new era of corporate transparency. But now, everything is on hold. 

Just weeks before the first compliance deadline, the Ninth Circuit Court of Appeals granted an injunction that pauses enforcement of the law. This unexpected twist leaves thousands of businesses wondering: What happens next? 

Read the full article

• California’s Climate Risk Disclosure Law Paused: What SB 261’s Injunction Means for Businesses

About the author

• Lisa Rushton

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

With a focus on innovation, collaboration and client service. We are committed to delivering exceptional value to our clients and to the communities we serve. And now our latest episode.

Host 1: 

Welcome back to Womble Perspectives. Today we’re tackling a major development in California’s climate disclosure landscape. The state’s ambitious climate disclosure law was set to usher in a new era of corporate transparency—but now, everything is on hold. 

Host 2: 

That’s right. Just weeks before the first compliance deadline, the Ninth Circuit Court of Appeals granted an injunction that pauses enforcement of the law. This unexpected twist leaves thousands of businesses wondering: What happens next? 

Well, let’s start with what the law actually requires. California’s climate disclosure law applies to U.S. companies with more than $500 million in annual revenue and operations in California. 

And those companies would need to publish a climate-related financial risk report every two years, starting January 2026. These reports outline climate-related financial risks and strategies for mitigation and adaptation, and they’re expected to align with certain existing frameworks. 

Host 1: 

So why the pause? The injunction stems from a lawsuit led by the U.S. Chamber of Commerce and other business groups. They argue the law violates the First Amendment by compelling speech on controversial policy matters. 

Meanwhile, a companion law remains unaffected. That one requires greenhouse gas emissions disclosures for companies with revenues over $1 billion, and the California Air Resources Board has proposed an initial compliance deadline of August 10, 2026. 

But here’s an important point: the Ninth Circuit’s injunction doesn’t invalidate the law, it just pauses enforcement. If the injunction is lifted, compliance obligations could resume immediately. 

Host 2: 

And ExxonMobil has added another layer of complexity with a separate challenge filed in October, raising similar constitutional claims and arguing federal preemption. That case is now on hold pending the Ninth Circuit’s decision. 

So, with all this in play, what should companies be watching? First, the Ninth Circuit’s ruling. Oral arguments are scheduled for January 9, but the court could rule earlier or later. 

Second, California Air Resources Board’s draft regulations, expected in early 2026, will clarify scope, definitions, and enforcement. And third, the possibility of a Supreme Court review if the law survives appeal. 

Host 1: 

Despite the injunction, companies should maintain a ready posture. Make sure to review California Air Resources Board’s preliminary list of covered entities and revenue thresholds. The bottom line? The Ninth Circuit’s injunction offers temporary relief, but uncertainty looms. 

Businesses should prepare for rapid compliance pivots while tracking litigation and regulatory developments closely. 

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