The U.S. Court of Appeals for the Ninth Circuit issued an order on Nov. 18 temporarily blocking enforcement of California’s climate-risk disclosure law, SB 261. The statute requires companies with more than $500 million in annual revenue to report climate-related financial risks starting Jan. 1, 2026. The court granted the request after the U.S. Chamber of Commerce and several business groups sought emergency relief while the broader appeal proceeds next year.

The decision did not extend to California’s emissions-reporting statute, SB 253. That law remains scheduled to take effect Jun. 30, 2026, for Scope 1 and Scope 2 emissions, which cover direct emissions and emissions from purchased electricity, steam, heating, or cooling. Scope 3 reporting—covering supply-chain and customer-related emissions—is set to begin in 2027. The court did not provide additional reasoning in its one-page order.

The ruling alters compliance expectations for large companies preparing for California’s climate-reporting framework. Firms subject to SB 261 gain temporary relief from climate-risk disclosures, while SB 253’s emissions-reporting schedule remains intact. The decision also affects national debates over climate-related reporting standards, as companies face differing obligations depending on litigation outcomes across states and federal courts.

For companies operating in California, the pause creates a split regulatory pathway:

• SB 261 paused: climate-risk disclosures delayed.
• SB 253 moving forward: emissions reporting remains mandatory on current timelines.

SB 253 and SB 261 were adopted in October 2023 as part of California’s Climate Accountability Package. SB 253 requires large companies doing business in the state to disclose Scopes 1 and 2 emissions in 2026 and Scope 3 emissions starting in 2027. SB 261 mandates disclosure of climate-related financial risks and mitigation strategies. In October, California regulators identified more than 4,000 companies that may fall under these laws.

Business groups—including the U.S. Chamber of Commerce, the California Chamber of Commerce, the American Farm Bureau Federation, and several regional federations—challenged both statutes. A federal district court first denied their request for a preliminary injunction, allowing both laws to move forward. After the Ninth Circuit also declined to halt the laws, the groups submitted an emergency application to the U.S. Supreme Court requesting a stay of both SB 253 and SB 261. The Ninth Circuit ultimately paused only SB 261 while leaving SB 253 in effect as the appeal proceeds.

Ballotpedia tracks support for and opposition to the environmental, social, and corporate governance (ESG) investing movement. To learn more about arguments for, against, and about ESG, click here. For more information on reform proposals related to ESG policy, click here.