California’s recently enacted laws mandating large companies to disclose their value chain greenhouse gas emissions and report on climate-related risks have withstood another legal challenge. A U.S. District Judge denied a motion to block the enforcement of these laws on First Amendment grounds.
The motion represented the latest attempt by the U.S. Chamber of Commerce and other business groups to invalidate California’s climate reporting requirements on constitutional grounds before trial. This ruling follows previous court decisions against similar motions.
The regulations in question, SB 253 and SB 261, were signed into law by Governor Newsom in October 2024 as a slightly amended bill, SB 219. SB 253 mandates that companies with revenues exceeding $1 billion and operating in California must annually report their direct Scope 1 and 2 emissions, as well as Scope 3 value chain emissions, which include those linked to supply chains, business travel, employee commuting, procurement, waste, and water usage. SB 261 requires U.S. companies with revenues over $500 million that do business in California to disclose their climate-related financial risks and measures to mitigate and adapt to those risks.
Following the approval of these laws, the U.S. Chamber of Commerce and other business groups filed a lawsuit against the state, arguing that the rules infringe on the First Amendment by compelling businesses to engage in subjective speech. They contended that calculating supply chain emissions is nearly impossible for companies and that the laws would force businesses to report subjectively on their worldwide climate-related financial risks and proposed mitigation strategies.
The latest ruling addressed a motion for a preliminary injunction by the Chamber of Commerce to halt enforcement of the new laws before trial on First Amendment grounds. While U.S. District Judge Otis Wright II acknowledged that the laws are subject to First Amendment review, he denied the Chamber of Commerce’s motion, stating that the plaintiffs had not demonstrated a likelihood of success on the merits of their First Amendment challenges to SBs 253 and 261.
The plaintiffs may still appeal the decision, and the trial is scheduled for October 2026. Under the new law, disclosures of Scope 1 and 2 emissions will commence in 2026, covering the previous fiscal year, while Scope 3 emissions reporting will begin in 2027. The first climate-related risk reports are due by January 1, 2026.
