ExxonMobil has initiated legal proceedings in a U.S. federal court against recent California legislation mandating large corporations to disclose their greenhouse gas emissions across their value chain and report on climate-related risks. The lawsuit contends that these laws infringe upon First Amendment rights by compelling speech that aligns with California’s ideological stance, purportedly aiming to embarrass large companies.
The challenged legislation, Senate Bills 253 and 261, was signed into law in 2024, with implementation set to begin in 2026. SB 253 requires companies with over $1 billion in revenue operating in California to annually report their direct and value chain emissions. SB 261 mandates U.S. companies with over $500 million in revenue to disclose climate-related financial risks and their mitigation strategies.
ExxonMobil argues that these requirements force it to communicate in a manner that supports the state’s ideological premise that large companies are primarily responsible for climate change. The company claims the reporting frameworks, based on the GHG Protocol, focus on absolute emissions rather than emissions intensity, potentially misrepresenting large companies’ efforts compared to smaller ones.
Moreover, ExxonMobil contends that the climate-related financial risk reporting, aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, exceeds the U.S. Securities and Exchange Commission’s requirements, compelling detailed speculative risk disclosures. The company also argues that the National Securities Markets Improvement Act preempts SB 261 from imposing more detailed risk disclosures than those required by the SEC.
The lawsuit seeks a court declaration that these laws violate the First Amendment and that SB 261 is preempted by federal law, aiming to prevent California from enforcing them.
