A federal judge in California has denied a request by the U.S. Chamber of Commerce and other business groups seeking to freeze enforcement of the state’s landmark climate disclosure laws: SB 253 and SB 261.
Passed in 2023, the laws mandate that large companies operating in California disclose their greenhouse gas emissions and climate-related financial risks. SB 253 requires businesses with annual revenues exceeding $1 billion to report Scope 1 and 2 emissions in 2026, followed by Scope 3 emissions in 2027. SB 261 mandates that companies with revenues over $500 million publish climate-risk assessments and mitigation strategies beginning January 2026.
In rejecting the injunction request, Judge Otis D. Wright II ruled that the plaintiffs failed to demonstrate a likelihood of success on their First Amendment claims. The court clarified that SB 253 falls under the category of “factual and uncontroversial” commercial speech and is therefore subject to the lower threshold of Zauderer scrutiny. California’s interest in providing reliable information to investors and driving greenhouse gas reductions was deemed substantial and legitimate.
SB 261, which entails more interpretive and subjective forecasting, required a higher level of review. Even so, the court found it likely to pass intermediate scrutiny, as it serves the same substantial state interests.
The decision allows California to proceed with implementing the laws while the legal challenge continues toward trial, currently scheduled for October 2026. Companies should continue preparations for compliance, as the transparency requirements will move forward without delay.
This ruling reinforces the judicial support for state-level climate regulation and adds momentum to the growing trend of mandatory ESG disclosures, which is pushing environmental transparency from voluntary to regulatory.
