US Supreme Court Asked to Freeze California’s Landmark Corporate Climate Disclosure Laws

California’s sweeping corporate climate-disclosure laws have landed before the US Supreme Court, after the US Chamber of Commerce and several major companies petitioned the justices to halt the measures while lawsuits continue. The move puts one of the country’s most ambitious state-level climate transparency frameworks directly in front of a Court that has recently limited environmental regulatory powers.

Signed by Governor Gavin Newsom in 2023, the laws require large companies operating in California to publicly report their full greenhouse gas emissions and disclose climate-related financial risks. Despite ongoing legal challenges, lower courts have allowed implementation to move forward, with the first obligations set to begin in 2026.

One law covers companies with over USD 1 billion in annual revenue, mandating annual reporting of direct emissions starting in 2026 and indirect emissions in 2027. These include emissions from fuel combustion, global supply chains, product delivery, and employee travel. While the Chamber estimates that about 5,000 businesses would be affected, the California Air Resources Board (CARB) projects closer to 2,600.

A second law targets companies earning more than USD 500 million annually, requiring them to disclose climate-driven financial risks every two years. CARB expects more than 4,100 companies to fall under this requirement. Both measures include civil penalties for non-compliance.

The Chamber and its co-plaintiffs argue the rules violate the First Amendment by forcing companies to disclose information they would not voluntarily provide, warning of “irreparable harm” if the mandates take effect before litigation concludes. ExxonMobil has filed a separate lawsuit challenging the statutes.

State officials counter that commercial disclosures fall well within California’s regulatory authority. They argue that commercial speech does not enjoy the same constitutional protections as political speech and that the laws serve critical public-interest goals, including transparency for investors and consumers. Governor Newsom and climate groups such as Ceres say the rules are essential for turning emissions data into meaningful climate action.

The legal battle unfolds against a volatile national backdrop. The US Securities and Exchange Commission’s climate-risk disclosure rule remains stalled amid federal lawsuits. Should California’s laws withstand Supreme Court scrutiny, they could effectively create a nationwide standard, given the significant number of global companies operating in the state.

The Supreme Court’s recent decisions - from limiting the EPA’s authority to suspending the “good neighbor” rule - add uncertainty to how it may view state-driven climate regulation. A ruling to block California’s laws could slow similar efforts elsewhere, while allowing them to proceed would strengthen the role of states in shaping US climate policy at a time of federal gridlock.

The Court has not yet announced when it will decide whether to grant the Chamber’s request for a temporary hold.

Supreme Court review of California SB 253 has enormous implications for US corporate climate disclosure - the ruling shapes what US-listed corporates need to build across states. Our ESG-strategy and sustainability-due-diligence teams help clients build disclosure infrastructure robust across California, SEC-adjacent and ISSB scenarios.