California's Mandatory Climate Reporting Stayed Pending Appeal

Today, the Ninth Circuit Court of Appeals issued an injunction pending appeal of one of California's two mandatory climate disclosure laws--S.B. 261, which mandates the disclosure of climate-related financial risk, and which had been scheduled to enter into effect as of January 1, 2026.  However, the Ninth Circuit declined to enjoin S.B. 253, which mandates the disclosure of Scope 1 and Scope 2 greenhouse gas emissions--the Ninth Circuit may have chosen not to enjoin this particular law since it will not enter into effect (as per the California Air Resources Board's latest presentation) until August 10, 2026, which is likely after the Ninth Circuit will issue a decision on the merits of the pending appeal (and so an injunction pending appeal is less necessary).

In effect, this injunction preserves the status quo until the Ninth Circuit has the opportunity to evaluate whether California's mandatory climate disclosure regime passes legal muster.  However, companies still face the risk of an immediate disclosure requirement following a ruling by the Ninth Circuit, and thus the burden to prepare for the compliance obligation--albeit not the disclosure requirement itself--remains as a significant concern.

Significantly, this move by the Ninth Circuit renders it less likely that the Supreme Court will intervene in this dispute until the Ninth Circuit has an opportunity to rule on the merits of the underlying appeal, as the threat of immediate harm through the disclosure obligation has now been alleviated by the Ninth Circuit's injunction pending appeal.  Indeed, this decision could be interpreted as a defensive move by the Ninth Circuit to avoid immediate review by the Supreme Court, which could have issued a decision less favorable to the underlying laws than the generally liberal Ninth Circuit. 

For now, however, companies can breathe a bit easier--the immediate January 1, 2026 deadline to disclose climate-related financial risk for companies doing business in California (for those with revenues exceeding $500 million annually) is no longer in effect.