In 2023, the California State Assembly approved two bills–SB 253 and SB 261–as part of the state legislature’s climate accountability package. SB 253 mandates that public and private companies doing business in California with annual gross revenues above $1 billion disclose their greenhouse gas emissions, and SB 261 requires that companies making more than $500 million annually disclose what financial risks climate change poses to their businesses and how they plan to address those risks. In response to these new laws, a coalition of business groups including the U.S. Chamber of Commerce, California Chamber of Commerce, and American Farm Bureau Federation sued California in January 2024, arguing that (1) both laws compel speech on a controversial, political topic (climate change), (2) they violate the First Amendment, and (3) they impose heavy and nationwide compliance burdens.
The Results So Far
After the district court denied their request for a preliminary injunction in August 2025, the coalition sought appellate review, arguing that the district court fundamentally misunderstood the First Amendment principles governing compelled speech. They contend that the laws force companies to adopt and convey the state’s political and ideological views about climate change, particularly through the disclosures required under SB 261, which mandates companies to evaluate governance structures, scenario analyses, risk‑management procedures, and long‑term climate‑related financial risks. They argue this content goes beyond factual commercial disclosures and instead requires companies to effectively endorse California’s position that climate‑related risk must drive corporate strategy and decision making.
The appellants emphasize that the district court erred in classifying the compelled disclosures as commercial speech, thereby applying reduced (intermediate) scrutiny. They argue that none of the Bolger factors–advertisement, reference to a product, or economic motivation–are met, and thus the compelled materials cannot be deemed commercial speech. The district court, they contend, wrongly relied on the fact that some companies voluntarily speak about climate issues to justify compelling all companies to engage in highly detailed climate reporting, an approach that conflates voluntary speech with government‑mandated speech and departs from longstanding Supreme Court precedent.
Developments To-Date
Procedurally, the case has already produced significant interim developments. In November 2025, the Ninth Circuit granted the plaintiffs’ request for an injunction pending appeal as to SB 261, temporarily halting enforcement of the climate‑risk disclosure law while allowing SB 253’s emissions‑reporting requirement to remain in effect. This partial relief prompted the Chamber of Commerce to withdraw its separate emergency petition before the U.S. Supreme Court. At oral argument on Jan. 9, 2026, the Ninth Circuit panel pressed both sides on the breadth and vagueness of the disclosure obligations. Several judges questioned whether the statutes inherently require companies to express political or ideological views about climate change, and whether the state’s requirements were even necessary given the overlap with the SEC’s federal climate‑disclosure framework. With these issues unresolved, the panel took the matter under submission, leaving the enforceability of both laws pending a final appellate decision.
This article originally appeared on Goldberg Segalla. www.goldbergsegalla.com.
About the Author:
Nicole A. Caspers is an associate at Goldberg Segalla.