Regulatory Pause, Market Pressure: Staying Aligned with Climate Disclosure Expectations

Many new developments emerged this November in California’s climate disclosure regulations. On November 18, 2025, the California Air Resources Board (CARB) convened a public workshop to advance rulemaking for the Climate Corporate Data Accountability Act (SB253) and the Climate Related Financial Risk Act (SB261), as amended by SB219. That same day, the Ninth Circuit Court of Appeals issued a temporary injunction halting enforcement of SB261 — reflecting the ongoing changes in the state’s regulatory environment. While these regulatory shifts affect compliance timelines, they do not alter the continuing expectations of investors and global reporting frameworks, which remain key drivers of climate-related disclosures. 

SB253: Extended Deadlines and Clarifications 

CARB proposed key updates for SB253, most notably extending the submission deadline for the first Scope 1 and 2 GHG reports to August 10, 2026 (originally June 30). This provides entities with additional time to prepare their emissions inventories. CARB also shared that limited assurance will not be required in the first reporting cycle. 

CARB has clarified the reporting period for the first submission. Entities with fiscal years ending between February 2 and December 31 will report starting with FY2025, while those ending January 1 to February 1 will report starting with FY2026.  

Despite the extended timeline, investors, lenders, and ESG raters and rankers continue to expect robust emissions data. Companies should maintain momentum in gathering accurate emissions data and understanding performance to meet the standards expected across markets. 

SB261: Legal Pause 

A major legal development occurred on November 18, 2025, when the Ninth Circuit Court of Appeals issued a temporary injunction halting enforcement of SB261. As a result, the January 1, 2026 reporting deadline for climate-related financial disclosures is not enforceable. CARB has confirmed it will not pursue enforcement against entities that do not meet the deadline. 

The Ninth Circuit is scheduled to hear oral arguments on January 6, 2026. If the injunction is lifted, enforcement could resume. For now, SB261 remains paused; the injunction does not affect SB253, which continues to be enforceable. 

Regardless of the injunction, investors continue to leverage global reporting frameworks such as TCFD and ISSB which prioritize decision-useful disclosures that demonstrate how companies assess and respond to climate-related risks.

Key Takeaway for Companies 

SB253 still enforceable with guidance continuing to evolve. Entities subject to SB253 should continue preparing in line with CARB guidance, using good faith efforts while recognizing that rulemaking is ongoing. 

SB261 is paused but unresolved. For entities with established climate-related financial risk reporting aligned with TCFD, Sodali & Co recommends continuing disclosures to meet investor and customer expectations. These reports also feed into indices and questionnaires such as CDP, S&P’s CSA, and EcoVadis. Investors, raters, and global frameworks continue to require disclosures of climate-related risks determined by thorough assessments, reinforcing the importance of these disclosures even amid regulatory delays. For entities new to this type of reporting, Sodali & Co advises continuing to prepare disclosure reports internally, with the option to delay public release until the injunction is lifted. 

Why Companies Should Maintain Momentum on Climate Reporting 

Even with SB 261 temporarily halted, investor and market expectations for transparency on climate-related matters remain unchanged. Companies should continue progressing their climate reporting efforts for several reasons: 

• Investor and framework expectations remain steady. Investors, lenders, and global frameworks such as TCFD and ISSB continue to rely on climate-related risk information to understand financial resilience, governance quality, and exposure to transition and physical risks.  
• Slowing down creates disadvantages. Pausing reporting efforts can reduce comparability with peers and may affect analyst ratings, index eligibility, and customer procurement processes. 
• Early preparation strengthens readiness. Companies still building climate-related risk reporting capabilities benefit from continuing internal preparation now, with flexibility on when to publish externally. 
• Internal reporting readiness reduces non-compliance risks. Continuing preparation allows internal teams to build information collection and reporting capabilities at a manageable pace and avoid compressed timelines or higher costs when enforcement resumes.  

Sodali & Co helps companies stay ahead of evolving climate disclosure requirements by offering end-to-end support, including GHG emissions inventory calculations, climate risk assessments, and preparation of reports and disclosures. Our expertise ensures compliance readiness while maintaining investor confidence. Learn more about our climate and sustainability advisory services.