California Climate Acts update: injunction to pause SB 261

The US Court of Appeals has issued an injunction to pause California’s SB261, the law requiring major companies to report on climate-related financial risks.

The law would have required companies operating in California with $500m in annual revenue to publish climate‑related financial risk reports from 1 January 2026.

While deciding to halt implementation of SB 261, the court denied the injunction for the companion law, SB 253. This means the mandate for reporting GHG emissions is, for now, still moving ahead, while the requirement to disclose the financial risks of those emissions is frozen. The decision arrived just weeks before the first SB 261 reports were due, removing the immediate 1 January 2026 deadline for over 4,000 companies. The news broke as the California Air Resources Board (CARB), held a public workshop to update the progress and requirements around compliance.

For boards and executives already grappling with volatile energy prices, supply‑chain shocks and physical climate impacts, this decision brings another layer of regulatory uncertainty rather than relief. Business operates best with clear rules; on-again, off-again regulations make long-term planning much harder to achieve.

Many global organisations see the value of building business resilience in an era of increased geopolitical and economic volatility and climate disruption. Investors need clear, comparable data to make informed decisions, and businesses need the certainty that comes with a standardised reporting landscape. The decision to pause California SB 261 should not deter companies from advancing decarbonisation plans. Climate risks are material financial risks; ignoring them only leads to increased business risk.

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