As Zachary shared on PracticalESG.com earlier this week, California’s climate disclosure laws face new legal challenges. ExxonMobil has filed a lawsuit arguing that the laws violate the First Amendment and the National Securities Market Improvement Act. Zachary reminded us that the California Chamber of Commerce has an ongoing lawsuit also challenging the constitutionality of SB 253 and SB 261 under the First Amendment. (First Amendment challenges were successful in lawsuits involving the SEC’s conflict minerals disclosure rules a decade ago.) A differentiator of the new lawsuit is that it also challenges the disclosure requirements as preempted under NSMIA.

As a reminder on the scope of the California laws, the WSJ says:

The rules are specific to California but their oversight reaches businesses across the globe. Under SB 253, companies doing business in the state with an annual total revenue exceeding $1 billion, be they public or private, will have to disclose their greenhouse gas emissions—the ones from their immediate operations, such as electricity intake, and those from their sprawling supply chain. Even if they are based elsewhere in the U.S. or overseas, the rules will apply.

The climate risk reporting rule, SB 261, will affect more companies. It requires public and private firms doing business in California with annual revenue of more than $500 million to disclose climate-related financial risks, along with the measures they are taking to mitigate and adapt to such risks, starting Jan. 1.

At the end of last month, the California Air Resources Board (CARB) posted a preliminary list of companies that it believes fall within the scope of the state’s Climate Corporate Data Accountability Act. The list is not determinative — and CARB is seeking feedback on covered entities through a voluntary survey.

Members of PracticalESG.com can learn more about SB 253 and SB 261. Interested in a full membership with access to the complete range of benefits and resources? Sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund.

– Meredith Ervine