Key Takeaways

• SB 261, California’s Climate-Related Financial Risk Act, requires public and private companies with over $500 million in total annual revenue that do business in California to publish a climate-related financial risk report by January 1, 2026, and every two years thereafter, detailing their climate-related financial risks and efforts to reduce and adapt to such risks.
• On November 18, 2025, the Ninth Circuit Court of Appeals stayed enforcement of SB 261 while it reviews an appeal to the ongoing litigation challenging SB 261, and SB 253, California’s Climate Corporate Data Accountability Act.
• Given the uncertainty with respect to when and how the Ninth Circuit will rule, it is prudent for in-scope companies to be prepared to comply with the requirements of SB 261 by the original deadline of January 1, 2026.

On November 18, 2025, the Ninth Circuit Court of Appeals (the Court) granted an injunction that stays enforcement of SB 261 while the Court reviews an appeal related to the ongoing litigation challenging SB 261 and SB 253 on First Amendment grounds. SB 261 requires public and private companies with greater than $500 million in total annual revenue that do business in California to prepare a climate-related financial risk report by January 1, 2026, and every two years thereafter, detailing their climate-related financial risks and efforts to reduce and adapt to such risks. You can find our prior client alerts related to preparation for SB 261 here and here.

The appeal concerns the lower court’s denial of a request for a preliminary injunction against SB 261 and SB 253. Oral arguments on the appeal are currently scheduled for January 9, 2026, but the Court has the ability to determine the case ahead of this date based on the briefing, which is complete. The Court could also hear oral arguments and not issue an order until some unknown later date, extending the duration of the injunction. Given the uncertainty with respect to when and how the Court will rule, it is prudent for in-scope companies to be prepared to comply with the requirements of SB 261 by the original deadline of January 1, 2026. While companies should be prepared to comply by the original deadline, companies need not post anything to their websites or submit anything to the California Air Resources Board (CARB) pending a decision on the appeal.

Additionally, the Court did not grant an injunction related to SB 253, which requires public and private companies with greater than $1 billion in revenue that do business in California to disclose their emissions. As such, in-scope companies should continue preparing for SB 253. CARB has not finalized a compliance deadline for SB 253, but has indicated that it will be in the second half of 2026, and the proposed deadline is August 10, 2026.

For more information on this topic or any related matter, please contact any member of the firm’s Sustainability and ESG Advisory, Corporate, or Litigation practices.