A U.S. appeals court on Tuesday blocked a California law scheduled to go into effect in January that would require large companies to report every two years on how climate change could negatively impact their finances.
Another new law requiring major companies to publish their carbon emissions annually can remain in place for now, the court ruled.
The policy is the most far-reaching of its kind in the country, and supporters say it will increase transparency and encourage companies to evaluate how they can reduce emissions.
The U.S. Chamber of Commerce has asked the U.S. Court of Appeals for the Ninth Circuit to suspend the law, which is scheduled to go into effect next year, saying it violates businesses’ First Amendment rights. Last week, the group asked the Supreme Court to consider the opinion. The chamber of commerce on Tuesday withdrew its emergency appeal to the Supreme Court, citing the lower court’s decision.
“We look forward to continuing our appeal and securing an injunction on both climate disclosure laws that impose significant compliance costs on companies and their supply chains,” Chamber attorney Darryl Josepher said of Tuesday’s ruling. “No one country should have the ability to impose this kind of burden on the entire country.”
Lindsey Buckley, a spokeswoman for the California Air Resources Board, which is drafting regulations to implement the law, said the agency is reviewing the ruling and could not comment further. The state argues that the law does not violate the First Amendment because commercial speech is not similarly protected under the Constitution.
The Financial Risk Disclosure Act, signed into law in 2023 by Gov. Gavin Newsom, applies to companies doing business in California with more than $500 million annually. The Air Resources Board estimates that more than 4,100 businesses will be required to comply with the law.
The state passed an emissions reporting law that year that applies to companies doing business in the state that make more than $1 billion a year. This will affect about 2,600 companies, according to the state’s air quality regulator. Global warming pollution from burning fossil fuels must be directly reported, as well as emissions from activities such as shipping products from warehouses to stores and employee travel.
The U.S. Securities and Exchange Commission last year approved rules requiring some public companies to report their greenhouse gas emissions and climate change risks, but the agency suspended the regulations amid litigation.
Austin writes for The Associated Press.
