U.S.: CARB Holds Second Public Workshop on Climate Disclosure Laws, Issues Draft Checklist for SB 261 Reporting

On August 21, 2025, the California Air Resources Board (“CARB”) hosted a virtual public workshop with stakeholders to discuss California’s climate disclosure mandates—the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). These laws will require companies “doing business in California” above certain revenue thresholds to publicly disclose their greenhouse gas emissions and climate-related financial risks.

CARB presented several proposals during the workshop, including with respect to covered entities and statutory definitions. CARB proposed that certain entities be exempt from reporting under SB 253 and SB 261, including: (i) companies whose only business in California is the presence of teleworking employees; (ii) nonprofits; (iii) government entities; (iv) the California Independent System Operator; and (v) business entities whose only activity in California consists of wholesale electricity transactions. CARB also proposed alternate definitions for “doing business in California” and “revenue” after receiving stakeholder feedback that the originally proposed definitions, which were tied to the definitions of such terms in the California Revenue and Taxation Code, were overly broad.

Additionally, CARB reiterated that covered entities must publish their SB 261 report to their website and post a link to CARB’s public docket by January 1, 2026. With respect to SB 253, CARB proposed a June 30, 2026 deadline for covered entities to report their Scopes 1 and 2 greenhouse gas emissions and indicated that the compliance deadline for Scope 3 reporting remains under review but is anticipated to be in 2027.

 The workshop addressed the assessment of fees under both SB 253 and SB 261. CARB has proposed a “flat” fee per covered entity. Companies reporting under both SB 261 and SB 253 will be required to pay fees for each reporting mandate. Because fees are calculated by covered entity rather than filing entity, subsidiaries filing via a parent company will be subject to a separate fee. 

Following the workshop, on September 2, 2025, CARB posted a draft checklist for the climate-related financial risk disclosures required by SB 261. CARB will continue to engage with stakeholders during the development of the regulations. Stakeholders may submit questions or comments through CARB’s public docket, linked below, until September 11, 2025. (For more information, please see our Debevoise Debriefs on CARB’s second public workshop and CARB’s draft checklist, and for additional background on California’s climate disclosure laws, see our Debevoise Update and ESG Update.)

Links:
CARB Workshop Slides
CARB Climate Related Financial Risk Disclosures: Draft Checklist
CARB FAQs and Fact Sheet
CARB Public Docket

U.S.: Court Denies Preliminary Injunction Against California’s Climate Disclosure Laws

On August 13, 2025, the U.S. District Court for the Central District of California denied the request for a preliminary injunction filed by a coalition of business groups seeking to halt implementation of California’s climate disclosure laws, SB 253 and SB 261. The court’s decision means that the implementation and enforcement of the laws will proceed while the litigation is pending.

In its order, the court held that the plaintiffs did not show that their First Amendment challenge is likely to succeed on the merits against either SB 253 or SB 261. Although it analyzed the two laws under different levels of scrutiny, the court found that each was sufficiently related to a substantial government interest.

In its defense, the CARB argued that the laws were related to three potential government interests: (i) providing investors with reliable information; (ii) reducing greenhouse gas emissions to mitigate climate risks; and (iii) preventing misleading climate-related statements. With respect to SB 253’s reporting of Scopes 1, 2 and 3 emissions, the court found that because SB 253 requires only “factual and uncontroversial” speech, the regulated speech only needs to be “reasonably related to a substantial government interest.” The court held that the law will likely survive this lowest level of scrutiny because the required information is related to providing reliable information to investors and reducing greenhouse gas emissions to mitigate climate risk. With respect to SB 261’s climate-related financial risk disclosure requirements, the court held that such disclosures are subject to intermediate scrutiny because they require more than merely factual information; however, the court held that SB 261 will likely survive this heightened scrutiny because it “directly advances a substantial government interest” in providing reliable information to investors in a manner “not more extensive than necessary to serve that interest.” The court rejected CARB’s additional argument that the laws support the state’s interests in preventing misleading, climate-related speech.

As a result of the order, the laws remain in effect while the claims are further litigated. The plaintiffs may appeal the District Court’s ruling to the United States Court of Appeals for the Ninth Circuit. The case is set for a trial in the District Court beginning on October 20, 2026, months after reporting under SB 253 and SB 261 are set to begin.

Links:
Court Order

EU: EU Pledges to Ensure That CSRD and CSDDD Will Not “Unduly Restrict” Trade with the United States 

On August 21, 2025, the United States and the European Union issued a Joint Statement announcing that they have agreed on a “Framework on an Agreement on Reciprocal, Fair and Balanced Trade.” (For more details, see our Debevoise In Depth on the topic here.)

Under the framework, the EU would remove tariffs on all U.S. industrial goods and reduce trade barriers for U.S. agricultural products. The United States committed that it would apply a maximum 15% tariff ceiling for EU products. Both parties agreed to cooperate on trade related to energy and defense. In addition to pledges related to procurement, the EU committed to revisit certain pieces of sustainability legislation, including the EU Deforestation Regulation, the Carbon Border Adjustment Mechanism, the Corporate Sustainability Due Diligence Directive (the “CSDDD”) and the Corporate Sustainability Reporting Directive (the “CSRD”). While the EU committed to consider U.S. concerns, it clarified in a subsequent press release that the cooperation with the United States will not grant U.S. companies more favorable treatment under any EU regulation.

With respect to the CSRD and the CSDDD, the EU pledged that neither directive would create “undue restrictions” for transatlantic trade. The EU further committed that its revisions to the CSDDD would “reduce administrative burden on businesses, including small- and medium-sized enterprises” and include “changes to the requirement for a harmonised civil liability regime for due diligence failures and to climate-transition-related obligations.” The EU also undertook to address U.S. concerns about the extraterritorial application of the CSDDD to companies from non-EU jurisdictions with “high-quality” regulations.

Links:

U.S.–EU Joint Statement

EU Questions and Answers on the U.S.-EU Joint Statement

UK: FCA Publishes Findings from Multi-Firm Review of Its Sustainability Reporting Framework

On August 6, 2025, the Financial Conduct Authority (“FCA”) announced the results of its review of climate reporting by asset managers, insurers and pension providers. The FCA found that its climate disclosure rules have led firms to increase consideration of climate risk in decision-making, but that not all firms were satisfied with the current state of the disclosure requirements. Some firms questioned the amount of information required to be disclosed more generally on the basis that the level of detail in its climate disclosures could be burdensome for retail investors, as shown by their limited engagement with the firms’ disclosure reports. In addition, firms noted that, given the multiple reporting regimes under which they must report, the FCA’s disclosure rules were overly detailed.

In response to this feedback, the FCA clarified the scope of its sustainability reporting requirements to explain how firms can report efficiently under both the Taskforce on Climate-related Financial Disclosures recommendations and the FCA’s Sustainability Disclosure Rules. The FCA also indicated that it plans to simplify its disclosure requirements while also “promoting international alignment” and to work to ensure that the reported data is useful to both reporting entities and investors.

Link:
FCA Findings

This publication is for general information purposes only. It is not intended to provide, nor is it to be used as, a substitute for legal advice. In some jurisdictions it may be considered attorney advertising.