California’s New Climate Disclosure Laws Under Fire in Lawsuit Against California Air Resources Board

California enacted two landmark climate disclosure and financial reporting laws in 2023: the Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Act (SB 261). Collectively known as the Climate Accountability Package, these new laws impose unprecedented reporting requirements on large U.S. public and privately-held companies doing business in California.

On January 30, 2024, a lawsuit was filed challenging two new California climate disclosure and financial reporting laws, Senate Bill (SB) 253 and SB 261, for unconstitutionally requiring disclosure by qualifying public and privately-held businesses of greenhouse gas (GHG) emissions and climate-related risks throughout their value chain. Plaintiffs, which include a number of businesses and industry associations, allege violations of the First Amendment, Supremacy Clause, and other constitutional limitations against the California Air Resources Board (CARB). In this article, Sidley partners David R. Carpenter and Maureen F. Gorsen discuss California’s climate disclosure laws, address the claims of the lawsuit challenging these laws, and the bigger picture of climate disclosure regulations.