A federal appeals court has temporarily blocked Senate Bill 261 (SB 261) in California — the state’s proposed law requiring large companies to disclose climate-related financial risks and adaptation measures — just weeks before the first reports were due.

At the same time, the state’s emissions-reporting law, Senate Bill 253 (SB 253), remains in effect and continues toward its 2026 rollout. Companies with more than $1 billion in annual revenue must report Scope 1 and Scope 2 emissions by June 30, 2026, and Scope 3 value-chain disclosures begin in 2027.

The ruling adds new complexity for corporate climate governance. Executives now must monitor three key developments: (1) the appeal hearing in January 2026 on SB 261; (2) the unfolding rule-making by the California Air Resources Board (CARB) under SB 253; (3) potential federal regulatory responses and the influence of California’s model on national standards.

Critics say the injunction could weaken state-level climate accountability, while others argue it underscores a fragmented regulatory landscape in the U.S., shifting more burden and uncertainty onto individual companies and their advisors. The decision highlights how climate disclosure obligations are increasingly shaped by state courts and regional policy rather than uniform federal mandates.