Western Growers Secures Partial Victory in California Climate Disclosure Challenge

The Ninth Circuit delivered a partial victory for Western Growers and its fellow plaintiffs on November 9, finding that California's climate-related financial risk reporting law, SB 261, and the Scope 3 emissions reporting requirements under SB 253 likely violate the First Amendment. The court left SB 253's Scope 1 and Scope 2 reporting requirements in place.

As WG previously reported, Western Growers is a plaintiff alongside the U.S. Chamber of Commerce, CalChamber, American Farm Bureau Federation and other business organizations challenging the laws. The Ninth Circuit previously blocked enforcement of SB 261 while the appeal proceeded. This decision addresses the plaintiffs' request for preliminary relief more fully.

SB 253 generally applies to U.S. business entities doing business in California with annual revenues exceeding $1 billion. SB 261 generally covers those with annual revenues exceeding $500 million. The ruling treats their disclosure requirements differently:

• Scope 1 and Scope 2 emissions reporting remains in effect. These disclosures cover emissions from a company's own operations and purchased energy. Covered companies remain subject to the November 10, 2026, reporting deadline.

• Scope 3 reporting warrants preliminary relief. These disclosures cover indirect emissions throughout a company's supply chain and other upstream and downstream activities. The court found the requirements likely unconstitutional and returned the case to the district court to determine whether they can be separated from the rest of SB 253.

• SB 261's financial risk disclosures also warrant preliminary relief. The court concluded that requiring companies to publish subjective assessments of climate-related financial risks compels noncommercial speech and fails strict constitutional scrutiny.

The Scope 3 ruling is particularly significant for WG members because reporting demands could reach member companies supplying larger covered companies, even when the members fall below the law's revenue threshold.

The litigation continues, and the decision remains subject to further review. Members should continue meeting applicable Scope 1 and Scope 2 obligations while monitoring the district court's next steps on injunctive relief.