Building a climate reporting regulation is a tricky balancing act. You need to collect enough   information to provide value to investors and other stakeholders, while simultaneously keeping the reporting burdens acceptable. 

This is playing out in real time in California as it struggles to implement its new climate laws: SB 253 (emissions reporting), SB 261 (climate risk reporting), which were combined into SB 219 - now collectively known as “the 200s.” 

This week, the California Air Resources Board (CARB) held its third public workshop on the implementing rules, where it outlined plans to delay some timelines and clarify which companies are covered. All of this is happening under extreme pressure with compliance deadlines as soon as six weeks away, active litigation, and an emergency appeal to pause the process. 

Adding to the pressure and confusion, just after the CARB workshop began, the Ninth Circuit Court of Appeals issued a two-sentence judgment granting an injunction against SB 261, which requires climate risk reports starting on the 1st of January 2026.  This means reporting climate risk reports will be postponed until the appeal process is over.

Despite this bombshell, CARB shared a slide deck, an updated FAQ, and a finalized and slightly edited reporting checklist for climate risk reporting (SB 261). Here is our attempt to simplify the new policy:

SB 261 - Climate Risk Reporting

Before the injunction paused the implementation, CARB announced that covered companies must still report their climate risks on their own websites on January 1, 2026, but have an additional six months (July 1st, 2026) to submit the reports to CARB.  CARB stated they are studying the court ruling and will issue updates as needed.  

SB 253 - Emissions Reporting

Key updates for first year reporting:

Throughout the workshop, the CARB staff said: “give us what you have." They suggest companies provide fully assured emissions and comprehensive risk reports, but in the first year, entities will not be punished for submitting something if there's a valid explanation for what they did not report.

Who’s Covered and Who's Not

CARB released a preliminary list of covered entities in September. However, they confirmed in that workshop that this was meant only to provide a rough estimate of covered entities, not to inform the listed companies that they are covered. To help companies determine if they are covered, CARB provided the flow chart above and the following clarifications:

The Ninth Circuit injunction means that an emergency appeal to the US Supreme Court last week was withdrawn. There is another ongoing lawsuit in the US District Court that argues the California laws violate First Amendment rights, scheduled for ruling in October 2026.

To say this is a moving target is an understatement. The tight timeframes, litigation, shifting timelines, and changing compliance criteria add up to a lot of confusion. CARB has repeatedly signalled its flexibility and willingness to accept “best efforts” as the policy matures. While the legal team may be triggered by the uncertainty, companies that have previously issued climate reports should be well positioned to comply, others should start the process now.    

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Given the headwinds ahead of this year’s international climate meeting (Conference of the Parties - COP), expectations for breakthrough agreements were low. However, as we move into the second week and indigenous protests continue, momentum is building:

So far, the Brazilian Presidency has failed to secure any early deals. Then, a fire in the blue zone yesterday halted negotiations. But, there is still a long way to go as negotiations on national climate action plans and financing move into the 11th hour, as they inevitably always do. 

Europe’s Carbon Border Adjustment Mechanism (CBAM) – a carbon border tariff charging importers for the embodied carbon (the amount of carbon it took to make a product) of certain imports above a threshold starting in 2026 – has become a linchpin in COP30 negotiations.

Countries like China and India are calling for “unilateral trade measures” and using further decarbonization pledges as leverage to pressure the EU to halt or weaken its CBAM. However, the EU sees CBAM as a way to ensure competitiveness as it invests in decarbonizing its heavy industry. EU’s chief COP negotiator, Jacob Werksman, said, “You have to make sure that an open market isn’t driving the deindustrialisation of your own economy.” 

Despite CBAM potentially becoming a ‘spoiler’ of broader negotiations, Europe has stood firm so far, even after India asked for an exemption, and claimed that CBAM is an “instrument of protectionism” and it could “undermine multilateral co-operation.”

Following the EU Parliament’s seismic vote last week, where the European People's Party sided with the far-right to weaken sustainability laws beyond all expectations, there have been strong reactions from all sides:

While there is clearly mixed sentiment across businesses, expect the Omnibus Simplification process to significantly weaken Europe’s sustainability policy. The “trilogue” (the European Commission, the European Parliament, and the Council of the European Union) negotiations have now begun in earnest, with a final verdict expected by December 8th.

The US Securities Exchange Commission (SEC) announced this week that, partly due to the shutdown of the US government, it would “not respond to no-action requests for, and express no views on, companies’ intended reliance on any basis for exclusion of shareholder proposals.” This sentence is about as clear as mud, but what it means is the SEC will allow companies to ignore shareholder proposals on climate and sustainability.

While the SEC claims the move was due to the shutdown, it follows multiple mentions by SEC Chair Paul Atkins that he plans to change the shareholder proxy voting process. And follows an announcement last week that the SEC will reconsider the role of proxy advisor firms. 

Sole Democratic SEC Commissioner Caroline Crenshaw claimed the move “creates unqualified permission for companies to silence investor voices. This is the latest in a parade of actions by this Commission that will ring the death knell for corporate governance and shareholder democracy, deny voice to the equity owners of corporations, and elevate management to untouchable status.” 

The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer. 

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