Companies’ obligations to identify and disclose climate-related financial risks and climate data have become increasingly complex in recent years, both at the state and federal levels. The fate of federal climate disclosure rules remains unclear, with the Securities and Exchange Commission (SEC), other federal agencies, and the courts deferring action. Meanwhile, some states, such as California, are stepping in with their own robust requirements.
The Eighth Circuit Court of Appeals’ Recent Deferral to SEC Action
Last year, the SEC published its final climate-related disclosure regulations. These rules would require public companies to disclose climate risks—including greenhouse gas (GHG) emissions—that materially impact their “business strategy, results of operations, or financial condition.” However, the regulations never took effect. Several states petitioned the Eighth Circuit to review the final agency action, arguing that the SEC exceeded its statutory authority. As a result, the SEC stayed implementation of the regulations pending review of the Eighth Circuit petitions. Earlier this year, the SEC voted to cease its defense of the “costly and unnecessarily intrusive climate change disclosure rules.”
Nonetheless, the regulations were not repealed, and the Eighth Circuit case continued. On April 21, 2025, the intervening states requested that the court stay the case until “the SEC clarifies whether it plans to amend or rescind the challenged rules.” Three days later, the court granted this motion, directing the SEC to provide a status report within 90 days “advising whether the Commission intends to review or reconsider the rules at issue.”
On September 12, 2025, in State of Iowa, et al. v. SEC, the Eighth Circuit Court of Appeals issued an order staying the litigation until the SEC either acted again to defend the proposed climate-related disclosure rules or acted to rescind them by notice-and-comment rulemaking. While the case is pending, the agency has paused regulation enforcement.
Broader Federal Retreat from Climate Disclosure Requirements
The SEC’s action reflects a broader shift away from federal climate reporting requirements. On October 16, 2025, the Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) announced the withdrawal of the 2023 interagency Principles for Climate-Related Financial Risk Management for Large Financial Institutions. The Principles proposed to offer a “high-level framework for the safe and sound management of exposures to climate-related financial risks” by the largest financial institutions (those with over $100 billion in total consolidated assets). According to the October announcement, while banks should still “consider and appropriately address all material financial risks,” the federal bank regulatory agencies do not believe the Principles are necessary. The agencies reasoned that they already have sufficient risk management processes in place, and adhering to these Principles could distract from addressing other potential risks identified in existing risk management plans. As of November 18, 2025, the Principles were officially rescinded.
This announcement is in line with the Federal Reserve’s decision earlier this year to disband several internal climate groups studying financial stability risks, including the Supervision Climate Committee and the Financial Stability Climate Committee. Similarly, the Financial Stability Oversight Council rescinded the charters of two committees formed during the Biden administration to advise the council on climate-related financial risks: the Climate-related Financial Risk Committee and the Climate-related Financial Risk Advisory Committee.
This federal trend extends beyond the financial sector. On September 16, 2025, the U.S. Environmental Protection Agency (EPA) proposed a rule to effectively end the Greenhouse Gas Reporting Program. This proposal would terminate any reporting requirements for most source categories, including the distribution segment of subpart W (Petroleum and Natural Gas Systems), and suspend any such requirements for the remaining subpart W segments until 2034. Under the EPA’s existing program, 47 source categories are required to report GHG emissions annually. Without this program in place, industry would largely no longer be required to report this data. However, some companies may continue to use the framework to meet environmental, social, and governance (ESG) goals. Comments related to the EPA’s proposed rule were due November 3, 2025. If adopted, the final proposal would take effect 60 days after publication in the Federal Register. If the proposal is implemented, 2024 would be the final reporting year; in other words, affected entities would not need to submit 2025 data in 2026. The proposal may face legal challenges and roadblocks. Still, the GHG Reporting Program remains in effect until the EPA issues a final rule.
The EPA also recently announced it would pursue rescinding the 2009 Obama-era endangerment finding for GHGs, which would impact a number of reporting requirements under the Clean Air Act (CAA). For example, if finalized, new motor vehicle and new motor vehicle engine manufacturers would no longer be required to measure, report, or comply with GHG emission standards. However, this proposed action would not remove reporting requirements related to criteria pollutant and air toxic measurement and standards, Corporate Average Fuel Economy testing, and associated fuel economy labeling. Comments were due September 15, 2025. In the meantime, the rule remains active until further EPA action.
California and Other State Climate Disclosure Regulations Push Forward
While the federal government is acting to reduce climate reporting regulations, state requirements are ramping up, especially in California, where two climate disclosure statutes are in play: (1) the California Climate Corporate Data Accountability Act (SB 253), requiring large companies doing business in California to disclose GHG emissions, and (2) Greenhouse Gases: Climate-Related Financial Risk (SB 261), requiring disclosure of climate-related financial risks.
On November 18, 2025, the Ninth Circuit granted a temporary injunction of SB 261, which required first reporting of an entity’s climate-related financial risk report by January 1, 2026. However, the court refused to grant an injunction for SB 253, which requires first reporting by August 10, 2026. This temporary injunction is in effect until the court hears arguments, which are currently scheduled for January 9, 2026. Accordingly, on December 1, 2025, the California Air Resources Board (CARB) issued an enforcement advisory stating that—while this appeal is pending—it will not enforce SB 261’s January 1, 2026, reporting deadline. Nonetheless, SB 253 currently remains in force.
As discussed in our previous post in August 2025, the U.S. District Court for the Central District of California upheld SBs 253 and 261. Though the court found that the laws regulate commercial speech, the business group plaintiffs (including the U.S. Chamber of Commerce) failed to show that the laws likely violate the First Amendment. Ultimately, the court denied the plaintiffs’ motion for a preliminary injunction, paving the way for enforcement. The plaintiffs then appealed to the Ninth Circuit and requested that the District Court pause enforcement while the appeal is pending. However, on September 11, 2025, the District Court declined this request, adhering to its August decision. The District Court stayed further proceedings pending the Ninth Circuit ruling discussed above.
As of this date, SB 253 remains on track to meet the first compliance deadline on August 10, 2026, and the Ninth Circuit may ultimately lift the injunction on SB 261. To facilitate compliance, CARB published a number of compliance resources on its website, including a Frequently Asked Questions (FAQ) document (posted July 9, 2025; updated November 17, 2025), which discusses the regulatory development process; the entities covered under the laws; definitions of key terms like “doing business in California” and “good faith efforts” to comply; and various reporting deadlines. Reporting entities in California should pay close attention to SB 253’s upcoming deadline in 2026, as well as SB 261’s possible upcoming deadline in 2026, depending on the Ninth Circuit’s ruling.
Companies should also monitor similar pending legislation in the states where they operate. Other states that have recently proposed their own climate disclosure laws include New York (S.B. 3456), Colorado (H.B. 25-1119), New Jersey (S.B. 4117), and Illinois (H.B. 3673).