2027 California climate disclosure outlook: What the Ninth Circuit ruling means for SB 253 and SB 261

The ruling maintains mandatory Scope 1 and 2 greenhouse gas (GHG) emissions reporting to continue while limiting the enforceability of Scope 3 emissions reporting and climate-related financial risk disclosures. The court determined that preliminary injunctive relief is warranted for these requirements, with further judicial proceedings pending.

Key takeaways and recommendations for 2027:

1. SB 253: Corporate Greenhouse Gas Emissions Reporting

• Regulatory status: Mandatory Scope 1 and 2 GHG emissions reporting remains in effect. CARB is developing additional regulations governing reporting and assurance requirements for 2027 and subsequent years.
• Scope 3 reporting: The Ninth Circuit determined that preliminary injunctive relief is warranted for mandatory Scope 3 reporting. The case has been remanded to the district court to determine whether the Scope 3 disclosures can be separated from the remainder of SB 253 before appropriate relief is implemented. Accordingly, the Scope 3 reporting, originally scheduled to begin in 2027, is expected to be enjoined, subject to further judicial proceedings.
• Client recommendations: Companies should prioritize strengthening their Scope 1 and 2 GHG inventories and preparing for anticipated limited assurance requirements in 2027. Scope 3 preparation should be proportionate to business needs, stakeholder expectations, and evolving regulatory requirements.
• Key actions include: Scope 1 and 2 assurance readiness: Develop or update a GHG Inventory Management Plan and assess data quality, calculation methodologies, documentation, and internal controls in preparation for independent assurance.
• Scope 3 readiness: Consider a high-level screening of significant value-chain emissions sources, existing data availability, and potential data gaps rather than immediately committing to comprehensive inventory development.
• Regulatory monitoring: Monitor ongoing litigation and CARB rulemaking to adjust Scope 3 reporting plans as requirements evolve.

2. SB 261: Corporate Climate-Related Financial Risk Disclosure

• Regulatory status: Mandatory climate-related financial risk reporting remains suspended under the existing court injunction. Companies may continue voluntary disclosures while litigation proceeds.
• Client recommendations: While mandatory reporting is suspended, companies should consider maintaining or updating climate risk assessments based on their business exposure, operational policies, and stakeholder expectations.

Looking ahead

While the ruling provides some regulatory relief, climate-related risks, emissions management, and stakeholder expectations remain important business considerations. Companies should focus near-term resources on regulatory compliance and assurance readiness while taking a measured approach to other climate reporting activities.

Ramboll recommends a risk-based approach to climate reporting that balances current regulatory obligations, business priorities, stakeholder expectations, and long-term readiness. Companies with established Scope 3 or climate risk programs may benefit from maintaining existing capabilities, while others may reasonably defer more extensive investments until regulatory requirements become clearer.

We welcome the opportunity to discuss how these developments may influence your organization's 2027 climate reporting strategy.