ExxonMobil has filed a lawsuit against the state of California, seeking to block the enforcement of two landmark climate disclosure laws, Senate Bill (SB) 253 and SB 261, which require large companies to publicly report their greenhouse gas emissions and climate-related financial risks [1][2].

In a complaint filed in the U.S. District Court for the Eastern District of California, Exxon argues that the laws violate its First Amendment rights by compelling it to “serve as a mouthpiece for ideas with which it disagrees.” The company contends that the statutes force businesses to adopt what it describes as California’s “ideological premise” that large corporations are chiefly responsible for climate change [1][2].

Under SB 253, companies with more than $1 billion in annual revenue and operations in California must report on their Scope 1, 2, and 3 greenhouse gas emissions, including indirect emissions from supply chains and customers. The first reporting obligations will begin in 2026 for Scope 1 and 2 emissions, and in 2027 for Scope 3 [1]. SB 261, which applies to firms with over $500 million in annual revenue, mandates the disclosure of climate-related financial risks in line with the Task Force on Climate-related Financial Disclosures (TCFD) framework or an equivalent standard, starting in 2026 [1][2].

Exxon claims that these frameworks compel speech on “speculative” topics and require it to present risks and emissions data in ways that it views as misleading. The company argues that the GHG Protocol methodology emphasized by California focuses on absolute emissions instead of emissions intensity, making large companies appear disproportionately responsible for global emissions. Exxon also said that the rules result in double counting, as one entity’s emissions can appear across multiple reporting scopes [1].

The oil major further alleges that SB 261 is preempted by the National Securities Markets Improvement Act (NSMIA) because it requires disclosures that go beyond what federal securities law mandates. It is asking the court to declare both laws unconstitutional and to bar California from enforcing them [1].

California officials have not yet commented on the lawsuit. The case follows a broader pattern of industry resistance to expanding climate disclosure mandates, even as California positions itself at the forefront of corporate climate transparency. The state’s climate laws, which gained support from major companies like Apple, Microsoft, and Ikea, represent some of the most ambitious environmental reporting requirements in the United States [2].

This legal battle could have nationwide implications. If California’s laws stand, they will apply to thousands of U.S. companies doing business in the state, effectively setting a new benchmark for corporate climate accountability even as federal efforts, such as the SEC’s climate disclosure rule, face continued delays [1][2].

References
[1] ESG Today. Exxon Sues California to Stop New Climate Reporting Laws. Retrieved from https://www.esgtoday.com/exxon-sues-california-to-stop-new-climate-reporting-laws/

[2] Reuters. Exxon sues California over climate disclosure laws. Retrieved from https://www.reuters.com/sustainability/climate-energy/exxon-sues-california-over-climate-disclosure-laws-2025-10-25/