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ExxonMobil Sues California, Claims Its New Climate Law Violates Free Speech

cls 2025-10-27 10:32:15

On Friday, October 24, local time, ExxonMobil filed a lawsuit against California, claiming that two recently passed laws violate the First Amendment of the U.S. Constitution by attempting to force companies to adopt specific climate positions and conflicting with federal regulations.

The two bills referred to by ExxonMobil are the "Corporate Climate Data Accountability Act" (SB 253) and the "Climate-Related Financial Risk Reporting Act" (SB 261).

The "Corporate Climate Data Accountability Act" requires large enterprises operating in California with an annual revenue exceeding $1 billion to measure and publicly disclose their greenhouse gas emissions each year.

The "Climate-Related Financial Risk Disclosure Law" requires companies with annual revenues exceeding $500 million to publish a report every two years, assessing the potential impact of climate change on their financial performance and explaining how the company is addressing these risks.

ExxonMobil stated that these two new laws are effectively forcing the company to publicly support views on climate change that it does not agree with.

The above two bills require companies to follow the California Greenhouse Gas Accounting Standards and the Task Force on Climate-related Financial Disclosures (TCFD) standards.

ExxonMobil believes that this is equivalent to the government forcing companies to "take responsibility for global warming," which constitutes compelled speech and violates the constitutionally protected freedom of speech.

The company pointed out that California claims that large enterprises "bear the greatest responsibility for climate change," and by legislating only against large businesses, it is effectively targeting those companies that are most likely to oppose climate policies.

The lawsuit claims that California is attempting to regulate out-of-state conduct and speech, as these disclosure requirements encompass emissions and risks generated by businesses on a global scale.

The complaint states: "ExxonMobil understands the real risks posed by climate change and supports ongoing efforts to address these risks. California may believe that companies meeting a certain income threshold should bear special responsibility for climate change, but the First Amendment explicitly prohibits the government from compelling companies to express such incorrect views."

ExxonMobil also alleged in the complaint that California legislators intended to "embarrass companies" to prompt them to change their behavior.

ExxonMobil argues that the Climate-Related Financial Risk Reporting Act conflicts with federal securities law, as the latter clearly defines the scope of financial and environmental risk information that publicly traded companies are required to disclose.

The company argues that states do not have the authority to impose additional or inconsistent disclosure obligations on matters within the regulatory scope of the U.S. Securities and Exchange Commission (SEC).

ExxonMobil has requested the court to block the implementation of the statute and declare it unconstitutional and overridden by federal law.

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ExxonMobil Sues California, Claims Its New Climate Law Violates Free Speech

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