Exxon, one of the world’s largest oil companies and consistently ranked among the top contributors to global carbon emissions, has filed a lawsuit against the state of California. The lawsuit challenges two significant climate-focused laws, collectively known as the California Climate Accountability Package, arguing that these regulations infringe upon the corporation’s rights to free speech. The laws, enacted in 2023, mandate large companies operating in California to disclose their carbon emissions and climate-related financial risks, or face stringent annual penalties.
The California Climate Accountability Package aims to enhance transparency regarding corporate contributions to climate change. By requiring companies like Exxon to disclose their planet-heating carbon emissions, the laws seek to hold major polluters accountable for their environmental impact. Exxon contends that these regulations would compel the company to “serve as a mouthpiece for ideas with which it disagrees,” a central argument in their lawsuit filed in the U.S. District Court for the Eastern District of California.
When asked for comments regarding the lawsuit, Exxon directed inquiries to the court filings. The state of California has not immediately responded to requests for comment. However, Tara Gallegos, spokesperson for California Governor Gavin Newsom, expressed disbelief at Exxon’s opposition to transparency, stating it is “truly shocking” that a major polluter would resist such measures. Gallegos emphasized that the laws have been upheld in court, reinforcing the state’s confidence in their legal standing.
Exxon is seeking to block the enforcement of these laws, which are scheduled to take effect in 2026. Currently, the company reports its emissions and climate risks voluntarily, utilizing various methodologies. Exxon argues that the new regulations would force it to adopt California’s preferred frameworks for emissions and risk reporting, which the company describes as “misleading and counterproductive.”
To calculate its emissions, Exxon employs a method developed by Ipieca, a global non-profit oil and gas industry association. However, under one of the California laws, Exxon would be required to use the Greenhouse Gas Protocol, a methodology created by the World Resources Institute and the World Business Council for Sustainable Development. The lawsuit claims this framework implies that large companies are solely responsible for climate change, irrespective of how efficiently they meet society’s demand for energy and goods.
Another critical component of the California laws requires companies to disclose their global emissions footprint. Exxon argues that this rule should only apply to emissions generated by activities conducted within California, as a significant portion of its operations occurs outside the state. Furthermore, the second law mandates companies to disclose the threats posed by climate change to their business operations and their strategies to address these risks. Exxon contends that this requirement would compel the company to speculate about “unknowable future developments.”
The lawsuit further claims that the California laws conflict with existing federal securities regulations, which already govern what publicly traded companies must disclose regarding financial and environmental risks. Exxon argues that the two laws represent an overreach by California officials, aiming to “shape public opinion and shame private parties disfavored by the state.”
Proponents of the California Climate Accountability Package assert that these laws are essential for preventing greenwashing among corporations. Hollin Kretzmann, a senior attorney with the Center for Biological Diversity, highlighted that the disclosure requirements would expose the practices of the largest climate destroyers in the oil industry. This push for transparency is crucial in holding companies accountable for their environmental impact.
In a related context, last year, various business groups, including the US Chamber of Commerce and the California Chamber of Commerce, filed a lawsuit against California regarding the same two laws. A judge denied their motion to block the laws, but the case continues, with a trial date anticipated in October 2026. Additionally, the US Securities and Exchange Commission has been working on implementing new federal climate disclosure rules, which faced legal challenges and were nearing completion towards the end of Joe Biden’s presidency.
