Exxon, an oil firm consistently ranked among the world’s top contributors to global carbon emissions, is suing the state of California over two climate-focused state laws, arguing that the rules infringe upon the corporation’s right to free speech.
The 2023 laws, known collectively as the California Climate Accountability Package, will require large companies doing business in the state to disclose both their planet-heating carbon emissions and their climate-related financial risks, or face annual penalties.
The laws would thereby force Exxon to “serve as a mouthpiece for ideas with which it disagrees”, says the lawsuit, filed in the US district court for the eastern district of California on Friday.
Asked for comment, Exxon referred the Guardian to the lawsuit. The state of California was not immediately available for comment.
Tara Gallegos, a spokesperson for Gavin Newsom, California’s governor, told the New York Times it was “truly shocking that one of the biggest polluters on the planet would be opposed to transparency”, adding that the laws “have already been upheld in court and we continue to have confidence in them.”
Exxon is asking the court to block the enforcement of the laws, which is set to begin in 2026. The company already reports emissions and climate risks voluntarily, using different methodologies, it said in the lawsuit.
But the laws would force the company to adopt the state’s preferred frameworks for emissions and risk reporting, which it finds “misleading and counterproductive”, the lawsuit says.
To calculate its emissions, Exxon uses a method established by the global non-profit oil and gas industry association Ipieca, which was created in 1974 to allow a UN environmental group to interface with polluting industries. But under one of the two California laws, it would have to use a methodology known as the Greenhouse Gas Protocol, developed by the research group World Resources Institute and business network World Business Council for Sustainable Development.
That framework sends “the counterproductive message that large companies are uniquely responsible for climate change no matter how efficiently they satisfy societal demand for energy, goods, and services”, the lawsuit says.
The California law also requires companies to report their global emissions footprint. But Exxon argues that the rule should apply only to emissions created by company activity within California’s borders, since the a vast majority of Exxon’s business operations occur outside the state.
The second 2023 California law that Exxon is challenging requires companies to disclose the threat that climate change poses to their business operations, and how they plan to address them. That would require it to speculate “about unknowable future developments”, Exxon argued.
It also claimed that the law conflicts with existing federal securities laws, which already regulate what publicly traded companies must disclose regarding financial and environmental risks.
Taken together, the two laws constitute overreach by California officials, the lawsuit argues. The laws aimed to “to shape public opinion and shame private parties disfavored by the State,” Exxon said.
Supporters of the California rules say they discourage greenwashing from companies.
“The disclosure requirements would really pull back the curtain on the biggest climate destroyers in the oil industry,” Hollin Kretzmann, a senior attorney at the environmental advocacy group Center for Biological Diversity, told the Guardian after they were passed.
Last year, business interests including the US Chamber of Commerce, California Chamber of Commerce, and American Farm Bureau Federation sued California over the same two laws. A judge denied a motion from the business groups to block the laws, but the case is still proceeding with a trial date expected in October 2026.
The US Securities and Exchange Commission had also been working to implement new federal climate disclosure rules, and was nearing completion toward the end of Joe Biden’s term in the White House. Those rules also faced legal challenges; in March, the agency voted to end its legal defense of the rules.
