California Air Resources Board Posts Draft Scope 1 and 2 GHG Reporting Template

With reporting obligations set to commence in 2026 under the requirements of the California Corporate Greenhouse Gas Reporting Program and the Climate-Related Financial Risk Disclosure Program, authorized by Senate Bills (SBs) 253 and 261, the California Air Resources Board (CARB) has posted a draft scope 1 and 2 greenhouse gas (GHG) reporting template. The template, downloadable in Excel format, contains the data fields that CARB is proposing to collect from reporting entities regarding such emissions. These include quantitative values of GHG emissions, matrixes or indices used to calculate GHG emissions, emissions excluded based on specific materiality thresholds, and emission reductions from direct contracts of renewable electricity and renewable gas. CARB takes care to note that the template neither constitutes legal advice nor modifies, replaces, or supersedes the statutes. Further, the template is not intended to create, expand, limit, waive, or interpret any legal rights or obligations; definitions are provided therein as a courtesy to help guide regulated entities, but they do not have the force of law. As noted in our October 3–16, 2025, roundup, CARB published a bulletin with a preliminary list of entities that will be required to submit reports. CARB recently indicated that the final regulations under SBs 253 and 261 are not expected to be issued until the first quarter of 2026.

On October 24, 2025, ExxonMobil Corporation filed a purported class action complaint in the U.S. District Court for the Eastern District of California seeking to overturn SB 253 and SB 261. The company argues that, as applied to ExxonMobil, SBs 253 and 261 impose “content-based speech regulation divorced from any legitimate state regulatory interest”; therefore, their enforcement against ExxonMobil should be enjoined as a violation of the First Amendment. In the complaint, ExxonMobil states that “climate change is one of the major challenges facing the world today” and notes that it has voluntarily released its annual Advancing Climate Solutions report since 2022 and discusses climate issues in its Annual Report on Form 10-K that is filed with the SEC. However, the company alleges that CARB’s reporting framework and scope compel ExxonMobil “to produce reports on a topic of intense political debate that it would otherwise not produce and with which it fundamentally disagrees.” Other lawsuits have been brought seeking to challenge these requirements, and it remains to be seen whether this latest lawsuit could delay or prevent implementation of the laws.

As noted in our September 19–October 2, 2025, roundup, on September 15, the staff of the SEC Office of Mergers and Acquisitions of the Division of Corporation Finance issued a no-action letter to ExxonMobil that paves the way for the company’s proposed retail voting program. Under the program, ExxonMobil investors can submit a standing voting instruction that requires ExxonMobil to vote their shares based on the recommendation of the company’s board of directors at all future shareholder meetings, unless a shareholder decides to opt out of the program or determines to vote on proposals to be considered at a particular meeting. On October 14, 2025, the City of Hollywood (Florida) Police Officers’ Retirement System filed a purported class action complaint in the U.S. District Court for the District of New Jersey against ExxonMobil and its board of directors. The complaint alleges that the defendant directors of ExxonMobil breached their fiduciary duties in adopting the program, which, it alleges, unlawfully impairs the voting rights of ExxonMobil’s public shareholders. In particular, the plaintiff alleges violations of Securities Exchange Act of 1934 rules 14a-2, 14a-3, 14a-5, 14a-6, 14a-9, 14a-10, and 14a-12. The lawsuit also seeks an injunction against ExxonMobil to prevent the company from proceeding with its solicitation associated with the program.

On October 29, 2025, ISS Sustainability Solutions, the proxy adviser’s sustainable investment arm, announced updates to its Governance QualityScore methodology. This score is marketed by ISS as a tool for investors to identify governance risks at companies. For US-based issuers, the key addition is to incorporate artificial intelligence (AI) oversight as a factor. There are three specific questions posed:

• Does the board of directors of the issuer have oversight over AI? 
• How many members of the board of directors have AI skills?
• Does the company have policies and procedures related to AI development, deployment, and monitoring?

There is no indication of the weighting of each of these items in determining the impact on a company’s governance score.

On October 22, 2025, the Council of Institutional Investors (CII) submitted a comment letter to the SEC in response to the agency’s Regulatory Flexibility Agenda released on August 18, 2025. CII articulates three priorities:

• Proxy vote reliability: end-to-end vote confirmation.
• Executive compensation transparency: non–generally accepted accounting principles (GAAP) reconciliation.
• Proxy vote transparency: class-by-class vote result disclosures.

CII suggests that the first two items could be addressed under the “Rationalization of Disclosure Practices” agenda item. In terms of proxy vote transparency, CII asks the SEC to mandate class-by-class disclosure of voting results so that shareholders can better assess “whether a board’s response to a proposal’s outcome is consistent with the preferences of the broad shareholder base representing the majority of outstanding equity.” Secondly, CII expresses concern about the use of non-GAAP financial measures in executive compensation programs, asserting that such use makes programs “more difficult to understand, more difficult to value and more vulnerable to obfuscation than time-vesting” awards. CII requests that the SEC require companies to provide quantitative reconciliation between GAAP and non-GAAP financial measures for executive compensation targets. With respect to proxy vote reliability, CII would like the SEC to implement a mechanism by which beneficial shareholders “can confirm that their votes in contested director elections were counted correctly.” CII notes that the SEC’s regulatory agenda previously included a “Proxy Process Amendments” item and requests that it be revived to address this issue.