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California’s court-backed climate disclosure regime may not apply directly in Asia, but it is already shaping the region’s regulatory trajectory. As global investors and trading partners demand greater transparency, Asian regulators and corporates are under mounting pressure to align with emerging standards in the US and Europe.
For policymakers in Hong Kong, Singapore, Malaysia, South Korea and India, where mandatory or phased environmental, social and governance ( ESG ) disclosure rules are taking shape, the California ruling reinforces a trend that climate accountability is no longer confined within borders but externalized through global supply chains and financial markets.
For context, California’s climate disclosure regime, which is being challenged by the US Chamber of Commerce, a powerful US business lobby group, and other business groups in a legal battle that began in January 2024, was strengthened on August 13 2025 by a ruling by US district judge Otis Wright that denied the chamber’s motion for a preliminary injunction.
Essentially, the chamber contested California Senate Bills 253 and 261, which mandated the climate disclosure of Scope 1, 2 and 3 carbon emissions, arguing the bills violate the First Amendment, Supremacy Clause and dormant Commerce Clause of the US constitution.
On February 3 2025, the court dismissed the Supremacy Clause and extraterritoriality claims and, on August 13, denied the chamber’s motion for a preliminary injunction, ruling that the regulations could move forward.
This ruling represents a significant setback for the chamber’s efforts to halt the forthcoming implementation of California’s climate disclosure laws that make mandatory the reporting of Scope 1, 2 and 3 emissions.
Because the regulations define covered entities as any company “doing business in California”, not just those incorporated there, the impact is global, including on large Asian, European and Canadian exporters to the US that could fall into scope.
The ruling also paves the way for the enforcement by California regulators of the scheduled reporting deadlines, which are 2026 for Scope 1 and 2, 2027 for Scope 3, and 2026 for climate risk reports.
Following the August 13 ruling, the chamber has filed a motion to delay the enforcement, a hearing for which is set on September 15 2025, which if successful could delay the reporting deadlines. But if the motion is denied on September 15, the deadlines can be implemented before the trial which is set on October 20 2026.
However, in any case, corporates will need to start building systems for emissions tracking, climate-risk analysis and supply-chain data collection now, in the event that the enforcement dates do not change or if they are even just delayed.
While the California ruling has no direct legal jurisdiction in Asia, for Asian companies, this means that even if domestic climate disclosure regulations are still evolving, the operational reality is already here that emissions tracking, supply-chain data and climate-risk reporting systems must be built to meet both local requirements and the extraterritorial pull of regimes like that of California’s and the European Union ( EU )’s Corporate Sustainability Reporting Directive ( CSRD ).
Meantime, across Asia, regulators are moving at different speeds, but the direction is clear that mandatory disclosure regimes are tightening. From Hong Kong and Singapore to Malaysia, India and South Korea, governments, in step with global momentum, are phasing in Scope 1, 2 and eventually 3 requirements. The result is a patchwork of timelines and obligations that Asian corporates must navigate, often in parallel with overseas standards, such as California’s law and the EU’s CSRD.
The California ruling means that US and global companies with significant operations in California will need to treat California’s disclosure regime as binding, regardless of federal uncertainty around US Securities and Exchange Commission climate disclosure rules.
While the ruling is not a definitive legal win for California, as it is still subject to appeals and challenges, it provides a model for Asian regulators to adopt similar regulations that align with global ESG trends, which many of them are already doing.
The reason is the ripple effects of the California ruling on Asian supply chains, trade and investor expectations are notable, particularly for export-driven economies like China, Japan and South Korea.
Asian firms listed on global exchanges or seeking US investment, for example, may face heightened scrutiny from investors prioritizing ESG data, as California’s laws amplify demand for transparent climate risk reporting. This is likely to push Asian companies to adopt disclosures voluntarily to attract capital.
The ruling is also likely to indirectly affect US-Asia trade, as compliance costs could raise prices or alter supply-chain dynamics. For example, Chinese exporters facing US buyer demands for emissions data may pass on costs, affecting competitiveness.
Even though California’s laws are domestic, their global supply-chain reach means Asian exporters, suppliers and financial markets will feel the effects.
For Asia, this is both a compliance burden and an opportunity since firms that can deliver reliable emissions data and credible climate risk disclosures will have a competitive advantage in global trade and finance.
California’s regime, combined with the EU’s Carbon Border Adjustment Mechanism, signals a trend that large economies are externalizing climate accountability onto global trade partners.
Asian governments may see this as a form of regulatory protectionism and could push back politically; but, at the company level, compliance will still be necessary to keep market access.
In a scenario where the Chamber of Commerce eventually elevates the California case to the US Supreme Court, and the Supreme Court reverses the law, a reversal would only invalidate California’s laws, leaving global ESG disclosure requirements intact. Such a reversal could indirectly slow the momentum for similar regulations in Asia.
In any case, this means Asian as well as US companies operating in markets and regions outside California, with mandatory climate disclosures ( Scope 1, 2 and 3 ), must continue to comply. Such jurisdictions would include:
The following countries have mandatory Scope 1 and 2 disclosures, with Scope 3 either voluntary, encouraged or under consideration for future mandates:
Regardless of the outcome of the legal battle to challenge the California disclosure laws, it is clear the future for Asian and multinational corporates is towards full disclosure.
