SEC moves to rescind climate disclosure rule for U.S. public companies

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SEC climate rule rollback

Highlights

SEC proposes rescinding the 2024 climate disclosure rule for U.S. public companies, citing overreach and legal challenges that prevented its implementation.
Business groups like the U.S. Chamber of Commerce support the reversal while investor advocates argue rescinding the rule would reduce transparency on climate-related risks.
Companies operating in California or the EU may still face mandatory climate disclosures under state and EU reporting laws such as California's August 10 deadline.

Proposal targets blocked Biden-era reporting mandate

As reported by Financial Times, the SEC has proposed scrapping a rule that requires companies to disclose climate-related risks in corporate filings, arguing the measure represents a "dramatic over-reach" of the agency's authority.

The rule, adopted in 2024 during former president Joe Biden's administration, is the first SEC rule specifically dedicated to climate change. The commission says it requires virtually all public companies to report direct emissions and emissions linked to purchased energy, but the measure never goes into effect after Republican-led states and trade groups challenge it in court.

SEC chair Paul Atkins says he has long questioned both the commission's authority to adopt the rule and the policy rationale behind it. The agency says the requirement would impose financial costs on companies and shareholders that are not justified by the informational benefits for some investors, and Atkins says the SEC must reassess the costs, burdens and benefits of disclosure mandates to make public listings more attractive.

Investor debate and wider compliance obligations

Business groups support the proposed reversal. Mike Flood, senior vice-president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce, which sues to block the rule, says the SEC is returning to the principle of materiality and allowing investors to obtain crucial business information through corporate disclosure.

Investor advocates oppose the move, warning it would leave shareholders with less information about climate-related risks. Benjamin Schiffrin, director of securities policy at Better Markets, says rescinding the rule would run against the SEC's investor protection mission.

Senior SEC officials say companies that view climate change as a material risk to operations still need to disclose it in financial statements, but they argue it is not appropriate to force all companies through an expensive review process. They also note the earlier rule extends to businesses not directly involved in environmental impacts, including financial companies.

Even if the federal rule is withdrawn, some companies still face climate disclosure obligations elsewhere. Businesses operating in California and the EU may remain subject to separate reporting laws, including the EU's Corporate Sustainability Reporting Directive and California's disclosure law, which requires large companies doing business in the state to publish carbon emissions disclosures by August 10.

Our earlier report on the UK’s climate adaptation investment gap described how a record heat episode intensified pressure to upgrade housing, water systems, and transport infrastructure. We highlighted estimates that around £11bn per year may be needed through 2050 to close resilience shortfalls, alongside growing risks such as water shortages, rail disruption, and wildfire exposure.

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