SEC Eyes Reversing Climate Disclosure Measures

On Friday, the Securities and Exchange Commission put forward a proposal to eliminate climate disclosure regulations that would have mandated public companies report climate-related risks and emissions information. This action represents a significant departure from ESG policies implemented during the Biden administration, potentially lowering regulatory compliance expenses while restricting investor access to climate-focused financial data ¹.

Key Takeaways

SEC proposes full rescission of March 2024 climate rules
Agency cites statutory authority concerns and cost-benefit analysis
Public comment period opens for 60 days following publication

Regulatory Authority Questioned

According to the SEC, the climate disclosure regulations that received approval in March 2024 under former Chairman Gary Gensler went beyond the agency’s legal authority under federal securities legislation ². Chairman Paul Atkins characterized these mandates as “a dramatic overreach” that created unwarranted financial burdens for publicly traded companies ³.

“SEC disclosure obligations should comply with the Commission’s statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens,” Atkins said in a Friday statement ⁴.

Legal Challenges Drive Rescission

Following their March 2024 approval, the regulations encountered swift legal opposition from business organizations and Republican state governments, preventing implementation. The SEC halted the rules in April 2024 and ceased defending them in court after the Trump administration assumed office in March 2025 ⁵.

Multiple lawsuits challenging the regulations were consolidated by the Eighth Circuit Court of Appeals, which directed the SEC in September 2025 to either mount a defense of the rules or initiate formal rescission procedures through public notice-and-comment processes ⁶.

Market Impact and Industry Response

The rescission proposal impacts all public companies that would have been obligated to reveal climate-related risks with significant financial implications. Larger corporations would have faced supplementary obligations to disclose greenhouse gas emissions from direct operations and energy purchases ⁷.

The Clean Air Task Force, an environmental advocacy organization, condemned the proposal through Senior Attorney Frank Sturges, who stated the action “should raise serious concerns for investors about the future of market transparency” ⁸. Business organizations that initially opposed the regulations have yet to provide commentary on the rescission proposal.

Regulatory Landscape Remains Complex

While federal requirements face elimination, companies continue confronting climate disclosure mandates in other jurisdictions. California’s SB 253 and SB 261 obligate companies operating within the state to provide emissions data, and European Union regulations require climate disclosures from multinational entities ⁹.

The SEC highlighted that its 2010 climate guidance continues operating, obligating companies to reveal material climate-related risks according to established financial materiality criteria ¹⁰.

Next Steps

Following Federal Register publication, the public comment period will extend for 60 days. Environmental organizations and investors who advocated for the disclosure requirements may challenge the final rescission through legal action.

Commissioner Hester Peirce emphasized the agency’s obligation to maintain “a merit-neutral, materiality-centric disclosure framework” operating within statutory boundaries rather than employing disclosure regulations “as a lever of change” ¹¹.

Not investment advice. For informational purposes only.