SEC to ditch climate disclosure rules

The Securities and Exchange Commission (SEC) proposes to scrap climate-related disclosure rules, saying they exceed its legal authority and impose unnecessary burdens on companies.

The rules were first proposed in 2022 under the Biden administration. Two years later, the SEC approved amendments to the rules under the Securities Act of 1933 and Securities Exchange Act of 1934, mandating public companies to disclose detailed information on climate-related risks, greenhouse gas emissions, and the financial impacts of extreme weather events on their business models, strategies and outlook.

However, the rules never officially took effect after facing setbacks and legal challenges.

In April 2024, the SEC stayed the climate disclosure rules pending completion of consolidated litigation in the US Court of Appeals for the Eighth Circuit.

In March 2025, the SEC voted to end its defence of the rules and by September, the court placed proceedings on hold to allow the SEC to reconsider its position.

The SEC is now attempting to officially rescind the rules, submitting a proposal to the Office of Information and Regulatory Affairs on May 4 to do so.

The SEC said the rules impose substantial costs on public companies and their shareholders that are not justified by the informational benefits they may provide to some investors, arguing they undermine its objectives of facilitating capital formation and promoting public company status.

The SEC further contends that mandating prescriptive climate disclosures conflicts with its long-standing registrant-specific, materiality-based approach, which allows companies to determine what information is financially relevant to investors.

Paul S. Atkins, the chair of the SEC, said the rollback would return the commission to its core mandate in line with its legal authority.

"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 behaviour, and be imposed only when the expected benefits justify the likely costs and burdens," Atkins said.