SEC Climate Disclosure Rules: Rescission Decision Pending
The debate over the SEC's climate disclosure rules is now centred on how the Commission should regulate material climate-related information. Commenters differ over whether this requires a dedicated framework or can be addressed through existing SEC disclosure requirements, while some also question the legal basis for full rescission.
The US Securities and Exchange Commission's (SEC) stated deadline for comments on its proposal to rescind the 2024 climate disclosure rules was 3 August 2026. The 2024 rules have not gone into effect, having been stayed by the SEC in April 2024. The related litigation is currently held in abeyance while the Commission reconsiders the rules. The rescission proposal remains under consideration, and the SEC has not announced a date for final action.
The Proposal Before the SEC
In May, the SEC proposed rescinding the 2024 Climate-Related Disclosure Rules in their entirety. The rules set out specific requirements covering material climate-related risks, governance and risk management, certain climate targets, material Scope 1 and Scope 2 emissions for specified filers, and specified climate-related effects in the notes to audited financial statements.
In the rescission proposal, the Commission argues that the 2024 rules exceed the statutory limits on its disclosure authority. It also says they impose substantial costs on public companies and their shareholders that are not justified by the informational benefits they may provide to some investors.
The Commission also says existing disclosure requirements can already require climate-related information when it is material to a particular company.
If adopted, the proposal would remove the climate-specific disclosure requirements introduced in 2024.
The Divide in the Comments
Responses to the proposal show disagreement over whether existing SEC requirements are sufficient for climate-related disclosure.
The NYSE Institute supported a company-specific materiality approach. It argued that the 2024 rules could require information that was not material to an individual company. It also noted that material climate-related information would continue to fall within existing Regulation S-K requirements (the SEC's non-financial disclosure requirements for public companies), including risk factor and Management's Discussion and Analysis (MD&A) disclosures.
Other commenters favoured retaining dedicated climate disclosure requirements. The Unitarian Universalist Common Endowment Fund (UUCEF), for example, argued that mandatory requirements would provide investors with more standardised and comparable climate information.
A coalition of state Attorneys General opposing rescission challenged the reasoning for the proposal, arguing that the SEC had not adequately explained its departure from the findings underpinning the 2024 rules or sufficiently considered narrower alternatives to full rescission.
A separate Question on the 2010 Guidance
As part of the rescission proposal, the SEC has also asked whether its 2010 Guidance Regarding Disclosure Related to Climate Change should be revised to clarify how existing disclosure requirements apply to climate-related information. No decision on revising the guidance has been announced.
