SEC Climate Rule Shifts from Litigation to Rulemaking

The SEC’s move to reconsider its 2024 climate disclosure rule concerns an attempt to bring climate-related information into securities reporting through federal securities regulation. The rule was designed to require climate-related disclosures in registration statements and annual reports, including greenhouse gas emissions and certain financial statement disclosures.

The development is procedural in nature, yet consequential for disclosure planning: the rule is now moving on two tracks, judicial review in the US Court of Appeals for the Eighth Circuit and a proposed rescission rule under OIRA review. In a 7 May 2026 court filing, the Commission said it had chosen notice-and-comment rulemaking to reconsider the challenged rules.

Why the Court Process Matters

The route to rescission was shaped by the Eighth Circuit’s 12 September 2025 order in State of Iowa, et al. v. SEC and consolidated cases. The court held the petitions for review in abeyance until the Securities and Exchange Commission either reconsiders the challenged Final Rules by notice-and-comment rulemaking or renews its defence of them.

The order noted that the Final Rules had been stayed and that an abeyance would not cause material prejudice to petitioners. It also stated that the SEC was responsible for deciding whether the Final Rules would be rescinded, repealed, modified or defended in litigation.

The Commission had already changed its litigation position. On 27 March 2025, the SEC announced that it had voted to end its defence of the rules requiring disclosure of climate-related risks and greenhouse gas emissions. It said SEC staff had informed the court that the Commission withdrew its defence and that counsel were no longer authorised to advance the arguments previously filed by the Commission.

What the May Filing and OIRA Entry Say

The SEC’s 7 May 2026 letter says the Commission had determined to reconsider the challenged Final Rules by notice-and-comment rulemaking. It also says Commission staff had prepared recommendations for a rulemaking to address legal and policy concerns about the Rules, including concerns that the Rules exceed the Commission’s statutory authority and that their costs outweigh their benefits.

The letter confirms that the Commission submitted a proposed rule titled “Rescission of Climate-Related Disclosure Rules” to the Office of Information and Regulatory Affairs (OIRA) for review. It also says the Commission does not intend to renew its defence of the Rules and will inform the court about material developments in the proposed rulemaking.

OIRA, within the Office of Management and Budget, lists the SEC item under RIN 3235-AN76. The entry says it was received on 4 May 2026, is at the “Proposed Rule” stage, is economically significant and has no legal deadline. It does not include the proposal text.

The Rule under Review

The rules at issue are the SEC’s final rules, “The Enhancement and Standardization of Climate-Related Disclosures for Investors”. The SEC adopted them on 6 March 2024 under the Securities Act of 1933 and the Securities Exchange Act of 1934. Their stated purpose was to require registrants to provide certain climate-related information in registration statements and annual reports.

The SEC described the required information as including climate-related risks that have materially impacted, or are reasonably likely to materially impact, a registrant’s business strategy, results of operations or financial condition. The rules also covered greenhouse gas emissions and certain disclosures related to severe weather events and other natural conditions in audited financial statements.

That scope made the rules relevant not only to sustainability teams, but also to securities reporting and finance functions. For companies that had started implementation planning, the current status leaves a practical distinction between work tied specifically to the stayed Final Rules and climate-related disclosure work linked to other SEC rules, guidance or market expectations.

What this Means for Issuers and Investors

For companies-issuers, the immediate effect is continued uncertainty rather than a replacement framework. The Final Rules remain stayed, the Commission does not intend to defend them, and the proposed rescission text has not been published. Companies therefore lack the detail needed to assess how far the SEC intends to go in removing, modifying or replacing the 2024 requirements.

For investors, the development matters because the original rule was framed by the SEC as standardisation of climate-related disclosures for investors. A rescission process would move the debate away from implementation timing and towards the future level of mandatory climate information in SEC filings.

For reporting teams, the main operational issue is separation. Disclosures prepared for the stayed Final Rules should not be treated as identical to disclosures required or expected under other sources. The SEC’s stay order expressly did not stay other Commission rules or guidance, including earlier Commission Guidance Regarding Disclosure Related to Climate Change.

Status and Unresolved Points

The confirmed position remains limited: the rules are stayed, the Commission has withdrawn its defence, and a proposed rescission rule is under OIRA review. As of the current OIRA record, no proposal text, comment deadline, final vote date or replacement framework has been published.