SEC Proposes Repeal of Climate Risk Disclosure Rule

SEC Proposes Repeal of Climate Disclosure Rule

The Securities and Exchange Commission (SEC) has proposed repealing a rule that requires some public companies to report their greenhouse gas emissions and the risks they face from global warming. This move comes in the latest action to undo Biden-era regulations on climate change.

The climate-disclosure rule has been on hold since last year, after the Republican-led commission said it was pausing its legal defense in the wake of legal challenges by business groups and Republican state attorneys general. The SEC has now announced that it is moving to rescind the disclosure rules "in their entirety because they exceed the scope of the agency's statutory authority."

According to the SEC, the rules, finalized in 2024, "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 added that eliminating the rule will "avoid the practical effect of dictating corporate behavior" and ensure that agency rules will "be imposed only when the expected benefits justify the likely costs and burdens."

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Environmental groups have expressed concerns that the repeal of the climate-disclosure rule will leave investors without information they need to accurately assess financial risks and other hazards related to climate change. Kathy Fallon, director of land systems at the nonprofit Clean Air Task Force, urged the commission to retain the rule and enforce disclosure requirements "that give both investors and the public the transparency they need."

The repeal of the climate-disclosure rule is among dozens of environmental rollbacks imposed in President Donald Trump's second term. The Environmental Protection Agency has eliminated major climate change programs, promoted deregulatory efforts, and canceled billions of dollars in Biden-era environmental justice grants.

The SEC approved the climate rule in March 2024 on a party-line vote, with three Democratic commissioners supporting it and two Republicans opposing. The commission currently has three Republican members, including Chairman Paul Atkins, and no Democrats.

The 2024 rule was one of the most anticipated in recent years from the nation's top financial regulator, drawing more than 24,000 comments from companies, auditors, legislators, and trade groups over a two-year process. A public comment period will remain open for 60 days following publication of the proposal in the Federal Register, expected in the next few days.

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