The Securities and Exchange Commission has proposed rescinding rules imposed under the Biden administration that mandate that public companies report their carbon emissions and climate change-related risks.
The commission described the climate disclosure rules as “unnecessary,” claiming the dormant rules exceed the scope of the agency’s statutory authority and impose significant costs on public companies and their shareholders.
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“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,” SEC Chairman Paul Atkins said in a statement.
The SEC has also said the rules are “inconsistent with a registrant-specific, materiality-based approach” for disclosures, stray beyond policy concerns of federal security laws, and are “at odds” with the agency’s policy objectives of facilitating capital formation and promoting public company status.
It marks the latest effort by the Trump administration to roll back climate change-related policies and regulations.
President Donald Trump has dismissed concerns regarding the risks of climate change, calling it the “greatest con job” in remarks to the United Nations last year.
The climate disclosure rules were first approved under the Biden administration in March 2024, creating guidelines for how and which companies report to investors on how their operations affect climate change. This includes reporting greenhouse gas emissions.
The final rule had been significantly watered down from the original proposal, not requiring companies to disclose emissions generated by their customers and supplies.
Still, it quickly faced legal challenges from Republican state officials and industry groups. Amid the litigation, the SEC moved to stay the rule just one month after it was approved. It has not been in effect since.
In March of last year, the SEC voted to end its defense of the disclosure rules, notifying the courts that its counsel was no longer authorized to defend the regulations.
About six months later, the court held the case in abeyance, effectively putting the legal challenge on hold while the commission reconsidered the rules.
The proposed rescission of the disclosure rules will be open to public comments for 60 days before it can be finalized.
Senior officials at the SEC told reporters that they would be “quite surprised” if the commission wasn’t sued over the proposed ruling if approved, given that a number of Democratic-led states have asked the courts to keep the disclosure rules in place.
Some states, such as California, have moved to implement their own climate-related disclosure laws, mandating that public and even some private companies doing business in their states over a certain revenue threshold must disclose their greenhouse gas emissions.
Climate-related disclosures have also become increasingly common in the European Union, where the “corporate sustainability due diligence” directive is set to take effect next year.
This law would require some companies to report on the effects of environmental, social, and governance standards and establish liability for violations.
The Trump administration has heavily criticized the law, claiming it would create major barriers to trade between the United States and the EU.
SEC VOTES TO APPROVE MAJOR CLIMATE DISCLOSURE RULE, SCALED DOWN FROM EARLIER DRAFT
When asked whether the proposed rescission would affect other disclosure regulations, senior officials at the SEC said the agency cannot influence what other regulatory bodies may or may not require.
“Maybe it would influence it indirectly, but … I don’t think it changes what any regular — other regulatory body [is doing] if they’re acting within their appropriate authority,” the officials said.
