SEC Proposes Repeal of Climate Disclosure Rule

The Securities and Exchange Commission has proposed a full rescission of a 2024 regulation that would have required publicly traded companies to disclose climate-related risks and greenhouse gas emissions [1, 2]. The proposal marks a significant reversal for the agency, which had previously paused the rule’s implementation amid ongoing legal challenges from business groups and various states [1, 2].

Key takeaways

• The proposed rescission follows a March 2025 decision by the Commission to stop defending the climate disclosure rules in court [2].
• If the 2024 rule had been implemented, companies would have been required to report on climate-related financial risks, such as potential damage from severe weather events [1, 2].
• Public companies remain subject to existing SEC requirements, which mandate the disclosure of material climate-related matters under current regulations [2].
• The proposal is currently open for a 60-day public comment period following its issuance on May 29, 2026 [2].

The Shift in Federal Regulatory Policy

The climate disclosure rule was originally adopted in March 2024 under the leadership of then-SEC Chairman Gary Gensler [1, 2]. The regulation aimed to create a standardized framework requiring companies to report on their greenhouse gas emissions, internal carbon pricing, and transition plans [2]. However, the rule faced immediate opposition from a coalition of business interests, including the oil and gas, trucking, and retail sectors, who argued the requirements were overly burdensome [1].

Paul Atkins, who was sworn in as the SEC chairman in April 2025, stated that the original rule exceeded the agency’s legal authority [1]. The Commission’s decision to move toward rescission follows a period of significant legal uncertainty, during which the rules were stayed by the SEC and challenged in the U.S. Court of Appeals for the Eighth Circuit [2]. By choosing to withdraw the rules through notice-and-comment rulemaking, the agency is effectively ending the litigation that had kept the mandate in limbo for over two years [2].

Why it matters

The proposed repeal highlights a broader transition in the U.S. regulatory environment toward a more flexible, materiality-based approach to environmental, social, and governance (ESG) reporting [2]. While the federal mandate is being dismantled, companies continue to face a fragmented landscape of reporting obligations [2]. For instance, California’s SB 253 remains in effect, requiring certain companies to report their emissions, and international standards continue to evolve [2].

For investors, the loss of a centralized federal framework may increase the difficulty of comparing climate data across different companies [2]. Conversely, the rescission reduces potential litigation exposure for registrants who would have been subject to Securities Act and Exchange Act liability under the 2024 rules [2]. As the SEC moves forward with the rescission process, market participants are encouraged to align their reporting with existing legal requirements and voluntary frameworks to meet the ongoing investor demand for climate-related information [2].