SEC Proposes Full Rescission of Climate Disclosure Rules

The Securities and Exchange Commission (SEC) has formally proposed the total rescission of its climate-related disclosure rules, a move that marks the end of a contentious regulatory effort initiated in 2022 [1]. The proposal, issued on May 29, 2026, follows a period of significant legal uncertainty and the agency's 2025 decision to cease defending the rules in court [1, 4].

Key takeaways

• The SEC argues the climate rules were outside its statutory authority and inconsistent with its materiality-focused policy objectives [1, 2].
• Although the rules were adopted in March 2024, they never went into effect due to a voluntary stay and subsequent litigation in the Eighth Circuit [1, 4].
• The proposal is subject to a 60-day public comment period following its publication in the Federal Register [1, 2].
• Public companies remain subject to existing climate-related disclosure obligations under current SEC regulations and various state and international laws [1, 4].

A Shift in Regulatory Philosophy

In its proposing release, the SEC stated that the climate rules were "unsound as a matter of policy" and imposed unjustified costs on shareholders and public companies [1]. SEC Chair Paul Atkins emphasized that the commission’s disclosure obligations should be guided by materiality and avoid the practical effect of dictating corporate behavior [2]. The commission argued that the rules strayed beyond the policy concerns of federal securities laws and were not sufficiently registrant-specific [1].

The journey of these rules began with a proposal in March 2022, which drew over 24,000 comment letters from the public [1]. While the final version adopted in March 2024 removed certain requirements—such as the disclosure of Scope 3 greenhouse gas emissions—the rules still faced immediate legal challenges [1]. After the SEC voted to discontinue its defense of the rules in March 2025, the U.S. Court of Appeals for the Eighth Circuit directed the agency to resolve the status of the rules through formal notice-and-comment rulemaking rather than leaving them in legal limbo [1, 3].

Navigating a Fragmented Landscape

While the federal climate disclosure regime is effectively ending, the regulatory environment remains complex for many firms [4]. Companies must still navigate a patchwork of existing obligations, including California’s SB 253 and SB 261, which require emissions and climate risk reporting [1]. The deadline for initial Scope 1 and 2 emissions disclosures under the California law is August 10, 2026 [1].

Furthermore, international requirements continue to expand. The European Union’s Corporate Sustainability Reporting Directive (CSRD) is already in force, with additional reporting waves scheduled through 2028 [1]. Other nations, including Australia, Brazil, Canada, China, and the United Kingdom, have also moved forward with their own climate disclosure mandates [1]. The SEC’s current proposal is expected to generate a high volume of public comments and may face its own set of legal challenges once finalized [1].