SEC Proposes to Rescind the Climate-Related Disclosure Rules

Over two years after they were adopted, the SEC has now proposed to rescind its climate-related disclosure rules.

The SEC adopted its climate-related disclosure requirements in March 2024, and those rules were subsequently challenged in proceedings that were consolidated in the U.S. Court of Appeals for the Eighth Circuit. In March 2025, the SEC announced that it had voted to discontinue its defense of the climate-related disclosure rules and subsequently provided a status update to the Eighth Circuit indicating that the Commission did not intend to review or reconsider the climate-related disclosure rules. In September 2025, the Eighth Circuit ruled that the litigation should continue to be held in abeyance and that it was the SEC’s responsibility to determine whether the climate-related disclosure requirements will be rescinded, repealed, modified, or defended in litigation.

In the release proposing rescission of the climate-related disclosure rules, the SEC notes:

The Final Rules were a dramatic overreach of the Commission’s statutory authority and, independently, unsound as a matter of policy. Based on an incorrect view of the scope of its authority, the Commission determined that it was appropriate to prescribe dozens of pages of highly specific disclosure rules solely about climate-related matters and apply the bulk of those rules to virtually all public companies, regardless of size, industry, or specific circumstances.

A Fact Sheet describing the proposal summarizes the key policy reasons that the SEC is relying on to propose rescission of the rules now, including:

• They are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure;
• They stray well beyond the policy concerns of the federal securities laws;
• They impose substantial costs that are not justified by the informational benefits they may provide to some investors; and
• They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.

In his statement in support of the proposal, Chairman Atkins notes:

We must re-examine the costs, burdens, and benefits of disclosure mandates to make becoming and remaining a public company more attractive again. 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.

In his statement supporting the SEC action, Commissioner Mark Uyeda states:

The Climate Rule should serve as a cautionary tale to financial regulators that their expertise is narrow and their authority is not without limit. We should focus our regulations on matters within our areas of core competency and not attempt to interject our subjective judgment on topics minimally related to that which the legislature has tasked us to oversee. If Congress had wanted the Commission to regulate environmental emissions and other non-financial issues, then Congress knows how to direct the Commission to do so.

In her statement in support of the proposal, Commissioner Hester Peirce notes that “[a]dhering to a merit-neutral, materiality-centric disclosure framework is not only consistent with the SEC’s statutory authority, but also good for the health of our capital markets.”

The comment period on the proposal will remain open until 60 days after publication of the proposing release in the Federal Register.

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