What a long, strange trip it has been with the SEC’s climate-related disclosure rules!

On Friday, the SEC announced that it is proposing to rescind its own climate related disclosure rules, just a little over two years after those rules were adopted by the Commission. The SEC’s adoption of those rules back in March 2024 marked the culmination of well over a decade of active debate as to what role the SEC’s public company disclosure requirements could play in requiring companies to describe their climate-related risks and opportunities, but the contemplated disclosures never actually materialized as the disclosure rules were bogged down in litigation.

Over the course of the past two years, the fate of the SEC’s climate disclosure rules was far from certain. The litigation challenging the rules was consolidated in the U.S. Court of Appeals for the Eighth Circuit, and in March 2025, the SEC announced that it had voted to discontinue its defense of the climate-related disclosure rules. But the litigation did not go away, and the SEC 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, and instead the Commission wanted the Court to continue the proceedings so that it could address the SEC’s authority to adopt the climate-related disclosure requirements. In September 2025, the Eighth Circuit ruled that the litigation should continue to be held in abeyance, noting that it was the SEC’s responsibility to determine whether the climate-related disclosure requirements should be rescinded, repealed, modified, or defended in litigation. Now the SEC has determined to go down the route of rescinding the rules, which requires the full notice and comment rulemaking process to strike the requirements from the SEC’s rulebook.

It is very clear from the proposing release and the statements of the Chairman and Commissioners that the current Commission is very much opposed to the climate-related disclosure requirements. The proposing release 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.

The Commission’s Fact Sheet describing the proposed amendments summarizes the key policy reasons that the Commission 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.

– They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.

Chairman Atkins described his concerns with the climate-related disclosure requirements in his statement in support of the rulemaking:

I have been concerned about the 2024 Climate Rules for some time because of questions raised about the Commission’s authority to adopt them and the soundness of the policy basis to support them. Careful compliance with the statutes governing the exercise of the Commission’s authority and a comprehensive effort to review and reshape the current SEC public company disclosure requirements are key components of my agenda, and I believe serious consideration must be given to rescission of the 2024 Climate Rules to help accomplish both of those goals.

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 action, Commissioner Mark Uyeda noted:

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. The rules themselves continue to be stayed and presumably the litigation challenging the rules will be held in abeyance while the rulemaking process plays out.

– Dave Lynn