SEC Proposal to Rescind Climate Disclosure Rules: Emphasizing Materiality in Securities Regulation
The Securities and Exchange Commission has put forth a proposal to eliminate onerous and expensive regulations that require companies to disclose specific climate-related information in their registration statements and annual reports. The focus is on aligning the agency with its core mandate and emphasizing materiality in securities regulation. SEC Chairman Paul S. Atkins emphasized the importance of disclosure obligations being within the Commission's legal authority, guided by materiality, and not overly burdensome on companies.
In March 2024, the Commission approved amendments to its rules that mandated detailed climate-related disclosures from public companies, including information on greenhouse gas emissions, climate risk management, and financial impacts of severe weather events. However, on April 4, 2024, the Commission halted the implementation of these rules due to ongoing litigation in the U.S. Court of Appeals for the Eighth Circuit. Subsequently, on March 27, 2025, the Commission decided to no longer defend the rules, leading to a stay in the review process by the Eighth Circuit.
The Commission is now proposing to rescind the climate disclosure rules entirely, citing that they go beyond the agency's statutory authority. Additionally, even if the Commission had the authority to implement such rules, there are strong policy reasons to revoke them. The public has a 60-day period to provide comments on the proposed rescission after the release is published in the Federal Register.
In conclusion, the Securities and Exchange Commission is moving to eliminate regulations that require companies to disclose specific climate-related information, aiming to align with its core mandate and focus on materiality in securities regulation. The proposal to rescind the rules is based on the belief that they exceed the agency's statutory authority and are not in the best interest of the public. The public comment period will allow stakeholders to provide feedback on the proposed rescission.