Key Takeaways:
- SEC proposed rescinding its 2024 climate-disclosure rule on May 29
- Chair Paul Atkins said the rule exceeded the agency's statutory authority
- The proposal enters a 60-day public comment period before a final vote
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SEC proposes scrapping 2024 climate rules, easing compliance for companies
The SEC moved to eliminate mandatory climate-risk disclosures for publicly traded companies, reversing a signature Biden-era investor protection rule.
The Securities and Exchange Commission on Friday proposed rescinding its 2024 climate-disclosure rule, arguing the requirements exceeded the agency's statutory authority and imposed billions of dollars in compliance costs on publicly traded companies.
"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," Chair Paul Atkins, a Republican, said in a statement.
The rule, adopted in March 2024 on a 3-2 party-line vote when Democrats controlled the commission, would have required all publicly traded companies to disclose climate-related risks to their business and forced large companies to report greenhouse gas emissions from their operations. The regulation never took effect, blocked by legal challenges from industrial lobbies and Republican-led states. The SEC last year voted to stop defending the rule in court.
The proposal marks the latest rollback of climate policy under President Donald Trump and signals a fundamental shift at the SEC, now controlled 3-0 by Republican commissioners. The agency estimates the rule would have cost companies hundreds of millions of dollars annually in compliance and reporting expenses. The proposal enters a 60-day public comment period before a final vote.
Investor Groups Push Back
Benjamin Schiffrin, head of securities policy at Better Markets, a nonprofit that advocates for stronger investor protections, criticized the move. "The risks public companies face matter to investors, and the SEC's proposal fails to acknowledge that climate-related risks are no exception," Schiffrin said.
The rule's original architect, former Chair Gary Gensler, had argued the mandate would give investors the ability to compare companies' contributions to and risks from climate change, which worsens extreme weather events. Proponents said the lack of standardized climate data had forced investors to rely on inconsistent voluntary disclosures.
What Comes Next
The SEC's proposal now enters a two-month public notice and comment period. A final decision could come later this year. The commission said the rule went beyond the policy concerns of securities laws and would have discouraged capital formation by imposing substantial costs.
The reversal aligns with a broader government-wide retreat from climate regulation since Trump returned to office. Other agencies, including the Environmental Protection Agency and the Department of Energy, have similarly moved to rescind or weaken climate-related rules adopted during the Biden administration.
This article is for informational purposes only and does not constitute investment advice.
