The U.S. Securities and Exchange Commission (SEC) has formally proposed rescinding the corporate climate disclosure rules introduced during the Biden administration.
The rules, adopted in 2024 under former SEC Chair Gary Gensler, would have required public companies to disclose climate-related risks, governance strategies, severe weather impacts, and in some cases greenhouse gas emissions.
SEC Chair Paul Atkins said the regulations exceeded the agency’s statutory authority and imposed excessive compliance costs on companies.
Key Overview
- The SEC proposed rescinding Biden-era climate disclosure rules
- The rules were originally adopted in 2024 under Gary Gensler
- Companies would have disclosed climate risks and emissions data
- The SEC says the rules exceeded its statutory authority
- The regulations were already paused amid ongoing legal challenges
- Public comments on the rescission proposal will remain open for 60 days
- Critics argue the repeal weakens climate transparency for investors
SEC Moves to Reverse Climate Reporting Rules
The U.S. Securities and Exchange Commission has formally proposed rescinding the corporate climate disclosure rules introduced during the Biden administration.
The rules were originally adopted by the agency in 2024 under former SEC Chair Gary Gensler and marked the first time the agency introduced broad climate-related disclosure requirements for public companies in the United States.
The regulations would have required companies to disclose climate-related risks affecting their businesses, plans to address those risks, financial impacts linked to severe weather events, and in some cases greenhouse gas emissions from operations.
The SEC said the proposal to rescind the rules reflects a return to the agency’s traditional materiality-focused approach to securities regulation.
According to the commission, disclosure obligations should remain tied closely to financial materiality and statutory authority rather than broader policy objectives.
SEC Says Rules Were Too Costly and Burdensome
In announcing the proposal, SEC Chair Paul Atkins argued that the climate disclosure requirements imposed costs and burdens on public 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,” Atkins said.
The SEC also argued that the rules extended beyond the intended scope of federal securities laws and conflicted with the agency’s objectives of supporting capital formation and encouraging companies to remain publicly listed.
According to one analysis referenced in discussions surrounding the rules, annual compliance costs could have exceeded $6 billion, more than double the previous total regulatory compliance spending by registrants.
Rules Faced Legal Challenges Almost Immediately
The climate disclosure rules never fully took effect after facing immediate legal challenges.
Just one month after the rules were finalized in 2024, the SEC stayed implementation pending litigation before the U.S. Court of Appeals for the Eighth Circuit.
In March 2025, after Donald Trump began his second presidential term, the commission voted to end its legal defense of the rules, significantly weakening their future prospects.
Later, the Eighth Circuit placed the consolidated legal challenges in abeyance while the SEC reconsidered the rules through a new notice-and-comment process.
The SEC is now seeking to rescind the rules entirely.
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What the Climate Rules Required
The final climate disclosure rules approved in March 2024 required public companies to disclose climate-related risks and governance information relevant to investors.
Some large companies would also have been required to disclose material Scope 1 and Scope 2 GHG emissions.
Earlier versions of the proposal introduced in 2022 also included Scope 3 emissions disclosure requirements covering indirect emissions across supply chains and product usage.
However, Scope 3 reporting requirements were removed from the final version adopted in 2024 after significant political and industry opposition.
The final rules also exempted several categories of companies from emissions reporting obligations altogether.
Debate Over Climate Transparency Continues
Supporters of the original rules argued that investors increasingly require climate-related information to assess long-term financial risks facing businesses.
The regulations were designed to standardize climate-related disclosures and improve consistency across public company reporting.
Critics, however, argued that the SEC was moving beyond its traditional role as a financial market regulator and attempting to shape corporate environmental policy.
The debate reflects broader tensions in the United States over ESG investing, corporate sustainability disclosure requirements, and the role of federal regulators in addressing climate-related financial risks.
Even without SEC climate disclosure rules, many large companies may still face reporting requirements through state-level regulations or international frameworks, particularly in Europe.
Public Comment Period Opens
The SEC said the public comment period for the rescission proposal will remain open for 60 days following publication in the Federal Register.
The original climate disclosure proposal generated massive public interest, receiving over 16,000 public comments, with some estimates placing the total closer to 24,000.
Following the comment process, the SEC would need to vote again before officially finalizing repeal of the rules.
Outlook
The SEC’s proposal to rescind Biden-era climate disclosure rules marks a major shift in the U.S. regulatory approach toward corporate climate reporting.
While supporters of the repeal argue the rules imposed excessive compliance costs and exceeded the agency’s authority, critics warn the decision could weaken transparency around climate-related financial risks facing investors.
The outcome of the public consultation and final SEC vote will likely shape the future of climate-related disclosure standards across U.S. capital markets for years to come.
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Sources: ESG Today, U.S. Securities and Exchange Commission, Corporate Compliance Insights, Hunton Andrews Kurth LLP
