Client Alert
The United States Securities and Exchange Commission (“SEC”) has announced that it plans to completely rescind the climate disclosure rules that it finalized just two years ago. The rules, entitled The Enhancement and Standardization of Climate-Related Disclosures for Investors (the “Climate Disclosure Rules”), require that companies provide significant new climate-related disclosures in their annual reports and registration statements. Disclosure obligations were originally set to begin in 2026 and 2027; however, the SEC never implemented the Climate Disclosure Rules due to legal challenges and other delays.
Background
The Climate Disclosure Rules were originally designed to standardize corporate climate reporting by requiring affected companies to disclose a variety of climate-related information in their registration statements and annual reports, including details regarding greenhouse gas emissions, management of climate-related risks, implications of publicly stated goals related to greenhouse gases, and the financial effects of severe weather events.
Rescission
States, affected companies, and environmental groups challenged the Climate Disclosure Rules in federal courts almost immediately after they were finalized. A coalition of ten states filed a lawsuit alleging that the Climate Disclosure Rules exceeded the SEC’s statutory authority and placed an undue burden on affected companies. Other states, industry groups, and independent companies followed with their own lawsuits on similar grounds. Environmental groups challenged the rules on the basis that they were not stringent enough and would allow companies to “selectively report” climate risks. The SEC quickly stayed implementation of the Climate Disclosure Rules pending the completion of litigation and, in March 2025, the Commission voted to end its defense of the rules in court.
The SEC is now proposing to rescind the Climate Disclosure Rules altogether on the basis that they are “overly burdensome and costly” and exceed the scope of the Commission’s statutory authority. There is a sixty-day public comment period on the SEC’s proposal that ends on August 3, 2026. After that, new litigation challenging the SEC’s rescission could commence.
Even with the rescission of the federal Climate Disclosure Rules, companies doing business in California may still be subject to that state’s Climate Corporate Data Accountability Act, with an approaching initial compliance deadline of August 10, 2026. Other states, including New York, are also considering legislation that could require corporate climate-related disclosures.
