The Securities and Exchange Commission is moving to scrap a Biden-era rule that would have required public companies to disclose climate-related risks. The agency's decision marks a sharp reversal from the previous administration's push for greater environmental accountability.
The rule, finalized in 2024, would have mandated that companies report their greenhouse gas emissions and climate risk management strategies. But the SEC under its current leadership has argued the rule exceeds its authority and imposes unnecessary burdens on businesses. The move comes after legal challenges and opposition from business groups who said the requirements were too costly and vague.
Why the rule is being pulled
The SEC's proposal to repeal the rule is based on claims that the disclosure requirements went beyond the agency's statutory mandate. Critics of the rule — including some business lobbying groups and Republican-led states — had filed lawsuits arguing the SEC overstepped its authority. The agency now says the rule would have led to costly compliance burdens without clear benefits for investors. In its announcement, the SEC indicated it intends to start a formal rulemaking process to revoke the existing regulation entirely.
What this means for investors
Without a federal mandate, companies won't have to report climate risks in a standardized format. Investor advocacy groups have warned that this leaves shareholders in the dark about potential financial impacts from climate change, such as physical damage to assets or regulatory shifts. Some large institutional investors had supported the rule, arguing it would provide consistent data for decision-making. Now, those disclosures will remain voluntary, and the patchwork of state-level requirements could persist.
Next steps for the SEC
The agency will publish its repeal proposal in the Federal Register in the coming weeks. That will open a 60-day public comment period, during which the SEC will collect feedback from investors, companies, and other stakeholders. A final vote on the repeal could come later this year. The rule's fate will also depend on ongoing litigation; if the SEC revokes it, the lawsuits challenging it would likely become moot. Until then, the rule remains technically in effect but has been stayed by the courts.
