Last Friday, the Securities and Exchange Commission proposed the rescission of “overly burdensome and costly rules that require companies to provide certain climate-related information in their registration statements and annual reports.”

The rules, adopted by the Commission on March 6, 2024, created a detailed and extensive special disclosure regime about climate risks for issuing and reporting companies, obliging companies to provide detailed information regarding their own greenhouse gas emissions, and how they identify and manage climate-related risks, as well as the impact of severe weather events on their financial statements.

On April 4, 2024, the Commission stayed the climate disclosure rules pending completion of consolidated litigation in the U.S. Court of Appeals for the Eighth Circuit. On March 27, 2025, the Commission voted to end its defence of the final rules. On Sept. 12, 2025, the Eighth Circuit issued an order holding the consolidated petitions for review in abeyance until the Commission reconsidered the challenged rules by notice-and-comment rulemaking or renewed its defence of the climate disclosure rules.

The Commission is now proposing to rescind the climate disclosure rules in their entirety because they exceed the scope of the agency’s statutory authority. Even if it had authority to adopt such final rules, the Commission believes there are independent, compelling policy reasons to rescind them entirely.

The proposal signals an important shift in federal policy toward environmental reporting by public companies. However, as pointed out by Vasil Velev writing in Carbon Herald, many large companies will still face reporting requirements elsewhere. The European Union’s Corporate Sustainability Reporting Directive (CSRD) requires many companies, including some non-EU firms, to disclose climate risks, emissions, sustainability strategies, and transition plans. Moreover, the EU framework uses “double materiality,” requiring companies to report both how climate issues affect their business and how their activities affect the environment.

Mr Velev explains that California has also introduced major climate disclosure requirements, including emissions generated across supply chains in many cases. He says because of California’s economic scale, these rules are expected to affect companies far beyond the state’s borders.

As a result, many businesses may continue investing in climate reporting systems regardless of the SEC’s decision.