SEC proposes rescinding 2024 climate disclosure rule

The Securities and Exchange Commission has formally proposed rescinding a rule that would have required public companies to disclose climate-related risks and, for larger firms, certain greenhouse gas emissions. The move, announced Friday, marks a definitive step to unwind a major regulatory initiative finalized in 2024 that has never taken effect.

The commission stated the proposed rescission is because the rule exceeds the agency’s statutory authority. Officials argued the mandates impose substantial costs on companies and shareholders that are not justified by the informational benefits to investors. SEC Chairman Paul Atkins said in a statement that eliminating the rule will avoid dictating corporate behavior and ensure agency rules are imposed only when expected benefits justify likely costs.

The rule, formally titled The Enhancement and Standardization of Climate-Related Disclosures for Investors, was adopted in March 2024. It would have required companies to disclose climate-related risks to their business and strategy, governance processes, and, for larger companies, Scope 1 and Scope 2 greenhouse gas emissions. The rule was designed to provide investors with consistent,...