The Securities and Exchange Commission is moving to formally rescind its climate disclosure rules, effectively ending what was the federal government's first major attempt to regulate climate-related corporate reporting.
The agency submitted a proposal titled "Rescission of Climate-Related Disclosure Rules" to the White House Office of Information and Regulatory Affairs on May 4. This decision is the final step in unwinding rules adopted under former Chair Gary Gensler just over two years ago.
The original rules, adopted in March 2024, would have required public companies to disclose climate-related risks, transition plans, Scope 1 and Scope 2 greenhouse gas emissions, and related financial impacts. They never took effect due to immediate legal challenges that put them on hold in April 2024. Now, under Chair Paul Atkins, the SEC is making the rescission official.
The timeline reveals a rapid shift: the rules were adopted in March 2024, stayed in court weeks later, and by March 2025 the SEC had voted to stop defending them. The agency now says its focus is on disclosures that are "material to investors," meaning companies only need to report issues that would influence a reasonable investor's decision.
What companies would have had to report
The proposed rules covered several key areas: climate-related risks and their potential effects on business strategy and financial condition; board-level governance of climate strategy; Scope 1 and Scope 2 emissions (direct and indirect); and financial metrics showing the dollar impact of severe weather events, carbon pricing, or transition costs. Scope 3 emissions were excluded after heavy lobbying.
A patchwork of state and international rules remains
The practical effect may not be that companies stop reporting altogether. California has its own climate disclosure laws, and the European Union's Corporate Sustainability Reporting Directive applies to companies operating in EU markets. Several other states are exploring similar legislation. Companies will face a patchwork of requirements with different standards and timelines.
What this means for investors
Reduced compliance costs for companies come with a trade-off: greater information asymmetry. When some firms disclose and others don't, and standards vary by jurisdiction, investors lose the ability to make apples-to-apples comparisons-exactly the problem the 2024 rules were meant to solve.