This retreat comes amid considerable pushback from various stakeholders, including congressional leaders, trade associations, state attorneys general, and business groups.
SEC acting chairman Mark Uyeda said: “The goal of the commission action and notification to the court is to cease the Commission’s involvement in the defence of the costly and unnecessarily intrusive climate change disclosure rules.”
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Adopted on 6 March 2024, the final climate disclosure rules established a comprehensive framework for issuers and reporting entities to provide detailed information regarding their exposure to climate hazards.
The requirements stipulated by the final rules encompass disclosures on climate risks that are likely to exert a significant influence on an organisation’s strategic direction, operational outcomes, or financial health.
Additionally, disclosures concerning extreme weather conditions and other natural phenomena were mandated within audited financial statements.
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By GlobalDataLegal proceedings surrounding these regulations were centralised in the Eighth Circuit Court. The SEC had previously suspended the implementation of these rules pending the outcome of this litigation, with briefings concluded prior to a shift in administration.
Following the commission’s vote, SEC staff communicated with the court via a letter indicating the agency’s withdrawal from defending the regulations. The letter further clarified that SEC counsel will not continue advocating for positions previously outlined in filed briefs and surrendered any allocated time for oral arguments back to the court.
Despite the SEC’s decision to abandon its climate disclosure rules, law firm Foley & Lardner points out that businesses may still be obligated to adhere to similar statutes in other jurisdictions including the European Union’s Corporate Sustainability Reporting Directive and California’s climate disclosure regulations remain in effect.
Moreover, legislative proposals echoing California’s “Climate Corporate Data Accountability Act” (CA SB 253), as amended by Senate Bill 219, have surfaced in states like New York, Colorado, New Jersey, and Illinois.
These initiatives aim to compel businesses generating over $1bn in annual revenue and operating within these states to report their greenhouse gas emissions annually, aligning with California’s upcoming requirements set for 2026.
