SEC puts climate disclosure rule on hold amid legal challenges
As anticipated, the Securities and Exchange Commission (SEC) took steps to pause its climate disclosure rule, originally adopted in March 2024.
In a statement made this week, Acting Chairman Mark T. Uyeda announced that the Commission would notify the court of “changed circumstances” and request a delay in scheduled hearings. The rule, which mandates climate-related reporting in structured formats such as XBRL, is currently facing legal challenges in the Eighth Circuit Court of Appeals. The new administration doesn’t intend to go ahead with the rule.
When the SEC’s climate rule was introduced under the previous administration both the Commissioner Uyeda and Commissioner Hester Peirce opposed its adoption, arguing that the SEC lacks statutory authority to regulate climate risks and that existing disclosure rules are sufficient. Critics also claim that the rule imposes excessive costs on companies without clear financial benefits.
The decision to pause litigation aligns with a broader regulatory freeze under the new presidential administration, signalling potential changes in the SEC’s stance on climate-related reporting requirements.
However, even if the SEC backs away, many companies will still have to report climate-related data elsewhere. Large global companies with a presence in the EU are still expected to come under the auspices of CSRD reporting requirements, and California’s attempt to introduce state-level climate disclosure laws could impose similar obligations. This means that, whether through US state-level rules or international standards, structured ESG data may still flow through XBRL pipelines—just not necessarily via the SEC. Workiva published research this week that underlines the intention of a large majority of corporates to go ahead with climate disclosure.
Stay up to date with the latest developments here.
