SEC withdraws from defending climate disclosure rules
On 27 March, the United States Securities and Exchange Commission (SEC) voted to withdraw its defence of the Climate-Related Disclosures Rule, leaving the future of mandatory climate risk reporting for US issuers in limbo. The decision, led by Acting Chairman Mark T. Uyeda, cited concerns over the perceived costs and intrusiveness of the rule, which was originally finalised in March 2024 following an extensive consultation process.
The rule aimed to introduce comprehensive climate-related disclosures, including greenhouse gas emissions and climate risk impacts, as part of financial reporting for listed companies. It had already faced legal challenges, with proceedings consolidated in the Eighth Circuit. The SEC had stayed the rule’s effectiveness pending the outcome of this litigation. The recent decision means that the SEC will no longer defend the rule in court, leaving the matter to be contested solely by other parties. Commissioner Caroline A. Crenshaw shared a statement challenging this approach, arguing that the Commission’s approach bypasses normal rulemaking processes and leaves investors without clear sustainability information.
While this development will not come as a surprise to many, it marks a turning point in the US sustainability disclosure landscape, raising questions about the future of digital climate reporting in the world’s largest capital market. The SEC’s decision could impact international efforts to align disclosures and may create divergence with other regimes, such as the European Union’s CSRD and the International Sustainability Standards Board (ISSB) frameworks.
Read the SEC press release here.
