SEC Moves To Scrap Biden Climate Disclosure Rule As Companies Face Patchwork Reporting Risk

The SEC has started the formal process to rescind its 2024 climate-risk disclosure rule, sending a proposal to the Office of Information and Regulatory Affairs on May 4.
The rule would have required large accelerated filers and accelerated filers to report material climate risks, related mitigation efforts, and phased-in Scope 1 and Scope 2 emissions.
Even if the federal rule is withdrawn, companies still face climate disclosure pressure from California, New York, and international reporting regimes.

The Securities and Exchange Commission is moving to unwind one of the Biden administration’s most contested ESG rules, setting up a formal retreat from federal climate-risk disclosure requirements for public companies.

The agency has submitted a proposal to rescind its 2024 climate rule to the Office of Information and Regulatory Affairs. The filing, made on May 4, begins the regulatory process for pulling back a rule that never took effect after immediate legal challenges.

An SEC spokesperson said staff are “preparing a recommendation to the Commission to rescind the agency’s 2024 climate rules.”

The move follows a sharp shift in SEC leadership under Chair Paul Atkins. It also reflects a broader Trump administration effort to roll back climate-related regulations adopted under former President Joe Biden.

“Under Chairman Atkins, the Commission is focused on returning the agency to its core mandate — in line with its legal authority — restoring a materiality-focused approach to securities regulation,” the SEC spokesperson said in an emailed statement.

A Rule That Never Reached Implementation

The SEC finalized the climate-risk disclosure rule in March 2024 under former Chair Gary Gensler. Commissioners approved it by a 3-2 vote, with Republican commissioners Mark Uyeda and Hester Peirce voting against it.

The final version was narrower than the original 2022 proposal. It removed a proposed requirement for companies to report Scope 3 emissions, which cover value-chain emissions. Still, it would have required certain public companies to disclose climate-related risks with material impacts, or risks reasonably likely to have material impacts.

Companies also would have needed to disclose climate mitigation activities tied to strategy, business models, or outlook. Large accelerated filers and accelerated filers would have phased in Scope 1 and Scope 2 emissions reporting.

For investors, the rule was designed to create more consistent climate-risk data across public markets. For companies, it raised new governance, controls, assurance, and legal exposure questions.

Industry groups and Republican-led states quickly challenged the rule in court. Gensler then stayed the rule while litigation moved through the Eighth Circuit Court of Appeals.

Legal Authority At The Center

The SEC’s current leadership has made legal authority the central argument for withdrawal. Atkins, Uyeda, and Peirce are now the agency’s only commissioners. All three have questioned whether the SEC should regulate climate disclosures in this form.

Shortly after President Donald Trump took office, Uyeda, then acting SEC chair, asked the court not to schedule arguments. In March 2025, Atkins directed SEC staff to formally withdraw the agency’s defense of the rule.

A federal judge later said “it is the agency’s responsibility to determine whether its Final Rules will be rescinded, repealed, modified, or defended in litigation.”

The SEC has now told the Eighth Circuit that it plans to “reconsider the challenged Final Rules by notice-and-comment rulemaking.” The agency also said it does not intend to renew its defense in court.

According to court records, staff have prepared recommendations to address current commissioners’ concerns. Those include concerns “that the Rules exceed the Commission’s statutory authority and the costs of the Rules outweigh their benefits.”

Companies Still Face Climate Reporting Pressure

The expected rescission would reduce federal disclosure risk for U.S.-listed companies. It would not remove climate reporting from the corporate agenda.

California still has climate disclosure laws on the books, although implementation and legal challenges continue to shape their path. New York is also advancing its own climate reporting proposal. Outside the U.S., several jurisdictions have already adopted climate-risk disclosure rules or are aligning with global sustainability reporting standards.

That leaves multinational companies facing a fragmented reporting environment. A U.S. issuer may avoid the SEC climate rule but still face state-level obligations, investor requests, lender demands, and international disclosure requirements.

For boards and executives, the near-term issue is not whether climate data disappears from capital markets. It is where the demand comes from, how enforceable it becomes, and how companies manage inconsistent rules across jurisdictions.

The SEC’s retreat may reshape federal policy. Yet the broader direction of corporate climate reporting remains unsettled, with regulatory power now shifting toward states, foreign markets, and investors demanding decision-useful risk data.