The U.S. Securities and Exchange Commission (SEC) announced on Friday its proposal to eliminate dormant regulations from the Biden administration that required companies to disclose climate-related risks and expenditures. This move comes as part of a broader rollback of climate policies since President Donald Trump returned to office last year.
The rule, adopted in 2024 but not yet in effect due to legal challenges from industrial lobbies and conservative states, aimed to meet investor demand for consistent information on climate-related risks and costs. SEC Chair Paul Atkins stated that the agency should require disclosures only when they are material to investors and when the benefits justify the costs.
SEC officials expressed concerns that the rule exceeded the agency's authority, imposed significant costs on companies, and might deter capital formation. Benjamin Schiffrin, head of securities policy at Better Markets, criticized the proposal as an "assault on investors," emphasizing the importance of climate-related risks to investors.
“The risks public companies face matter to investors, and the SEC's proposal fails to acknowledge that climate-related risks are no exception.”
Benjamin Schiffrin, head of securities policy at Better Markets
The proposal is now open for a two-month public comment period before any final decision by the SEC.
Background
The SEC's decision reflects a shift in regulatory priorities under the Trump administration, focusing on reducing what it views as burdensome regulations. The outcome of this proposal could significantly impact how companies disclose environmental risks and their approach to sustainability.
As the SEC moves forward with this proposal, stakeholders will be closely watching the public comment period and any subsequent decisions, which could reshape the landscape of corporate climate disclosures in the U.S.
