SEC Proposes Rescinding Climate-Related Disclosure Rules

In March 2022, the U.S. Securities and Exchange Commission (SEC or Commission) proposed sweeping climate-related disclosure requirements that would have required registrants to include extensive climate-related information in their registration statements and annual reports. In March 2024, the Commission adopted a final version of those rules, scaled back somewhat from the original proposal but still representing the most significant expansion of mandatory environmental disclosure in the history of U.S. securities regulation. (See Holland & Knight's previous alert, "SEC Adopts Landmark Climate Disclosure Rules," March 11, 2024.)

The 2024 final rules required, among other things, disclosure of material climate-related risks and their actual or likely material impacts on a registrant's business, strategy and financial condition. The rules also mandated disclosure of Scope 1 and Scope 2 greenhouse gas (GHG) emissions for large accelerated filers and accelerated filers, subject to a materiality qualifier and phased compliance timeline. In addition, the final rules required disclosure of climate-related impacts in financial statement footnotes, including costs and losses from severe weather events and other natural conditions exceeding 1 percent of pretax income.

The final rules did not include the originally proposed Scope 3 emissions disclosure requirement, which had drawn significant opposition during the comment period.

Shortly after adoption, the rules were challenged in multiple federal courts of appeals, and the cases were consolidated in the U.S. Court of Appeals for the Eighth Circuit. The SEC voluntarily stayed the rules pending resolution of those legal challenges. In March 2025, the SEC announced that it would no longer defend the climate disclosure rules in court, signaling the current Commission's intent to move away from the prior administration's regulatory approach.

In June 2024, the U.S. Supreme Court's decision in Loper Bright Enterprises v. Raimondo overturned the long-standing Chevron deference doctrine, which had required courts to defer to reasonable agency interpretations of ambiguous statutes. The Loper Bright decision significantly altered the legal landscape for the pending challenges to the climate disclosure rules by removing a key pillar of deference that agencies such as the SEC had historically relied upon when defending expansive rulemaking. Together with the Supreme Court's 2022 decision in West Virginia v. EPA, which established the major questions doctrine requiring clear congressional authorization for agency actions of vast economic and political significance, Loper Bright presented a formidable obstacle to the SEC's defense of the climate rules.

The Proposed Rescission

On May 29, 2026, the Commission voted to propose the complete rescission of the climate-related disclosure rules. The Commission's proposal to rescind the climate-related disclosure rules rests on several grounds. Commissioner Hester Peirce, in a statement accompanying the proposal, emphasized that the rules exceeded the Commission's statutory authority and imposed significant costs on registrants that were not justified by corresponding investor benefits.

The proposal also reflects the changed judicial landscape following Loper Bright, which heightened the legal vulnerability of the rules by requiring courts to exercise independent judgment when evaluating whether the SEC's climate disclosure mandates fell within the scope of its statutory authority under the Securities Act of 1933 and Securities Exchange Act of 1934, rather than deferring to the Commission's interpretation.

The Commission noted that existing disclosure obligations under Regulation S-K, including the requirement to disclose material risks and material impacts on a registrant's business, already capture climate-related information to the extent it is material to a particular registrant, without the need for a prescriptive, climate-specific disclosure regime.

The proposed rescission also reflects concerns that the climate disclosure rules represented a departure from the SEC's traditional materiality-based disclosure framework in favor of a stakeholder-oriented approach more commonly associated with European regulatory regimes. The Commission expressed the view that a one-size-fits-all climate disclosure mandate is not well suited to the diverse circumstances of U.S. public companies and that investors are better served by the existing principles-based disclosure requirements.

The proposal will be subject to a public comment period of 60 days following publication in the Federal Register. A final vote on rescission is expected later in 2026.

Implications for Registrants

Companies investing in systems, controls and processes to comply with the climate disclosure rules should consider the following practical implications of the proposed rescission.

First, although the proposed rescission signals the Commission's intent to eliminate these rules, the proposal is not yet final. Companies should monitor the rulemaking process and refrain from prematurely dismantling compliance infrastructure until a final rescission is adopted.

Second, the rescission of the SEC's climate rules does not eliminate all mandatory climate-related disclosure obligations. Though California's Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act – which impose GHG emissions reporting and climate risk disclosure requirements on large companies doing business in California – have been delayed, they remain in flux. The European Union's Corporate Sustainability Reporting Directive (CSRD) similarly imposes sustainability disclosure obligations on companies with significant EU operations or revenues, although the European Commission's 2025 Omnibus Simplification Package has proposed significantly narrowing CSRD's scope by raising reporting thresholds and reducing the number of companies subject to mandatory sustainability reporting by roughly 80 percent. Companies with exposure to these jurisdictions must continue to develop and maintain climate reporting capabilities.

Third, existing SEC disclosure requirements continue to apply. Registrants must still disclose material risks, including climate-related risks, under Item 105 of Regulation S-K, and discuss known trends and uncertainties, including those related to climate change, under Item 303 (Management's Discussion and Analysis). The SEC's Division of Corporation Finance may continue to issue comments on climate-related disclosures where it believes registrants have not adequately addressed material climate risks or expenditures.

Fourth, many institutional investors continue to seek climate-related information through voluntary frameworks such as the International Sustainability Standards Board standards, which in 2023 assumed the monitoring responsibilities of the now-disbanded Task Force on Climate-related Financial Disclosures. Companies should assess whether voluntary disclosure remains appropriate in light of investor expectations, peer practices and reputational considerations, even in the absence of a federal mandate.

Looking Ahead

The proposed rescission marks a significant shift in the regulatory landscape for climate-related disclosure in the U.S. Companies should use the comment period to evaluate how the rescission, if finalized, will affect their broader environmental, social and governance (ESG) disclosure strategies and compliance planning. Holland & Knight will continue to monitor this rulemaking and provide updates as the process moves forward.

For more information on how the proposed rescission may affect your company's disclosure obligations, please contact the authors of this alert or another member of Holland & Knight's Public Companies and Securities Team.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.