The U.S. Securities and Exchange Commission (SEC) has begun the process of withdrawing a climate disclosure framework adopted during the Biden administration, marking a significant shift in federal policy toward environmental reporting by public companies.
The proposal would remove rules approved in 2024 that were designed to give investors more consistent information about how climate-related issues could affect corporate finances. The regulations would have required companies to report material climate risks, certain costs linked to severe weather events, and details about how management evaluates and oversees those risks.
Supporters of the original framework argued that investors increasingly consider climate exposure when making investment decisions and need standardized information to compare companies across industries. However, the rules faced immediate legal challenges from business organizations and several Republican-led states, preventing them from taking effect.
The SEC’s current leadership says that the agency’s role should remain focused on disclosures that are directly tied to financial materiality and investor protection. Officials have also raised concerns about the cost and complexity that the climate reporting requirements could impose on public companies.
Climate disclosure pushback
In March 2024, the SEC adopted a climate disclosure rule that required “highly specific and granular disclosure from virtually all public companies about climate-related matters.” The rule called for companies to provide detailed information on areas such as greenhouse gas emissions, how they identify and manage climate-related risks, and the impact of severe weather events on their financial statements.
The rule has since faced a series of legal challenges. In April 2024, the SEC temporarily suspended implementation of the requirements while consolidated litigation proceeded before the U.S. Court of Appeals.
Then, in March 2025, the U.S. Court of Appeals for the Eighth Circuit ordered the petitions to be held in abeyance as the SEC either reevaluated the contested rules through notice-and-comment rulemaking or decided to resume defending the climate disclosure requirements.
The repeal proposal is now subject to a public comment process of two months before the agency decides whether to finalize the change.
SEC reverses, California and EU stay the course
The issue has become one of the most closely watched debates in financial regulation, reflecting broader disagreements over the role of environmental, social, and governance considerations in corporate reporting.
Even if the SEC repeals its climate disclosure rule, many large companies will still face reporting requirements elsewhere. The European Union’s Corporate Sustainability Reporting Directive (CSRD) requires many companies, including some non-EU firms, to disclose climate risks, emissions, sustainability strategies, and transition plans. Unlike the SEC’s approach, the EU framework uses “double materiality,” requiring companies to report both how climate issues affect their business and how their activities affect the environment.
California has also introduced major climate disclosure requirements. Large companies doing business in the state will be required to report greenhouse gas emissions and climate-related financial risks, including emissions generated across supply chains in many cases. Because of California’s economic scale, these rules are expected to affect companies far beyond the state’s borders.
As a result, many businesses may continue investing in climate reporting systems regardless of the SEC’s decision. For multinational firms, the challenge may become complying with a mix of international and state-level requirements rather than a single federal standard.
Read more: California Climate Data Disclosure Hit By Court Order, Emissions Rule Still Intact
