SEC Proposes Rescinding 2024 Climate Disclosure Rules, Citing Statutory Overreach

The U.S. Securities and Exchange Commission on Friday proposed rescinding its 2024 climate disclosure rules in their entirety, marking the formal end of a two-year regulatory reversal on one of the most contested rulemakings in the commission’s recent history.

The proposal would eliminate rules the SEC adopted by a 3-2 vote on March 6, 2024, requiring public company registrants to disclose greenhouse gas emissions, climate-related risk management, and the financial statement effects of severe weather events. The rules, which the commission stayed in April 2024 pending litigation in the U.S. Court of Appeals for the Eighth Circuit, never took effect.

“SEC disclosure obligations should comply with the commission’s statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens,” SEC Chair Paul S. Atkins said in a statement accompanying the proposal.

The SEC cited two independent grounds for rescission. First, it concluded the rules exceed the statutory limits on its disclosure authority – that requiring climate-specific information goes beyond what Congress authorized in the Securities Act of 1933 and the Securities Exchange Act of 1934. Second, it concluded that even if the authority existed, the rules are inconsistent with a materiality-based approach to disclosure, impose costs on public companies and shareholders not justified by informational benefits, and are at odds with the commission’s capital formation objectives.

The proposal arrives after the SEC voted in March 2025 to stop defending the rules in court. The Eighth Circuit responded in September 2025 by holding the consolidated challenge petitions in abeyance pending either a rescission rulemaking or a renewed defense – in effect requiring the commission to formalize its position through the notice-and-comment process, which Friday’s proposal initiates. The public comment period will remain open for 60 days following publication in the Federal Register.

For registered real estate programs – nontraded real estate investment trusts, interval funds, and other registered vehicles that file annual reports and registration statements with the SEC – the rules would have imposed greenhouse gas emissions measurement, severe weather financial disclosures, and climate risk governance requirements that industry participants had flagged as costly to implement. The original rulemaking identified real estate assets as significant contributors to greenhouse gas emissions, which would have subjected sponsors of real estate programs to more intensive disclosure obligations than many other sectors.

The proposal does not affect voluntary environmental, social and governance, or ESG, disclosures or state-level climate reporting requirements, including California’s Climate Corporate Data Accountability Act, which independently requires large companies doing business in California to disclose Scope 1, 2, and 3 emissions. Sponsors operating in states with their own climate reporting mandates would not be relieved of those obligations by federal rescission.

The SEC will vote on a final rescission after the public comment period closes.

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