The U.S. Securities and Exchange Commission (SEC) has proposed the rescission of climate disclosure rules requiring companies to provide climate-related information in their registration statements and annual reports.

The Commission’s proposal is based on its view that it lacks statutory authority to mandate such disclosures, as well as a broader policy re-evaluation aimed at returning to a materiality-focused approach to securities regulation. The SEC emphasizes that its core responsibilities are to facilitate capital formation and promote public company status, rather than to regulate environmental emissions. The agency also contends that mandating climate disclosures from public companies is unduly burdensome for both companies and shareholders.

Previously, the agency approved amendments to its rules under the Securities Act of 1933 and Securities Exchange Act of 1934 which mandate specific disclosures from nearly all public companies regarding greenhouse gas emissions, the management of climate-related risks, and finance statements relating to the effects of severe weather events. These amendments were initially proposed in response to increasing investor demand for information about companies’ exposure to climate-related risks.

However, ultimately, the SEC has proposed to rescind the climate disclosure amendments in their entirety, asserting the amendments would exceed the agency’s statutory authority. The agency further states that climate disclosure requirements are unnecessary and inconsistent with the best interests of registrants and investors as they impose substantial costs on public companies and shareholders that are not justified by the informational benefits to investors of the requirements. According to the SEC, if the rules were to take effect, they could cost public companies anywhere from $200,000 to $740,000 annually in extra compliance costs per company, while rescission could yield estimated aggregate annual savings of approximately $4.9 billion across affected registrants.

On the other hand, some shareholders and investors maintain that requiring climate-related disclosures enables them to play a meaningful role in corporate governance. They contend that eliminating these requirements may limit the flow of information on which securities regulation depends. In their view, access to comprehensive information is important to support informed investment and business decision-making.

The proposal is not final and remains subject to a public comment period. The SEC has requested feedback on the potential costs and benefits of rescinding the amendments, including whether doing so would promote efficiency, competition, and capital formation, or instead adversely affect investor protection.

Commenters have approximately 60 days, until August 3, to submit comments on the proposed rescission. Comments can be submitted directly on the SEC’s internet forum, via email, or mail.