Key Takeaways
Wall Street's top regulator is drafting rules to repeal a Biden-era regulation that would have required public companies to disclose their climate-related risks and spending, according to a government notice posted May 5, marking a significant reversal of environmental policy.
"The agency was working to rescind the rule to return to the SEC's core mandate of requiring that corporate disclosures focus on information that is material to investors, which he said was in line with its legal authority," SEC Chair Paul Atkins said in a statement.
The original rule, adopted in a watered-down form in early 2024 under the Biden administration, was immediately challenged in court by Republican-led states and business groups. The SEC issued a stay on the rule in April 2024 pending the outcome of the legal battles. Under the Trump administration, the commission voted to stop defending the rule in court in March 2025, leading to a suspension of the case.
Repealing the rule would eliminate a significant compliance burden for public companies but reduce investor transparency into long-term climate-related financial threats. The new proposal to scrap the rule is now under review by the White House’s Office of Management and Budget, a step required before the SEC can finalize the action.
The push to nullify the climate disclosure rule is a hallmark of President Donald Trump's administration, which has consistently moved to undo climate-related regulations. This broader policy agenda includes the Department of Justice's recent action to block a Minnesota lawsuit against oil companies over climate change deception and the Environmental Protection Agency's revocation of the 2009 "endangerment finding" that underpins greenhouse gas regulation.
Critics of the SEC's original rule, including industry associations and conservative groups, argued it represented regulatory overreach and compelled speech on issues not financially material to all investors. The legal challenges were consolidated in the U.S. Court of Appeals for the Eighth Circuit, a venue considered favorable to the rule's opponents.
The SEC's decision to cease its defense of the rule last year was a pivotal moment, signaling that the regulator, under new leadership, no longer supported the measure. The current action to formally rescind it provides a final chapter, removing the dormant rule from the books entirely and pre-empting any future attempts to revive it through the courts. A timeline for the final repeal is uncertain and depends on the length of the OMB's review.
This article is for informational purposes only and does not constitute investment advice.
