SEC Moves to Rescind Climate Rule as States Keep the Mandate

The Securities and Exchange Commission (SEC, the federal markets regulator) on May 29 proposed to wipe out its own 2024 climate disclosure rule, the regulation that would have forced thousands of public companies to report greenhouse gas (GHG, the emissions tied to warming) data, climate risks, and the financial-statement effects of severe weather. The proposal would rescind the rules in their entirety, and a 60-day public comment window opens once the notice hits the Federal Register. For the largest issuers, though, the obligation to count and publish emissions does not vanish with the federal rule. It simply moves to Sacramento and Brussels.

That is the part most wire coverage skipped. A company with more than a billion dollars in revenue that does business in California, or that trades on an EU exchange, still owes much of the same data on roughly the same timeline. Killing the federal mandate changes who collects the report, not whether the report gets written.

The Federal Mandate the Commission Just Moved to Erase

The rule on the chopping block was adopted in March 2024 on a 3-2 vote, after a two-year process that drew more than 24,000 comment letters. It required large filers to disclose direct (Scope 1) and purchased-energy (Scope 2) emissions, plus governance and risk-management details, inside their annual reports and registration statements. It was the most contested disclosure measure the agency had produced in years.

Chairman Paul S. Atkins framed the reversal around a single word: materiality. In his view, the agency had strayed from its core job of giving investors decision-useful facts and had instead started steering corporate behavior.

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.

Those words, from Atkins in the SEC’s climate rule rescission release, are the spine of the legal case the agency now makes: that the rules reach beyond what Congress authorized, and that even if they were lawful, the costs outrun the benefit.

From Adoption to Abeyance: How the Rule Stalled

The 2024 measure barely took a breath before the courts closed in. Industry groups and Republican-led states sued within days, the litigation consolidated in the Eighth Circuit, and the agency itself eventually stopped defending the regulation it had written. The retreat unfolded across five clear steps.

1. March 6, 2024 – the Commission adopts the climate disclosure rules in a 3-2 vote.
2. April 4, 2024 – the agency stays the rules pending consolidated litigation in the U.S. Court of Appeals for the Eighth Circuit.
3. March 27, 2025 – the Commission votes to end its defense of the final rules.
4. September 12, 2025 – the Eighth Circuit holds the petitions in abeyance until the agency either reconsiders the rules through notice-and-comment or renews its defense.
5. May 29, 2026 – the Commission proposes full rescission, opening a 60-day comment period.

That timeline matters because rescission is not a press release. Under federal procedure, unwinding a final rule takes its own rulemaking, with its own comment record that can itself be litigated. Commissioner Caroline A. Crenshaw, who voted against the move, has argued the Commission cannot simply abandon a duly adopted rule because its membership has changed, calling the approach inconsistent with the Administrative Procedure Act and historical practice.

The federal fight echoes a wider rollback of climate regulation under the current administration. State officials have already gone to court over the Environmental Protection Agency’s bid to revoke the 2009 endangerment finding, the legal foundation for federal emissions rules, as Colorado’s planned litigation over the EPA climate repeal shows. The disclosure rescission is one front in a much larger campaign.

Why the Compliance Bill Does Not Disappear

Here is the second-order story. A finance chief reading the SEC headline might assume the climate-reporting project is dead. For a large multinational, it is not. Two other regimes already capture much of the same data, and neither answers to Washington.

California passed two laws in 2023 that survive entirely independent of the federal rule. The EU’s sustainability reporting regime, trimmed but not scrapped this year, reaches US companies through their European operations. The table below lines up the three regimes a big US issuer now has to track.

California’s Two-Track Rule

SB 253, the Climate Corporate Data Accountability Act, makes companies doing business in the state with at least $1 billion in annual revenue disclose Scope 1 and Scope 2 emissions every year, with Scope 3 (supply-chain and value-chain emissions) phasing in later. The California Air Resources Board (CARB, the state’s clean-air regulator) approved its initial regulation at a February 2026 hearing and set the first Scope 1 and 2 deadline for August 10, 2026, per the agency’s climate transparency regulation announcement.

SB 261 runs alongside it, requiring companies above $500 million in revenue to publish a climate-related financial-risk report every two years. Enforcement of its January 1, 2026 deadline is paused while litigation plays out, and CARB has said it will set an alternate date once the appeal resolves.

Who Crosses the Revenue Line

The reach is national, not local. Both laws apply to any entity “doing business” in California, a test that pulls in firms headquartered far outside the state. Estimates from law firms tracking the statutes put the number of affected companies in the thousands, many of which would also have fallen under the federal rule. For those issuers, the SEC’s exit changes the cover sheet, not the workload.

Brussels Still Wants the Same Numbers

The EU’s Corporate Sustainability Reporting Directive (CSRD, the bloc’s mandatory sustainability disclosure framework) was scaled back this year through an Omnibus simplification package, but it was not abandoned. The Council signed off on the changes in February, narrowing scope while keeping the core reporting duty intact, as the EU sustainability reporting simplification decision describes.

For US companies, the revised thresholds capture non-EU parents with net turnover above 450 million euros inside the bloc and subsidiaries or branches above 200 million euros. A large American firm with meaningful European sales remains on the hook for climate and sustainability data under the European Sustainability Reporting Standards, regardless of what the SEC does at home.

The Cost Argument at the Center of the Fight

Both sides agree the rule is expensive. They disagree about whether the price buys anything investors actually need. That single dispute, cost versus informational value, is what the entire rescission turns on.

When it adopted the rule in 2024, the agency itself published the numbers now used against it. Its 2024 climate disclosure adoption release laid out compliance estimates that critics call proof the burden outweighs the benefit.

• $1.0 million in estimated first-year compliance cost for large accelerated and accelerated filers.
• $862,000 in estimated first-year cost for all other filers.
• $197,000 to $739,000 in annual cost averaged across the first decade, depending on the filer and disclosures.

The Numbers Each Side Cites

Atkins and Commissioner Hester Peirce, who supports the rollback, treat those figures as a burden imposed on shareholders without a matching payoff. They argue the data was already available through voluntary reporting and that the rule duplicated what materiality standards already require firms to disclose.

Investor advocates read the same record the opposite way. During the rulemaking, hundreds of institutional investors managing tens of trillions of dollars backed mandatory climate disclosure. Environmental groups argue the cost is modest against the risk being measured.

The Authority Question

Underneath the cost math sits the harder legal claim, that the agency lacked the power to write the rule at all. Jessye Waxman of the Sierra Club rejected that framing in the group’s statement on the proposed rescission, arguing the regulator’s authority here is plain. “Investors have long recognized climate risk as financially material,” Waxman said, casting the data as exactly the kind of information securities law exists to surface.

What Companies Are Doing While the Comment Clock Runs

For corporate compliance teams, the practical answer is to keep building. The infrastructure needed for California and the EU is largely the same plumbing the federal rule would have demanded: emissions inventories, internal controls over climate data, and assurance-ready reporting. Tearing it down now to save money would only mean rebuilding it before the August California deadline.

The smart play looks less like relief and more like triage across overlapping rulebooks.

• Map which entities cross the California and EU thresholds, since those deadlines are live regardless of the SEC outcome.
• Keep emissions data systems running rather than mothballing them during the comment period.
• Treat voluntary investor demand as its own driver, because large asset managers continue to ask for the numbers.

If the rescission is finalized after the 60-day window, the federal filing requirement ends and the patchwork hardens into the default. If the comment record or fresh litigation slows it, companies that paused their reporting programs will be the ones scrambling. Either way, the data still gets collected; the only open question is which government desk it lands on.

Frequently Asked Questions

Has the SEC climate disclosure rule been officially repealed?

No. As of May 29, 2026, the agency has only proposed to rescind the rule. A 60-day public comment period must run after the proposal is published in the Federal Register, and the Commission must finalize the rescission through formal rulemaking before the requirement is legally gone.

Do US companies still have to report greenhouse gas emissions?

Many do. Even if the federal rule is rescinded, companies that meet California’s revenue thresholds or fall within the EU sustainability regime through their European operations must still measure and disclose emissions and climate risk on their own timelines.

What is the SB 253 reporting deadline?

California’s Air Resources Board set the first Scope 1 and Scope 2 emissions disclosure deadline under SB 253 for August 10, 2026, following the regulation it approved at its February 2026 hearing. Scope 3 emissions phase in later.

What revenue level triggers California’s climate disclosure laws?

SB 253 applies to companies doing business in California with more than $1 billion in annual revenue. SB 261, which requires a biennial climate financial-risk report, applies to companies with more than $500 million in annual revenue.

Does the EU CSRD still apply to US companies after the 2026 simplification?

Yes. The Omnibus package narrowed the directive’s scope but kept it in force. US groups with EU net turnover above 450 million euros, and subsidiaries or branches above 200 million euros, remain subject to sustainability and climate reporting under the European standards.

Why is the SEC rescinding the rule?

The Commission says the rules exceed its statutory authority, stray from a materiality-based disclosure approach, and impose costs on companies and shareholders that are not justified by the benefit to investors. Chairman Paul S. Atkins has framed materiality as the agency’s guiding standard.

When does the SEC comment period close?

The public comment period stays open for 60 days following publication of the proposing release in the Federal Register. The agency cannot finalize the rescission until that window closes and it reviews the comments.

Disclaimer: This article is for informational purposes only and does not constitute legal, accounting, or investment advice. Securities disclosure and climate-reporting obligations carry significant compliance risk and vary by jurisdiction and company. Consult a qualified legal or financial professional before acting. Figures and regulatory status are accurate as of publication on May 30, 2026.