ATR Commends the SEC’s Rescission of the Climate-Related Disclosure Final Rules

In 2024, the Securities and Exchange Commission (SEC) adopted climate related disclosure rules requiring publicly traded companies to disclose greenhouse gas emissions data and climate-related risks. The final rules exceed as the Commission’s statutory authority and impose compliance costs that far outweigh any investor benefit. ATR commends the SEC for its decision to rescind the final rules.

Standard SEC reporting covers a company’s business characteristics, financial condition, management, capital structure, and securities terms — information directly relevant to investors making investment decisions. The final rules required disclosures well outside that scope. The Commission has no comparative expertise in climate science or climate risk methodologies, and Congress directed the EPA to collect mandatory greenhouse gas emissions data, not the SEC. As Commissioner Uyeda stated in the rescission release, “if Congress had wanted the Commission to regulate environmental emissions and other non-financial issues, then Congress knows how to direct the Commission to do so.” Courts have consistently held that the Commission’s authority to act in the “public interest” for “investor protection” is not an open-ended grant. Excessive interference in securities regulation and disclosure requirements detract from the financial and operational focus of the underlying securities laws. 

First, the final rules were unnecessary. Regulations S-K Items 101, 103, 105, and 303, already require registrants to disclose material climate-related impacts tailored to their specific circumstances. The 2010 Commission Guidance Regarding Disclosure Related to Climate Change already addressed this.

Second, the final rules broke from the Commission’s longstanding, principles-based, registrant-specific approach to disclosure. The SEC’s own 2020 amendments to Regulation S-K reaffirmed that a principles-based system “allows registrants to more effectively tailor their disclosure to provide only the information about their specific business and financial condition that is important to investors.” Mandating granular, climate-specific disclosures for every public company regardless of size, industry, or circumstances inverts that approach and diverts corporate resources toward a single risk category that is not uniformly applicable nor relevant across industries, thereby exaggerating the relevance of climate disclosure information in cases where such information may produce no value to evaluating the financial condition of a firm.

Third, the final rules addressed a politically contested issue well outside the Commission’s mandate. As Commissioner Uyeda stated at the time of the vote, the Commission had “ventured outside of its lane and set a precedent for using its disclosure regime as a means for driving social change.” The SEC’s regulatory mandate serves to protect investors and incentivize capital formation through providing information on material risks that could affect shareholder returns, and is not a vehicle for reshaping corporate behavior to comport with partisan activist agendas at the expense of corporations and their shareholders.

Voluntary climate disclosures have already grown substantially without the final rules. SEC staff analysis of nearly 88,000 annual reports shows approximately  47% of 2024-2025 filings contained at least one climate-related keyword, reaching roughly 80% among Large Accelerated Filers. This demonstrates the final rules were largely redundant. If investors are interested in a company’s environmental impact, companies can voluntarily disclose relevant information as seen fit to satisfy investor curiosity to provide a holistic understanding of how such activities may factor into investors’ evaluation of the business model. The Commission’s own per-registrant annual compliance cost estimates ranged from $197,000 to over $739,000. Rescission is estimated to generate approximately $4.9 billion in annualized savings across all registrants over the next ten years. If left in place, the rules would have imposed roughly $25 billion in annual GDP losses by the late 2020s and discouraged companies from filing publicly – worsening a trend the SEC itself has tracked, with reporting issuers declining from over 9,600 in 2004 to under 7,900 in 2024. The freed compliance resources can be redeployed toward capital investment, operations, and shareholder returns.

ATR commends the SEC’s decision to rescind the final rules. The SEC should be commended for their efforts to roll back on wasteful regulations that serve no purpose. The Trump administration has taken great strides to deregulate the economy, curb excessive agency regulation, and restore rulemaking to its statutory roots.