SEC Proposes Rescinding Biden-Era Climate Disclosure Rules

The Securities and Exchange Commission (SEC) on Friday proposed to rescind a Biden rule that required publicly-listed companies to disclose alleged climate risks.

“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 Chairman Paul Atkins said in a statement.

The Commission in 2024 mandated the disclosure of highly specific information from nearly all public companies about climate-related matters such as greenhouse gas emissions, management of climate-related risks, and the financial effects of severe weather events. The SEC has moved to end the disclosure of climate-related risks, believing that the Biden-era rule exceeded the agency’s statutory authority. The SEC said in a press release:

• They are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure that best serves the interests of registrants and investors.
• They stray well beyond the policy concerns of the federal securities laws.
• They impose substantial costs on public companies and their shareholders that are not justified by the informational benefits they may provide to some investors.
• They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.

The SEC will enter into a 60 day comment period about the commission’s move.

In 2023, Amazon said that the disclosure proposal would be “extremely difficult, if not impossible.”

Rep. Ashley Hinson (R-IA), in a 2023 hearing, grilled SEC Chairman Gary Gensler, noting that the law do not appear to provide the SEC with the authority to regulate such behavior over greenhouse gases.

“The action taken today by the SEC to rescind the climate disclosure rule is the most important deregulatory step taken by the agency in more than 50 years,” Competitive Enterprise Institute (CEI) President Kent Lassman said in a statement supporting the SEC’s move to repeal the climate disclosure rule.