In March 2024, the Securities and Exchange Commission adopted what it described as the most significant expansion of public company disclosure obligations in a generation. The final rules — formally titled The Enhancement and Standardization of Climate-Related Disclosures for Investors — would have required US public companies to disclose detailed information about their climate-related risks, their greenhouse gas emissions, their governance processes for overseeing those risks, and the financial impacts of severe weather events and other climate-related conditions. The rules were the product of two years of rulemaking, more than 24,000 public comments, and significant revision from an even more ambitious 2022 proposal.

The rules never took effect. They were challenged in court by a coalition of states, industry groups, and other litigants within days of adoption. A federal court imposed a temporary stay, and the SEC itself voluntarily stayed the rules pending judicial review. Then, in March 2025, under newly confirmed SEC Chair Paul Atkins, the Commission voted to end its defense of the rules in litigation, effectively abandoning them. The Eighth Circuit subsequently placed the litigation in abeyance pending further action by the agency, leaving the rules in a formal limbo from which, as of the time of writing, they have not emerged.

Despite this outcome, the SEC climate rules remain among the most important regulatory developments in the history of US securities law — not because they are in force, but because understanding what they required illuminates the direction of global climate disclosure regulation, explains why investors and counterparties continue to ask about climate risk, and helps public companies understand the baseline obligations that still apply under existing securities law even without the 2024 rules. This article explains what the rules would have required, why they were structured the way they were, what brought them down, and what disclosure obligations US public companies continue to face in their absence.

Why the SEC Acted

The SEC’s authority to require public company disclosures derives from the Securities Act of 1933 and the Securities Exchange Act of 1934, which together give the Commission broad power to require disclosure of information that is material to investors. For decades, the SEC applied this authority to climate-related matters on an ad hoc basis. In 2010, the Commission issued interpretive guidance clarifying that climate change could be material under existing disclosure rules and that registrants should consider whether climate-related information needed to be disclosed in their annual reports under existing line items covering business description, legal proceedings, risk factors, and management’s discussion and analysis.

The 2010 guidance, while significant in principle, produced inconsistent results in practice. Companies disclosed climate-related information in varying formats, at varying levels of detail, using varying methodologies, in ways that made comparison across companies effectively impossible. Institutional investors — managing trillions of dollars of assets on behalf of pension funds, endowments, and individual savers — increasingly demanded standardized, decision-useful climate information that the existing voluntary and ad hoc framework could not deliver. Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, published in 2017, provided a widely adopted voluntary framework, but voluntary adoption was uneven and the information produced was not subject to the verification standards that apply to financial disclosures. Against this backdrop, the SEC under Chair Gary Gensler proposed comprehensive mandatory climate disclosure rules in March 2022 and, after processing thousands of public comments and making significant modifications, adopted final rules in March 2024.

The Structure of the 2024 Rules

The final rules added a new subpart to Regulation S-K — the SEC’s general disclosure regulation — and a new article to Regulation S-X — the SEC’s financial statement regulation. The Regulation S-K additions required narrative and quantitative disclosures about climate-related risks, governance, strategy, and (for larger companies) greenhouse gas emissions. The Regulation S-X additions required financial statement footnote disclosures about the financial impacts of severe weather events, carbon offsets, and renewable energy credits. Together, the two sets of requirements were designed to give investors a complete picture of how climate-related factors affect a company’s business, strategy, operations, and financial condition.

Climate-Related Risk Disclosures

The centerpiece of the Regulation S-K requirements was mandatory disclosure of climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, the registrant’s business strategy, results of operations, or financial condition. The rules distinguished between two categories of climate-related risk that have become standard in global climate risk frameworks. Physical risks are the risks arising from the physical effects of climate change itself — including acute risks such as hurricanes, floods, wildfires, and droughts, and chronic risks such as rising sea levels, increasing average temperatures, and shifting precipitation patterns. Transition risks are the risks arising from the transition to a lower-carbon economy — including policy changes (such as carbon pricing or emissions regulations), technological changes (such as the shift away from fossil fuel-based energy), market changes (such as shifts in consumer preferences or commodity prices), and reputational changes affecting demand for carbon-intensive products or services.

Critically, the rules applied a materiality filter throughout. A company was required to disclose information about climate-related risks only to the extent that those risks were material — meaning that there was a substantial likelihood that a reasonable investor would consider the information important in making an investment or voting decision. The SEC deliberately did not require all registrants to disclose all conceivable climate-related risks. Instead, each company was required to assess its own exposure to physical and transition risks in light of its specific business, industry, geography, and supply chain, and to disclose information about risks that cleared the materiality threshold. This approach was meant to avoid requiring immaterial boilerplate disclosures while ensuring that genuinely significant climate-related risks were transparently communicated to investors.

Governance Disclosures

The rules required registrants to describe the governance structures through which they oversee and manage climate-related risks and opportunities. On the board side, this meant disclosing whether the full board, a specific committee, or a combination of both is responsible for overseeing climate-related risks; how the board or committee is informed about climate-related risks; and how frequently climate-related risks are discussed at the board or committee level. On the management side, registrants were required to describe whether and which management positions or committees are responsible for assessing and managing material climate-related risks, the relevant expertise of those individuals or bodies, and the processes by which management is informed about and monitors climate-related risks.

These governance disclosures were not simply a box-checking exercise. They were designed to give investors insight into whether a company’s leadership structure is equipped to identify and respond to climate-related risks — and to create accountability for the governance representations that companies make. A company that discloses robust board-level climate oversight but whose board has never actually discussed climate risk in a substantive way faces potential disclosure liability under the general antifraud provisions of the securities laws. The governance disclosure requirements thus functioned as a structural incentive for companies to actually build the governance mechanisms they would need to describe.

Strategy, Business Model, and Outlook

Beyond governance, the rules required disclosure of how any material climate-related risks identified have affected or are reasonably likely to affect the registrant’s business strategy, business model, and outlook. This was the most analytically demanding part of the disclosure framework for many companies, because it required translating climate risk assessment — often conducted by sustainability teams using scenario analysis and other specialized tools — into the language of business strategy that securities lawyers and financial officers are accustomed to drafting. A company that has identified rising sea levels as a material risk to its coastal manufacturing facilities, for example, would need to disclose not just the existence of that risk but how it has affected or is likely to affect the company’s capital expenditure plans, insurance costs, operational resilience strategies, or facility location decisions.

The rules also required disclosure of any climate-related targets or goals that a registrant has set — such as net zero commitments, carbon neutrality pledges, or interim GHG reduction targets — and the progress made toward achieving them. This requirement reflected a deliberate regulatory choice: companies that have made public climate commitments to investors, customers, and the public should be required to report on their progress toward those commitments in the same regulated disclosure framework that governs other forward-looking representations. Notably, the final rules did not require companies to set climate targets or adopt transition plans — but companies that had voluntarily done so were required to disclose them and report on progress.

Greenhouse Gas Emissions Disclosures

The GHG emissions disclosure requirements were among the most debated and heavily modified provisions of the rulemaking. The 2022 proposed rules would have required all registrants to disclose Scope 1 emissions (direct emissions from operations owned or controlled by the company), Scope 2 emissions (indirect emissions from purchased electricity, steam, heat, or cooling), and Scope 3 emissions (all other indirect emissions across the company’s value chain, both upstream from suppliers and downstream from customers and product use). By the time the final rules were adopted in March 2024, Scope 3 had been eliminated entirely — a significant retreat from the proposed rules driven by the enormous compliance costs and data availability challenges that Scope 3 reporting would have imposed, particularly on smaller companies.

Under the final rules, the obligation to disclose GHG emissions applied only to large accelerated filers (LAFs) and accelerated filers (AFs) — companies with a public float of $75 million or more. Even for those companies, the obligation was subject to a materiality threshold: Scope 1 and Scope 2 emissions needed to be disclosed only if material. Smaller reporting companies, emerging growth companies, and non-accelerated filers were exempt from the GHG emissions disclosure requirements entirely, though they remained subject to the other disclosure requirements (risk, governance, strategy, and targets) to the extent those were material.

For registrants required to disclose GHG emissions, the rules specified a precise format. Emissions were to be reported in metric tons of carbon dioxide equivalent (CO2e), covering the seven greenhouse gases identified in the Kyoto Protocol: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, nitrogen trifluoride, and sulfur hexafluoride. Registrants were required to report gross emissions before any offsets, to separately disclose each constituent GHG that is individually material, and to use a consistent and documented methodology based on the GHG Protocol Corporate Accounting and Reporting Standard — the dominant global standard for corporate GHG reporting.

Assurance Requirements for GHG Emissions

One of the most significant features of the GHG emissions disclosure requirements — and one that distinguished them from voluntary climate reporting — was the requirement for independent attestation. Large accelerated filers were required to obtain limited assurance over their Scope 1 and Scope 2 emissions disclosures, with a phased requirement to upgrade to reasonable assurance (a higher and more demanding standard) over time. Limited assurance is comparable in concept to a review engagement in financial reporting — the assurance provider evaluates whether the disclosures are materially misstated but does not conduct the full procedures required for reasonable assurance. Reasonable assurance is more analogous to a full audit. Accelerated filers were required to obtain limited assurance on a delayed timeline, while smaller registrants were exempt from the assurance requirements.

The assurance requirement was designed to address a fundamental problem with voluntary ESG disclosure: without independent verification, there is no reliable mechanism for investors to evaluate whether a company’s reported emissions figures are accurate, complete, and calculated using a consistent methodology. The SEC modeled the assurance framework on existing financial reporting assurance requirements and proposed to allow both accounting firms and non-accounting assurance providers to perform the attestations, subject to standards that the Commission would develop. For most large companies, building the internal data collection and control infrastructure required to support third-party GHG assurance would have required years of preparatory work.

Financial Statement Disclosures

In addition to the Regulation S-K narrative and quantitative disclosures, the rules added a new article to Regulation S-X requiring financial statement footnote disclosures about climate-related financial impacts. These disclosures covered three areas. First, registrants were required to disclose the capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions — such as hurricanes, floods, droughts, and wildfires — if those amounts exceeded one percent of the absolute value of pretax income or loss for the year, subject to a de minimis threshold. Second, if a registrant used carbon offsets or renewable energy credits (RECs) as a material component of a plan to achieve a disclosed climate-related target, it was required to disclose the amounts expensed and any capitalized costs associated with those instruments. Third, registrants were required to disclose whether estimates and assumptions used to produce their financial statements were materially impacted by risks and uncertainties associated with severe weather events or climate-related targets.

These financial statement disclosures were significant because they subjected climate-related financial information to the full rigor of audited financial reporting — including the standards, controls, and liability framework that apply to the financial statements themselves. A company that materially misstates a financial statement footnote disclosure faces the same exposure under Section 11 of the Securities Act and Section 10(b) of the Exchange Act that it would face for a materially false income statement or balance sheet. This integration of climate information into the financial statements was one of the most consequential structural features of the 2024 rules, and one of the most contested.

The Phase-In Timeline

Recognizing the substantial compliance burdens that the rules would impose, the SEC adopted a phased implementation timeline based on company size. Large accelerated filers — companies with a public float of $700 million or more — would have been required to provide most climate disclosures beginning with their annual reports for fiscal year 2025 (filed in early 2026), with GHG emissions disclosures and the associated limited assurance requirements phased in for fiscal year 2026 (filed in 2027), and reasonable assurance required by fiscal year 2033. Accelerated filers would have faced a one-year lag behind LAFs on most requirements, with GHG emissions disclosures phased in for fiscal year 2028. Non-accelerated filers, smaller reporting companies, and emerging growth companies would have had until fiscal year 2027 for most non-GHG disclosures and would have been permanently exempt from the GHG emissions and assurance requirements.

The phased timeline was deliberately designed to give companies the longest available runway to build compliance infrastructure. For GHG emissions reporting in particular, the SEC recognized that most public companies — even large ones — lacked the internal systems, data collection processes, and expertise to produce auditable emissions figures on short notice. The timeline gave large accelerated filers approximately two to three years to develop those capabilities before their first required GHG disclosure. In practice, however, the legal challenges that immediately followed adoption made the timeline academic before any registrant was required to comply.

The Legal Challenges and the Rules’ Collapse

The climate disclosure rules attracted legal challenges within days of their adoption. Petitions were filed in multiple federal circuit courts by industry groups, Republican-led state attorneys general, and advocacy organizations arguing that the SEC had exceeded its statutory authority, violated the Administrative Procedure Act, and infringed on First Amendment rights by compelling speech on politically contested topics. The Eighth Circuit consolidated the challenges and, in April 2024, a federal court imposed a temporary stay of the rules pending judicial review. The SEC itself subsequently confirmed the stay, citing the complexity of the litigation and the administrative burden of complying with inconsistent judicial orders from different circuits.

The change in administration following the November 2024 presidential election proved decisive. Under newly confirmed SEC Chair Paul Atkins — an appointee of President Trump — the Commission voted in March 2025 to end its defense of the climate disclosure rules in the Eighth Circuit litigation. The SEC’s press release stated that a majority of current Commissioners believed the Commission had exceeded its statutory authority in adopting the rules. The agency declined to defend them in court and indicated it would initiate a rulemaking process to rescind them. In September 2025, the Eighth Circuit ordered the litigation placed in abeyance pending the SEC’s determination of whether to rescind, modify, or otherwise revisit the rules. As of April 2026, the rules remain formally on the books but entirely unenforced and effectively defunct.

What Remains: Disclosure Obligations That Continue to Apply

The collapse of the SEC’s 2024 climate rules does not mean that US public companies have no climate-related disclosure obligations. Several important obligations remain in force, and the practical pressure from investors, counterparties, and international regulators has not diminished.

First and most importantly, the SEC’s existing materiality framework continues to apply in full force. Under Rule 10b-5, Regulation S-K, and decades of securities law precedent, public companies are required to disclose any material information — including climate-related information — that investors would consider important in making investment or voting decisions. The SEC’s 2010 interpretive guidance on climate change remains in effect and makes clear that climate-related risks can be material and must be disclosed when they are. A company that faces material physical risks from climate change — such as a coastal manufacturer with significant flood exposure or an agricultural business facing drought — cannot simply omit that information from its annual report on the ground that the 2024 rules were rescinded. The underlying materiality obligation has existed since the securities laws were enacted.

Second, California’s mandatory climate disclosure laws continue to move forward on their own timeline, independent of the SEC. The Climate Corporate Data Accountability Act (SB 253) requires companies with annual revenues exceeding $1 billion doing business in California to publicly disclose their Scope 1, Scope 2, and Scope 3 greenhouse gas emissions — a broader set of requirements than the SEC’s final rules would have imposed, and one that applies to both public and private companies. The Climate-Related Financial Risk Act (SB 261) requires companies with annual revenues exceeding $500 million doing business in California to publish biennial climate-related financial risk reports. The California Air Resources Board is in the process of finalizing implementing regulations. These California laws reach an enormous number of companies — the revenue thresholds capture most large US businesses — and their Scope 3 requirement is particularly demanding.

Third, the European Union’s Corporate Sustainability Reporting Directive (CSRD) continues to impose mandatory climate disclosure obligations on large US companies with significant EU operations or revenues. US companies with EU-listed securities, or with net EU turnover exceeding €150 million and at least one large EU subsidiary or branch, will be required to comply with the CSRD and the detailed European Sustainability Reporting Standards (ESRS) on a phased schedule. The ESRS include comprehensive requirements for climate-related disclosure — covering both physical and transition risks — that are in many respects more detailed and demanding than the SEC’s 2024 rules would have been. For US multinationals with substantial European operations, CSRD compliance is a live and pressing obligation regardless of what happens with the SEC rules.

Fourth, investor expectations have not followed the regulatory retreat. Major institutional investors — including the largest index fund managers and pension funds — continue to request climate-related information from portfolio companies through direct engagement, proxy voting, and participation in investor coalitions. Many have made public commitments that require them to monitor and assess the climate risk exposure of their holdings. Companies that withdraw from voluntary climate disclosure frameworks or significantly reduce the quality of their climate-related reporting in response to the SEC’s reversal may face investor scrutiny and negative proxy voting recommendations that create real governance consequences.

What Public Companies Should Do Now

The lesson of the past two years of SEC climate disclosure rulemaking is not that climate disclosure is going away — it is that the regulatory pathway is fragmented, contested, and evolving, and that companies need to manage climate-related disclosure risk with that reality in mind.

Public companies should ensure that their existing annual report disclosures accurately reflect material climate-related risks under the existing materiality framework. The SEC’s enforcement posture toward climate disclosure may have shifted under the current administration, but the underlying antifraud provisions of the securities laws have not changed. A company that omits a material climate-related risk from its annual report, or makes a materially misleading statement about its climate commitments or performance, faces potential SEC enforcement action, securities class action liability, and damage to investor relationships regardless of the fate of the 2024 rules.

Companies that fall within the scope of California’s SB 253 or SB 261 need to begin building GHG reporting infrastructure now — particularly for Scope 3 emissions, which require supplier engagement and data collection processes that take years to build properly. The California reporting timelines are not contingent on federal action and are proceeding independently. Companies with significant EU operations or revenues need to assess whether they fall within the scope of the CSRD and, if so, begin the double materiality assessment and governance documentation that CSRD compliance will require.

Companies that have made public climate commitments — net zero pledges, carbon neutrality goals, science-based targets — should review those commitments carefully with legal counsel. Public climate commitments create liability exposure under both securities law (if investors are relying on them) and consumer protection law (if customers or the public are relying on them). The FTC’s updated Green Guides set standards for environmental marketing claims that apply to sustainability representations made in commercial contexts. Companies should ensure that their climate commitments are supported by a credible, documented methodology, that their progress reporting is accurate, and that they understand the legal risks associated with representations that may prove difficult to keep.

Finally, companies should build and maintain the internal governance structures necessary to identify, assess, and respond to material climate-related risks — not because the 2024 SEC rules require them to, but because those risks are real, because investors and counterparties are asking about them, and because a board that fails to engage meaningfully with a material risk to the company faces potential liability under the Caremark oversight standard regardless of what any particular disclosure rule requires. The regulatory framework around climate disclosure will continue to evolve. The underlying business and legal reality of climate risk will not.

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