Trump proposes end to rule requiring companies to disclose climate costs to shareholders

SEC Proposes to Scrap Climate Disclosure Rules 

By Gina-Marie Cheeseman 

The Securities and Exchange Commission announced on May 29 that it is proposing to send its climate disclosure rules to the metaphorical scrap yard. That’s where any climate change-related rules go during President Trump’s second term in office. The federal agency stated that it is “returning the agency to its core mandate.”

​In March 2024, the SEC approved rules that mandated public companies to disclose climate-related matters, including greenhouse gas emissions. The Commission stayed the rule due to litigation. A year later, the SEC voted to stop defending the rules.

​The SEC claims the rules “exceed the scope” of its statutory authority. The agency labels the climate disclosure rules as unnecessary, costly for public companies, and at odds with its policy objectives. However, Tom Zimpleman, a senior attorney at the Natural Resources Defense Council, characterizes the SEC’s proposal as “shirking its responsibility to protect investors.” He points out that “climate risk is financial risk.”

​“We must re-examine the costs, burdens, and benefits of disclosure mandates to make becoming and remaining a public company more attractive again. 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.” Paul S. Atkins, SEC Chairperson

The Need for Climate Disclosure Rules

A sustainable economy effectively manages climate change risks. Enter mandated climate disclosure. The authors of a 2023 paper found that for firms, “when prices fully reflect climate-related risks, mandatory climate disclosures enhance efficiency compared to voluntary reporting.”

​They also found that accurate disclosure will influence domestic production choices of firms, leading to a reduction in their greenhouse gas emissions. Accurate emissions disclosure by foreign suppliers of their indirect emissions lowers their indirect emissions.

​The sustainability consulting and advisory services firm ERM conducted a survey of 39 corporate issuer respondents from various U.S. industry sectors. The issuers represent over $3.8 trillion in combined market capitalizations. They listed climate disclosure as a benefit, leading to “better performance in meeting sustainability, climate, ESG, and SDG goals.” The second listed benefit was “better access to data capable of enhancing corporate strategy.”

​State Climate Disclosure Laws

California is the only state with climate disclosure laws currently on the books. However, one of those laws, SB 261, is held up in litigation. The law requires companies doing business in California with $500 million in annual revenue or more to publicly disclose their climate change-related financial risk every two years. The first disclosures were due on January 1, 2026, but were delayed because of an injunction. The California Air Resources Board (CARB) approved the regulations implementing SB 261 and SB 253 on February 26, 2026, despite the ongoing litigation.

​SB 253 requires companies doing business in California with $1 billion in annual revenue or more to disclose their Scope 1 and Scope 2 emissions by August 10, 2026. They must disclose their Scope 3 emissions by 2027.

​Two other states have pending legislation: New York and New Jersey. New York’s SB 9072A would add a new article to the state’s Environmental Conservation Law and would also amend the State Finance Law to create the Climate Accountability and Emissions Disclosure Fund. The bill passed the New York Senate and advanced to the State Assembly. It only covers emissions disclosures.

​New Jersey’s S679 requires businesses operating in the state to publicly disclose their annual emissions data. Introduced in January, the bill was referred to the Senate Budget and Appropriations Committee in February.

​With Washington stepping back, the future of climate disclosure in the U.S. is being written state by state. California has the only laws on the books, New York and New Jersey are moving, and the investors who wanted this information aren’t going anywhere. The SEC can send its rules to the scrap yard, but the demand for climate risk data won’t follow them there.

Gina-Marie Cheesemanhttp://www.justmeans.com/users/gina-marie-cheeseman, freelance writer/journalist/copyeditor about.me/gmcheeseman Twitter: @gmcheeseman