In May 2026, the Securities and Exchange Commission (the “SEC”) proposed to rescind the climate-related disclosure rules it adopted in 2024 (the “Original Rule”). If approved, the proposed recission would eliminate the specific, line-item disclosure of climate-related information required by the Original Rule.
The Original Rule required public companies to disclose detailed climate-related information in registration statements and annual reports and would have applied to a majority of public companies. The required disclosure included information about climate-related risks, governance, greenhouse gas emissions, and certain financial statement impacts arising from severe weather or other climate-related conditions.
Following adoption, the Original Rule was quickly challenged in federal courts and consolidated in the U.S. Court of Appeals for the Eighth Circuit. In 2024, the SEC stayed the effectiveness of the Original Rule and, in 2025, the SEC voted to end its defense of the litigation. With the uncertainty of the Original Rule in question, the Eighth Circuit paused the litigation until the SEC formally reconsidered the Original Rule or renewed its defense.
The current proposal would rescind the Original Rule in its entirety rather than revise or scale back the Original Rule. In the press release and fact sheet accompanying the proposed recission, the SEC explained its view that the Original Rule exceeded the SEC’s statutory authority and that rescinding the Original Rule would be consistent with the SEC’s objective of encouraging capital formation by reducing the costs associated with being a public company. The comment period on the proposed recission is open until August 3, 2026.
Key Takeaways
- There is no immediate change for public companies. Because companies were never required to comply with the Original Rule, this proposal does not change the current state of required disclosure.
- If the Original Rule is rescinded, existing materiality-based guidance will apply. As currently required, companies should be disclosing climate-related risks and other information if material to investors. The SEC’s Sample Letter to Companies Regarding Climate Change Disclosures is the most current, effective guidance in this area.
- State-mandated disclosure still applies. Even if the Original Rule is rescinded and an environmental reporting framework is not in force at the federal level, states are still moving forward with climate-related disclosure. For example, companies doing business in California with at least $1 billion in revenue must make a good faith effort to disclose Scope 1 and 2 emissions data beginning in August 2026, with Scope 3 to follow in 2027. Similar legislation has been proposed in New York. Note that, for entities doing business in California with at least $500 million in annual revenue, litigation has paused the deadline to report climate-related risks to the state.
- Focus on key investors. Even if the Original Rule is rescinded, companies may still provide climate-related disclosure if their key investors are seeking consistent climate disclosure. As with the SEC’s proposal to allow semi-annual instead of quarterly reporting, investor expectations may drive this area of disclosure more than the SEC’s rules.
If you have any questions about how this potential change could affect your company, please contact a member of Harter Secrest & Emery LLP’s Securities and Capital Markets practice group.