The United States Securities and Exchange Commission has begun the formal process of rescinding the climate disclosure rules introduced under the previous administration in 2024. The development was confirmed through a filing submitted to the United States Office of Management and Budget and a statement from an SEC spokesperson, who said staff is preparing a recommendation to the Commission to rescind the agency's 2024 climate rules at the direction of Chairman Paul Atkins. The move marks one of the most consequential reversals in United States sustainability regulation in recent years and reshapes the global landscape of mandatory climate reporting.

 

Background to the 2024 Rule

 

The climate reporting rules were adopted in 2024 under former SEC Chair Gary Gensler and established the first federal requirement for public companies in the United States to disclose climate-related risks facing their businesses. The rules required reporting on plans to address those risks, the financial impact of severe weather events and, in certain cases, greenhouse gas emissions originating from company operations. The framework represented a major step toward integrating climate considerations into mainstream financial disclosure for United States listed companies.

The rules were closely watched by global investors, asset managers and multinational corporations because they would have introduced standardised climate disclosure into one of the world's largest capital markets. Aligning United States disclosure practice with elements of European and international frameworks would have reduced fragmentation in cross-border reporting. The proposed rescission removes that prospect and reinforces the divergence between the United States approach and emerging global standards.

 

Legal Challenges and the September 2025 Court Order

 

The 2024 rules faced a series of legal challenges almost immediately after their release and were paused in 2024 pending review of the legal petitions. The agency subsequently launched a legal defence of the rule, but following the change in administration and the resignation of Gensler, the SEC announced that it would drop its defence. Under Chair Atkins, the SEC subsequently told the court that it did not intend to review or reconsider the rule and instead requested that the court decide the issue.

In September 2025, the United States Court of Appeals declined to issue a ruling on the legality of the rule, instead directing the Commission to determine its fate. The court stated that the agency was responsible for deciding whether its final rules would be rescinded, repealed, modified or defended in litigation. The court's decision effectively forced the SEC to take an explicit policy position on the future of the rule rather than allowing it to remain in legal limbo indefinitely.

 

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The Rescission Process and Procedural Timeline

 

A new rulemaking procedure to rescind the climate reporting rule could be a lengthy process under the Administrative Procedure Act, the standard framework governing federal rulemaking. The agency must publish the proposed rule along with explanations and legal authority justifying the action, then open a public commentary period during which staff must consider and respond to significant issues raised by commenters. The final rescission rule itself could face legal challenges, potentially extending the timeline further before the matter is resolved.

This procedural complexity means that the formal rescission may take many months to complete, even though the policy direction has now been clearly stated. During the interim period, the original 2024 rule remains paused, leaving issuers without active federal climate disclosure requirements. Companies will continue to navigate this gap through existing voluntary frameworks, state-level requirements and demands from investors and global markets.

 

Implications for Corporate Climate Reporting

 

For United States listed companies, the rescission removes a significant prospective reporting obligation but does not eliminate the broader pressure to disclose climate-related information. California's climate disclosure laws remain in force for companies operating in the state, and many United States multinationals are already subject to European Union sustainability reporting requirements through their European operations. International Sustainability Standards Board frameworks have also been adopted in numerous jurisdictions, creating de facto disclosure obligations for globally active companies.

Investor expectations have likewise shifted significantly since 2024, with major asset managers, pension funds and institutional investors continuing to request climate-related information regardless of regulatory mandates. Many United States companies have already invested in disclosure infrastructure that will not be unwound simply because federal requirements are removed. The practical effect of the rescission is therefore likely to be more visible in smaller and mid-cap issuers than in large multinationals already operating within global reporting frameworks.

 

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Strategic Rationale and Agency Direction

 

In its statement, the SEC indicated that under Chairman Atkins the Commission is focused on returning the agency to its core mandate in line with its legal authority and restoring a materiality-focused approach to securities regulation. The framing positions the rescission as a return to traditional financial disclosure principles rather than a rejection of climate-related information altogether. Under this approach, climate-related information would still be disclosed to the extent that it is financially material under existing securities laws.

The narrower interpretation of materiality is consistent with the broader regulatory direction of the current administration, which has sought to reduce what it views as expansive disclosure mandates beyond the agency's core remit. Critics of the original rule have argued that it required disclosure of information that was not consistently material across all issuers and that compliance costs were disproportionate to investor benefit. The Atkins SEC's approach effectively endorses that critique through its proposed rescission.

 

Outlook for the Global Disclosure Landscape

 

The rescission of the United States climate rules will sharpen the divergence between major jurisdictions on mandatory sustainability reporting. The European Union has just published its revised European Sustainability Reporting Standards, and ISSB-aligned frameworks are being adopted in markets including the United Kingdom, Australia, Japan, Singapore and parts of Latin America. Companies operating across these jurisdictions will continue to face mandatory disclosure obligations regardless of the United States position.

How the rescission proceeds and whether it survives potential legal challenges will determine the longer-term shape of climate disclosure in the United States capital markets. Investor demand, state-level rules and global reporting requirements are likely to continue driving substantive climate disclosure even in the absence of a federal mandate. The next phase of policy debate will focus on the boundaries of materiality and how climate information is integrated into traditional financial reporting frameworks under existing securities law.