The SEC says the Biden-era rules are overstepping, while others say investors have a right to the climate-related data.
Whatever you may think of the current configuration of the U.S. Securities and Exchange Commission (SEC), it is not shy about diving into controversy, such as the climate disclosure rules that emerged during the Biden administration.
Grygo is the chief content officer for FTF & FTF News.
The SEC just issued an official proposal for “the rescission of overly burdensome and costly rules that require companies to provide certain climate-related information in their registration statements and annual reports. The Commission’s proposal focuses on returning the agency to its core mandate – in line with its legal authority – and restoring a materiality-focused approach to securities regulation.”
However, others, such as Benjamin Schiffrin, director of securities policy for Wall Street policy watchdog Better Markets, think that the controversial climate change disclosure rules are exactly what the SEC should be doing.
Paul S. Atkins, the chairman of the SEC, is arguing that regulators should not be in the habit of overstepping.
“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,” Atkins says in his prepared statement.
SEC officials offer a quick recap:
- The SEC “in March 2024 approved amendments to its rules under the Securities Act of 1933 and Securities Exchange Act of 1934 to mandate highly specific and granular disclosure from virtually all public companies about climate-related matters such as greenhouse gas emissions, management of climate-related risks, and the financial statement effects of severe weather events;”
- By April 4, 2024, “the Commission stayed the climate disclosure rules pending completion of consolidated litigation in the U.S. Court of Appeals for the Eighth Circuit;”
- By March 27, 2025, the SEC “voted to end its defense of the final rules;”
- By Sept. 12, 2025, “the Eighth Circuit issued an order holding the consolidated petitions for review in abeyance until such time as the Commission reconsiders the challenged rules by notice-and-comment rulemaking or renews its defense of the climate disclosure rules.” Translated from the legal gobbledygook, the climate disclosure rules were put in limbo until the current configuration of the SEC renders a decision, which it did.
The SEC wants to “rescind the climate disclosure rules in their entirety” because:
- They “exceed the scope of the agency’s statutory authority;”
- “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;” and
- “They are at odds with the Commission’s policy objectives of facilitating capital formation and promoting public company status.”
Not so fast, says Schiffrin, who alleges that the SEC is carrying out an “assault on investors by proposing to rescind its climate-risk disclosure rule less than two years after it was adopted. This action threatens to leave investors in the dark. The risks public companies face matter to investors, and the SEC’s proposal fails to acknowledge that climate-related risks are no exception.”
“Make no mistake: the SEC passed the climate-risk disclosure rule not to regulate climate change but to ensure that investors know about material information regarding climate-related risks,” Schiffrin says. “These risks are no more material, but also no less material, than other risks that are important to investors. The climate-related risks that companies face matter to their bottom line, and investors deserve to know about those risks and then weigh their significance for themselves.”
Schiffrin ends his statement with: “If the SEC follows through on its proposal and rescinds the rule, investors will have less information about the companies in which they invest. That is antithetical to the SEC’s mission, which is supposed to be to protect investors.”
FTF News reached out to the SEC for a response to Schiffrin’s comments. “We decline to comment on the remarks,” an SEC spokesperson tells FTF News.
The public has the chance to comment upon the proposal and will have 60 days to do so after the publication of the proposed release in the Federal Register. The full text of the proposal can be found here: https://shorturl.at/9QawV
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