The Securities and Exchange Commission (SEC) has taken a significant step to dismantle a key Biden-era climate regulation by proposing the repeal of a rule that mandates certain public companies to disclose their greenhouse gas emissions and climate-related risks. The announcement, made on Friday, marks the latest effort by the Trump administration to roll back environmental policies.
Background of the Rule
The climate-disclosure rule, finalized in March 2024, has been on hold since last year after the Republican-led SEC paused its legal defense amid challenges from business groups and Republican state attorneys general. The SEC now argues that the rule exceeds the agency's statutory authority and imposes substantial costs on companies and shareholders without commensurate informational benefits.
SEC Chairman's Statement
SEC Chairman Paul Atkins stated that eliminating the rule would avoid dictating corporate behavior and ensure that regulations are imposed only when benefits justify costs. He emphasized the need for agency rules to be cost-effective and not overreach.
Environmental and Investor Reactions
Environmental groups have criticized the proposed repeal, asserting that it deprives investors of crucial information needed to assess financial risks from climate change. Kathy Fallon, director of land systems at the Clean Air Task Force, highlighted that while the rule was imperfect, it provided consistent information on material climate risks, including carbon offsets. She urged the SEC to retain and enforce the disclosure requirements for transparency.
Broader Context of Environmental Rollbacks
The SEC's action is part of a broader effort by the Trump administration to reverse environmental regulations. The Environmental Protection Agency (EPA) has eliminated major climate programs, promoted deregulation, and canceled billions in Biden-era environmental justice grants. EPA Administrator Lee Zeldin has focused on weakening climate-friendly rules, including revoking a scientific finding central to U.S. climate action.
Political and Legal Landscape
The SEC, an independent agency with presidential appointees, approved the climate rule in 2024 along party lines, with three Democrats supporting and two Republicans opposing. Currently, the commission has three Republican members and no Democrats. The 2024 rule drew over 24,000 comments during a two-year process and aligned the U.S. with similar disclosure rules in the European Union and California.
A 60-day public comment period will begin once the proposal is published in the Federal Register, expected within days. The outcome remains uncertain as legal and political battles continue.
