The Securities and Exchange Commission is moving to formally rescind its controversial 2024 climate-risk disclosure rule, shifting the compliance strategy for corporate defense and securities attorneys. According to reports by ESG Dive, the agency sent a letter to the Eighth Circuit Court of Appeals confirming it will not renew its legal defense of the regulations. Under the direction of Chair Paul Atkins, the commission is shifting toward notice-and-comment rulemaking to officially undo the mandate. The agency stated that its staff has finalized recommendations to address ongoing legal and policy concerns, "including concerns that the Rules exceed the Commission’s statutory authority and the costs of the Rules outweigh their benefits."
The rollback caps a prolonged legal battle that began immediately after the rule’s initial 3-2 passage under former Chair Gary Gensler, which prompted a swift consolidation of lawsuits in the Eighth Circuit. Though Gensler issued an administrative stay during the litigation, the regulatory unwinding escalated after the recent presidential transition. In March 2025, Atkins directed staff to withdraw from defending the rule, culminating in a September judicial order that gave the SEC a strict timeline to either resume its court defense or formally modify the regulation. Commissioners Mark Uyeda and Hester Peirce, who originally voted against the framework, join Atkins in the current three-member panel driving the rescission.
Despite the elimination of the federal framework, corporate legal departments still face an intricate web of environmental obligations. The original SEC rule targeted large accelerated and accelerated filers, requiring disclosures on material climate impacts and phasing in Scope 1 and Scope 2 emissions data while excluding Scope 3 requirements. Without a federal standard, public companies remain subject to state-level mandates already on the books in California, developing disclosure legislation in New York, and expanding international regulatory frameworks. Regarding the strategic pivot, an SEC spokesperson stated that the commission is focused on "restoring a materiality-focused approach to securities regulation."
