Introduction
In a significant policy shift, the United States has officially abandoned a groundbreaking regulation that would have required publicly-listed companies to disclose their greenhouse gas emissions and climate-related risks. Initially adopted by the Securities and Exchange Commission (SEC) in March 2024 under President Joe Biden, these rules aimed to enhance transparency around corporate environmental impact. However, with the transition to the Trump administration in 2025, the SEC has reversed course, citing the rules as "unnecessarily intrusive." This decision, announced on March 28, 2025, marks a pivotal moment in the intersection of climate policy and corporate accountability. Here’s what happened, why it matters, and what’s next.
Why Were the SEC Climate Disclosure Rules Introduced?
The SEC’s climate disclosure rules, enacted in March 2024, represented a historic step toward holding public companies accountable for their environmental footprint. For the first time, firms were required to report Scope 1 and Scope 2 emissions—direct emissions from operations and indirect emissions from purchased energy—when deemed "material" to their business. Additionally, companies had to disclose climate-related risks, such as extreme weather or regulatory changes, and their potential impact on strategy, business models, and financial forecasts. The Biden administration championed this move as a way to align corporate practices with global efforts to combat climate change, supported by overwhelming scientific consensus, including a 2021 Cornell University study showing 99.9% of research attributing climate change to human activity.
What Prompted the Reversal?
The rollback stems from a combination of political and legal pressures. Following Donald Trump’s return to the presidency, the Republican-led SEC, under Acting Chairman Mark Uyeda, moved swiftly to end its defense of the regulation. Uyeda criticized the rules as "costly" and overly invasive, reflecting a broader GOP stance against what some, like West Virginia Governor Patrick Morrisey, call regulatory overreach. Morrisey, who as attorney general in 2024 led a coalition of nine states in challenging the rules in federal court, argued they were a "backdoor move to undermine the energy industry." The SEC paused the rules’ implementation amid litigation and, on March 28, 2025, formally withdrew its support, notifying the courts of its stance.
Implications for Businesses and Investors
The abandonment of these rules has far-reaching consequences. For businesses, it lifts an immediate burden of compliance, sparing them the costs of emissions tracking and risk reporting. However, it may also create uncertainty for investors who rely on such data to assess long-term sustainability and risk. Globally, the U.S. decision contrasts with stricter climate disclosure mandates in regions like the European Union, potentially putting American firms at a disadvantage in international markets. Environmental advocates warn that this rollback could slow progress toward net-zero goals, while critics of the rules celebrate it as a win for economic freedom.
The Bigger Picture: Climate Science vs. Policy
The debate over the SEC rules underscores a deeper divide. While scientific consensus on human-driven climate change remains near-unanimous, policy responses continue to spark contention. Opponents like Morrisey question the feasibility of uniform climate action, pointing to disagreements among experts on solutions. Yet, as extreme weather events intensify and public pressure grows, the tension between regulation and deregulation is unlikely to fade. The SEC’s retreat may signal a broader shift in U.S. climate policy under Trump, with ripple effects for years to come.
