Wall Street regulator moves to scrap Biden-era climate rule

• The climate disclosure rule was paused in 2024 pending legal challenges from industry groups and Republican states claiming the SEC exceeded its authority
• The SEC voted in March to stop defending the rule in court, and an appeals court subsequently suspended its review of the case
• The proposed rescission is currently under review by the Office of Management and Budget with no definitive timeline for final action

Summary

The Securities and Exchange Commission (SEC) is moving to eliminate a Biden-era climate disclosure rule that required publicly traded companies to report climate-related risks, emissions, and spending to investors. According to a notice on the U.S. budget office website dated May 5, the regulation is currently under review by the Office of Management and Budget, though no final timeline has been established.

Key Background:

The climate disclosure rule was adopted in 2024 under former President Joe Biden but never took effect. Republican-led states and industry groups immediately challenged the regulation in court, arguing it exceeded the SEC's legal authority. The SEC subsequently suspended the rule pending litigation. In March of the previous year, under the Trump administration, the SEC voted not to defend the rule in court, leading an appeals court to suspend case proceedings.

Official Rationale:

SEC Chair Paul Atkins stated the agency is rescinding the rule to refocus on its "core mandate" of requiring only "material" information for investors, aligning with what he described as the SEC's legal authority. This move reflects the Trump administration's broader effort to roll back climate-related regulations, as President Trump rejects the scientific consensus on climate change.

Market Implications:

The regulatory reversal eliminates mandatory climate disclosure requirements for public companies, reducing compliance burdens for corporations but potentially limiting investor access to standardized climate risk information. The outcome represents a significant shift in ESG reporting standards and reflects the current administration's deregulatory approach to climate policy. The final action awaits OMB review completion.