Wall St regulator proposes to scrap Biden-era climate rule

• The climate disclosure rule was adopted under Biden but had not taken effect due to legal opposition from industrial lobbies and conservative-leaning states
• SEC officials now argue the rule exceeds the agency's authority, imposes substantial costs on companies, and could discourage capital formation
• The proposal faces a two-month public comment period, with investor advocates warning that eliminating climate disclosures ignores material risks that matter to investors

Summary: SEC Proposes to Scrap Biden-Era Climate Disclosure Rule

The U.S. Securities and Exchange Commission announced on May 29 a proposal to eliminate climate disclosure requirements adopted under the Biden administration. The rule, which never took effect due to legal challenges from industrial lobbies and conservative states, would have required companies to disclose climate-related risks and spending.

Key Details:

SEC Chair Paul Atkins justified the reversal, stating the agency should only mandate disclosures that are material to investors and where "expected benefits justify the likely costs and burdens." SEC officials now contend the rule exceeded the agency's authority, imposed substantial costs on companies, and could discourage capital formation.

The original rule was designed to address investor demand for consistent information about climate-related financial risks and corporate adaptation costs. However, it faced intense opposition before implementation.

Market Implications:

This proposal represents a significant policy shift under the Trump administration, marking a government-wide retreat from climate regulation. The decision removes potential compliance costs for public companies but eliminates standardized climate risk reporting that many investors sought.

Benjamin Schiffrin of Better Markets criticized the move, arguing that "climate-related risks are no exception" to material risks investors need to assess companies.

Next Steps:

The proposal enters a two-month public comment period before any final SEC decision.

Bottom Line:

The regulatory rollback reduces disclosure requirements for corporations while potentially limiting investor access to climate risk data. Companies facing climate-related exposure may benefit from reduced compliance burdens, though institutional investors seeking ESG-related information may face greater challenges in assessment.