SEC sends proposal to OMB to rescind climate disclosure rule

The Securities and Exchange Commission on May 4 sent a draft proposal to the White House Office of Management and Budget seeking formal rescission of a Biden-era climate disclosure rule for public companies. The posting on a government website began the OMB review required for significant regulatory actions.

The rule, developed under former SEC Chair Gary Gensler, would have required companies to disclose material business risks from a changing climate and to report carbon emissions for certain firms. It never took effect after a series of court challenges.

About a year ago the SEC told a federal judge it would no longer defend the regulation in litigation, leaving the policy effectively dormant. If OMB clears the draft, the commission must vote to publish a proposed rescission, open it for public comment and revise the text before a final vote. That process typically takes several months.

In an email, an SEC spokesman wrote the commission is returning the agency to “its core mandate” and to a “materiality-focused approach to securities regulation.” Until rulemaking concludes, companies will continue to follow existing disclosure obligations.

Supporters of the original rule argued it would have standardized reporting of climate-related risks and emissions. Opponents argued the SEC lacked legal authority to require some of the disclosures. OMB review is a procedural step and does not itself decide the outcome of the proposal.