The Securities and Exchange Commission has laid out a revised rule meant to standardize climate-related disclosures by public companies and in public offerings.
The final rule, which will go into effect in 2026, mandates material climate risk disclosures and “will provide investors with consistent, comparable and decision-useful information and issuers with clear reporting requirements,” SEC Chair Gary Gensler said Wednesday in a press release.
“Further, they will provide specificity on what companies must disclose, which will produce more useful information than what investors see today,” he said. “They will also require that climate risk disclosures be included in a company’s SEC filings, such as annual reports and registration statements, rather than on company websites, which will help make them more reliable.”
In short, companies will need to start divulging more details about the climate risks they face, the costs of severe weather events and, in some cases, their greenhouse gas emissions. Companies also will need to disclose climate-related risks that have or could affect the company’s business strategies and financial outlook, the actual and potential effects of any identified climate-related risks, and any efforts the business has made to mitigate or adapt to a material climate-related risk.
The SEC voted Wednesday to approve the climate disclosure rules 3-2 along party lines. Once approved, Republicans were quick to object.
“The Securities and Exchange Commission is not a climate regulator,” stated Rep. Patrick McHenry (R-NC), chair of the House Financial Services Committee “With this rulemaking, Chair Gensler continues to make clear a partisan political agenda outweighs the SEC’s statutory mission. Given the substantial changes made since the rule was proposed, the SEC must reissue it for public comment to satisfy the requirements under the Administrative Procedure Act.”
Ten Republican-led states — Alabama, Alaska, Georgia, Indiana, New Hampshire, Oklahoma, South Carolina, Virginia, Wyoming and West Virginia — began legal proceedings against the SEC on Wednesday. In a letter filed in the US Court of Appeals for the 11th Circuit, the petitioners urged the court to vacate the SEC’s rule as “unlawful.”
“Petitioners will show that the final rule exceeds the agency’s statutory authority and otherwise is arbitrary, capricious, an abuse of discretion, and not in accordance with law,” the letter stated.
