Washington DC: US Securities and Exchange Commission building exterior. The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government. The SEC holds primary responsibility for enforcing the federal securities laws, proposing securities rules, and regulating the securities industry, the nation's stock and options exchanges, and other activities and organizations, including the electronic securities markets in the United States.

The Securities and Exchange Commission on Thursday announced a stay on its climate rules while their legality is challenged in consolidated cases before an appeals court.

The SEC’s final rules, announced March 6, are meant to standardize climate-related disclosures by public companies and in public offerings. The rules, which are planned to go into effect in 2026, mandate 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 previously.

In short, public 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. Such companies also will need to disclose climate-related risks that have or could have an effect on 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’s latest move was another early victory for climate disclosure regulation opponents, which have said the agency exceeded its authority with requirements for companies to report their greenhouse gas emissions and disclose climate-related risks to their business,” Bloomberg Law reported. 

The independent federal agency could have fought a temporary stay ordered by the appeals court blocking the rule’s enforcement, according to the Wall Street Journal. The commission’s voluntary stay is meant to expedite the court process.

“Among other things, given the procedural complexities accompanying the consolidation and litigation of the large number of petitions for review of the final rules, a commission stay will facilitate the orderly judicial resolution of those challenges and allow the court of appeals to focus on deciding the merits,” the SEC wrote. “Further, a stay avoids potential regulatory uncertainty if registrants were to become subject to the Final Rules’ requirements during the pendency of the challenges to their validity.”

The SEC said it plans to “vigorously” defend the rules’ validity through the court process.