The Demise of the SEC’s Climate Disclosure Rules: Implications for Risk Management

According to an article by Foley & Lardner, the Securities and Exchange Commission (SEC) took another step away from its climate disclosure rules on March 27, 2025, voting to end its defense of the regulations in Iowa v. SEC. 

While the rules technically remain in place, they are subject to a stay, leaving their future uncertain. The SEC’s withdrawal from litigation raises questions about whether Democratic attorneys general, who had supported the rules, will continue the legal fight. This development signals a significant retreat from federal climate disclosure requirements, but companies still face compliance obligations from other jurisdictions.

Despite the SEC’s retreat, businesses must navigate an evolving regulatory landscape. The European Union’s Corporate Sustainability Reporting Directive and California’s climate disclosure laws remain in effect, with additional state-level regulations emerging. New York, Colorado, New Jersey, and Illinois have introduced legislation modeled after California’s Climate Corporate Data Accountability Act, requiring large companies to report greenhouse gas emissions. These state laws could create a complex compliance environment, particularly for businesses operating across multiple jurisdictions.

Adding to the uncertainty, Senator Bill Hagerty has introduced legislation aimed at restricting US companies from participating in foreign sustainability regulations. While unlikely to pass, the bill includes a private right of action that could pose risks if enacted. 

For risk managers, these developments underscore the need for a proactive compliance strategy that accounts for state, federal, and international regulatory shifts. Even as federal climate disclosure rules fade, regulatory risks persist, requiring careful monitoring and adaptation.