The Securities and Exchange Commission is proposing to rescind “overly burdensome and costly rules” that require companies to provide certain climate-related information in their registration statements and annual reports.
The Biden-era rules require companies to disclose material climate-related risks, activities to mitigate or adapt to such risks, and information about the board’s and management’s oversight of risks and estimates of the financial effects of severe weather events. Several lawsuits were brought against the requirements, and last year the SEC board voted to drop its legal defense of the rules.
The SEC is now proposing to rescind the rules in their entirety “because they exceed the scope of the agency’s statutory authority,” according to a statement. The commission also said the rules stray well beyond the policy concerns of federal securities laws and would impose substantial costs on public companies and their shareholders.
Given that existing Regulation S-K requirements and the 2010 “Commission Guidance Regarding Disclosure Related to Climate Change” already address disclosure of material climate-related information, American Bankers Association staff noted that the SEC move does not eliminate the need to disclose climate-related information. Instead, the commission is proposing to not provide specialized rules on disclosure of material climate-related information.
