Another Nail in the Coffin: SEC Proposes Total Rescission of Climate-Related Disclosure Rules

Following extensive foreshadowing, the Securities and Exchange Commission (“SEC”) proposed the total rescission of the Biden-era climate-related disclosure rules on May 29, 2026. As justification for rescinding the rules, the SEC argued that the rules were outside of its statutory authority and “unsound as a matter of policy.” In particular, the SEC argued in its proposing release that the rules are unnecessary, neither registrant-specific nor materiality-based, stray beyond the policy concerns of the federal securities laws, impose unjustified and substantial costs on public companies and shareholders, and are at odds with the SEC’s policy objectives. Although the rules never went into effect, the proposed rescission marks a significant development in the ongoing federal climate disclosure saga. Nevertheless, companies may still face climate-related disclosure requirements in various U.S. state and global jurisdictions.

The SEC proposed rules mandating climate-related disclosures from public companies in their filings on March 21, 2022, leading to fierce debate and the submission of over 24,000 comment letters, many of which expressed concerns regarding the proposed requirement for certain entities to disclose Scope 3 greenhouse gas (“GHG”) emissions (i.e., indirect GHG emissions from upstream and downstream activities in a company’s value chain). The final climate-related disclosure rules were released on March 6, 2024. Despite dropping the Scope 3 GHG emissions reporting requirement and providing other accommodations, the rules were swiftly challenged, with the SEC voluntarily pausing the rules while litigation progressed. Following consolidation of the litigation in the U.S. Court of Appeals for the Eighth Circuit, the court temporarily suspended the rules until the SEC either renewed its defense of the rules or initiated notice and comment to rescind them.

After the new presidential administration took office, the SEC announced in March 2025 that it had voted to discontinue its defense of the rules. A few months later, the SEC indicated in a status update that it did not intend to review or reconsider the rules. However, the SEC asked the Eighth Circuit to lift the stay on the litigation so that arguments regarding the scope of the agency’s power to adopt such requirements could continue. Intervenors argued that the case should remain paused until the SEC decided to repeal or proceed with the rules. In a September 2025 order, the Eighth Circuit agreed, directing the SEC to determine whether the rules would be rescinded, repealed, modified, or defended. The SEC’s decision to rescind the rules likely means the end of the SEC’s climate-related disclosure rules under the current administration.

Even with the federal climate-related disclosure rules flatlining, companies should stay vigilant of existing and advancing climate-related disclosure obligations at both the U.S. state level and in foreign jurisdictions, some of which have significant extraterritorial reach. For example, while the federal lawsuit challenging California’s climate disclosure laws, SB 253 (emissions reporting) and SB 261 (climate risk reporting), remains pending, the deadline for initial Scope 1 and 2 GHG emissions disclosures under SB 253 is swiftly approaching (August 10, 2026). Additionally, climate-related disclosure bills have advanced in New York, Colorado, New Jersey, Illinois, and Washington.

Across the pond, the European Union’s Corporate Sustainability Reporting Directive (“CSRD”), which requires companies to disclose the impact of their activities on the environment through the reporting of various metrics, including GHG emissions, entered into force in 2023 and required certain companies to begin reporting in 2025. Pursuant to the Omnibus I Directive finalized in 2025, which significantly modified the scope, timing, and reach of the CSRD, companies included in the next “wave” will need to submit their first CSRD reports in 2028. Other countries have also been moving forward with adopting climate-related disclosure rules: Australia, Brazil, Canada, China, India, New Zealand, Singapore, and the United Kingdom, among others, have all proposed or adopted climate-related disclosure rules.

The proposal will be subject to a 60-day public comment period after publication in the Federal Register. The proposal is likely to receive a high volume of comments, and it is very likely that the rescission rule will be subject to legal challenge.

We will continue monitoring developments regarding climate-related disclosure obligations and are available to assist with comment submissions. Please reach out to your Vinson & Elkins team to discuss these matters and their implications for your business.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.