In the Law360 article “Why SEC Climate Rule Rescission Wouldn't End Disclosure,” William Haddad, Kirill Nikonov, and Frank Strumolo analyze the SEC's proposal to rescind its 2024 climate disclosure rules and explain why existing disclosure obligations would remain in place. Gabrielle Danzeisen Serrano was also a contributing author. The following is an excerpt:
On May 29, the U.S. Securities and Exchange Commission proposed rescinding the climate-related disclosure rules adopted in March 2024 under then-SEC Chair Gary Gensler. If adopted, the proposal will remove the climate-specific disclosure rules, including new Regulation S-K Subpart 1500; Regulation S-X Article 14; related amendments to Regulation S-X Article 8; form amendments; and associated tagging, attestation and expert-consent provisions.
The proposal should be viewed as part of SEC Chairman Paul S. Atkins' broader effort to recalibrate the commission's disclosure rules around statutory authority, materiality, cost-benefit discipline and capital formation under the aegis of his "Make IPOs Great Again" agenda. The rescission proposal fits within the SEC's stated effort to make becoming and remaining a public company more attractive.
In his statement, Atkins emphasized that "SEC disclosure obligations should comply with the Commission's statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens." The proposing release echoes those themes and characterizes rescission as warranted both legally and as a matter of policy.
The SEC's rationale for rescission would not, however, make climate-related disclosure irrelevant. Even without the 2024 rules, companies would still need to assess climate-related matters under the SEC's existing disclosure framework and anti-fraud principles. Where material, those matters may call for disclosure as risk factors, management's discussion and analysis, business and legal proceedings, or other company-specific developments relevant to investors.
The proposal is subject to notice and comment, and comments are due Aug. 3.
For the full article, click here.