Regulatory bodies in the U.S. no longer perceive climate change as a significant financial concern
SEC Delays Climate-Related Disclosure Rules Amid Legal Challenges
The Securities and Exchange Commission (SEC) under Acting Chair Mark T. Uyeda has decided against affirming the financial materiality of climate risk and has delayed climate-related disclosure rules. This decision comes as a result of mounting legal challenges and concerns about the SEC's statutory authority from federal courts.
The SEC's stance is primarily a consequence of legal pressure and authority concerns. Multiple lawsuits from business groups, oil companies, and several Republican-led states have challenged the SEC's authority to mandate climate risk disclosures. Courts have expressed doubts about whether the SEC has the statutory mandate given by Congress to impose such broad climate-related financial disclosure rules.
In March 2025, the SEC voted to stop defending the climate disclosure rule in litigation, a move led by leadership including Uyeda. This strategic withdrawal signals reluctance to push forward with enforcement amid uncertain legal grounds and political shifts within the commission.
The rule was initially passed on a narrow 3-2 party-line vote, with Uyeda being one of the two Republican dissenters opposing the rule under prior leadership. This political composition influences the SEC's current reluctance to uphold the rule without further commission deliberation.
The SEC has stated it will not revisit or review the rules unless mandated by court decisions and emphasizes that any reconsideration would require a formal commission vote, reflecting a cautious regulatory posture while awaiting judicial clarity.
While this has delayed federal climate-related disclosure regulation, states and global markets continue pushing climate transparency initiatives independently.
Meanwhile, the Network for Greening the Financial System (NGFS), a global coalition aimed at mobilizing green finance and developing climate-risk management strategies for the financial sector, continues its work. Despite the Federal Reserve's withdrawal, the NGFS's community of central banks and supervisors remains strong and determined. The European Central Bank, for instance, identifies climate change as a source of systemic risk.
The SEC, America's securities regulator, is tasked with protecting investors, maintaining fairness, and facilitating capital formation. However, the SEC has made it more challenging to steer climate-related shareholder resolutions through the proxy season with new guidance on rule 14a-8 and increased scrutiny on 13G and 13D filings.
The future of climate-related disclosure rules under the SEC remains uncertain, as the SEC's assertion is that climate disclosures would require a large volume of "financially immaterial" information, indicating that they no longer see climate risk as a financial risk. The SEC's climate disclosure rules have been frozen indefinitely due to lawsuits.
In conclusion, the SEC's retreat from defending climate risk disclosure rules under Mark T. Uyeda is primarily a consequence of legal challenges questioning its authority, political opposition within the commission, and a strategic pause pending judicial decisions to avoid overreach concerns. The SEC's stance is a significant development in the ongoing debate about climate-related disclosure rules and their impact on financial markets.
- Despite the SEC's delay in enforcing climate-related disclosure rules due to legal challenges and political opposition, the Network for Greening the Financial System (NGFS) continues its work, pushing for green finance and climate-risk management strategies in the global financial sector.
- The SEC's decision to no longer see climate risk as a financial risk, and to indefinitely freeze the climate disclosure rules, could have significant implications for the financial markets, as they now make it more challenging to steer climate-related shareholder resolutions.
- In the realm of general news, the ongoing debate about climate-related disclosure rules and their impact on financial markets has taken a turn with the SEC's retreat from enforcing them, a move primarily influenced by legal challenges, political opposition, and a strategic pause pending judicial decisions.
