Financial officers applaud climate rule rescission

(The Center Square) – A coalition of state financial officers applauded the Securities and Exchange Commission for moving to rescind its 2024 climate disclosure rules that is estimated to save public businesses more than $7.9 billion.

In March 2024, the SEC approved amendments to its rules that would mandate all public companies disclose greenhouse gas emissions, how it managed climate-related risks, and financial statements on severe weather events.

“The Commission is not a climate regulator and mandatory climate disclosure lies outside the scope of the Commission’s statutory responsibilities,” the financial officers wrote in a letter to SEC Secretary Vanessa Countryman.

The SEC estimated rescinding the requirement would bring about total cost savings up to $7.9 billion for public businesses that would have been forced to comply.

“These are substantial sums that would otherwise be diverted from productive use to compliance with disclosure requirements that do not reliably produce material, decision-useful information,” the officers wrote.

Over the last year, the SEC has worked to formally rescind the regulation. As part of its rescission process, it called for public comment from stakeholders.

The financial officers also said proposed reporting rules exceeded the SEC’s congressionally mandated boundaries. The SEC sought to implement the rules without approval from Congress when it introduced the reporting requirements in 2024.

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“Climate policy is the subject of ongoing and intense political debate; it is a matter for Congress and the duly authorized agencies, not for resolution through the Commission’s disclosure authority,” the officers wrote.

The officers also argued that long-standing business reporting requirements within the SEC’s structure already mandated climate impact analysis. The letter outlined current reporting standards as being sufficient for overseeing businesses.

The proposed rules were never implemented due to ongoing litigation challenging the SEC’s authority to issue rules mandating climate change reporting for businesses.

Members of the SEC agreed that its proposed rule went beyond the scope of the agency's authority. In a memo announcing the planned rules rescission, members said it was not responsible to continue the policy.

“They are unnecessary and inconsistent with a registrant-specific, materiality-based approach to disclosure that best serves the interests of registrants and investors,” the officials wrote.

Arizona Treasurer Kimberly Yee, Idaho Comptroller Julie Ellsworth, Kentucky Auditor Allison Ball, Pennsylvania Treasurer Stacy Garrity and South Carolina Treasurer Curtis Loftis are among 17 financial officers who wrote a letter to the SEC.

“We support the proposed rescission of the climate-related disclosure rules and urge the Commission to finalize it in full,” the financial officers wrote. “Doing so will restore the Commission’s disclosure framework to its proper, materiality-based foundation, relieve registrants and their shareholders of unjustified costs, and respect the limits Congress placed on the Commission’s authority.”