The SEC’s proposed rescission represents the latest development in a process that began with the adoption of the climate rules in March 2024.

On May 29, 2026, the Securities and Exchange Commission (SEC) proposed to rescind in its entirety the climate-related disclosure regime adopted in March 2024. While the proposal signals a significant shift in federal climate disclosure policy, it does not eliminate climate-reporting obligations for many U.S. companies. State laws, international disclosure regimes and global reporting standards continue to expand—and several compliance deadlines are rapidly approaching.

Key Takeaways

SEC Timeline

A final rescission is unlikely before late 2026 or early 2027. The proposal is subject to a 60-day public comment period and would require a subsequent commission vote before becoming final.

California Deadlines Remain Imminent

The first greenhouse gas emissions reporting deadline under California SB 253 is August 10, 2026. California regulators have reaffirmed that deadline and continue to move forward with implementation.

Litigation Remains a Wildcard

Enforcement of California SB 261 remains stayed pending appeal before the Ninth Circuit. A decision could be issued at any time and may have implications beyond SB 261.

New York Legislation Is Advancing

New York lawmakers are considering climate disclosure legislation modeled in significant respects on California’s reporting framework.

International Obligations Continue to Expand

The European Union’s Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) disclosure standards remain important sources of climate-reporting obligations for companies with international operations.

Preparation Remains Essential

Companies that establish scalable climate-data and governance systems now will be better positioned to comply efficiently across multiple jurisdictions.

Introduction

The SEC’s proposed rescission represents the latest development in a process that began with the adoption of the climate rules in March 2024. The rules were immediately challenged by a broad coalition of business groups, trade associations and state attorneys general. Following consolidation of the litigation in the Eighth Circuit, the SEC stayed the climate rules on April 4, 2024.

In March 2025, the commission voted to withdraw its defense of the climate rules, prompting a coalition of 18 states and the District of Columbia to intervene in support of their validity. In September 2025, the Eighth Circuit held the litigation in abeyance while the commission reconsidered the climate rules through notice-and-comment rulemaking. The May 29, 2026, proposal is the commission’s response to that order.

The proposing release, Release No. 33-11421, reflects the views of the commission’s current membership: Chairman Paul Atkins and Commissioners Mark Uyeda and Hester Peirce, all of whom supported the proposal.

Although the proposed rescission would eliminate the climate rules if finalized, it would not eliminate the growing network of climate-related disclosure requirements imposed by state governments, foreign jurisdictions and international standard-setting bodies. Companies should therefore view the proposal as a change in regulatory emphasis, not as the end of climate-related reporting obligations.

The SEC’s Proposed Rescission

The commission’s proposal rests on both legal and policy grounds. According to the proposing release, the climate rules exceeded the commission’s statutory authority and departed from the traditional materiality-based framework that has long governed federal securities disclosure obligations. The commission further concluded that the climate rules imposed substantial compliance costs that were not justified by corresponding informational benefits to investors.

Chairman Atkins emphasized that disclosure obligations should be guided by materiality and imposed only where expected benefits justify compliance burdens. Commissioner Uyeda similarly argued that climate-related matters are already addressed through existing SEC disclosure requirements, where required materials include disclosures relating to business operations, risk factors, management’s discussion and analysis, and financial statements. Commissioner Peirce likewise supported the proposal, emphasizing that a merit-neutral, materiality-centered disclosure framework is consistent with both the commission’s statutory mandate and the efficient functioning of U.S. capital markets.

The public comment period will remain open for 60 days following publication in the Federal Register. After considering public comments, the commission would need to vote again before any rescission becomes final. Accordingly, a final rule is unlikely before late 2026 or early 2027.

Why the Proposed Rescission Does Not End Climate Disclosure Obligations

Despite the SEC’s proposed retreat from climate disclosure requirements, many companies remain subject to climate-related reporting obligations arising from state law, international regulations, investor expectations, contractual commitments and voluntary reporting frameworks.

California SB 253 and SB 261

California remains the most significant source of climate-reporting obligations for many U.S. companies. SB 253 applies to entities doing business in California with annual revenues exceeding $1 billion. The law requires annual reporting of Scope 1 and Scope 2 greenhouse gas emissions, with the first reporting deadline scheduled for August 10, 2026. Scope 3 reporting requirements will begin in 2027, accompanied by phased assurance requirements that become increasingly rigorous over time.

California regulators have continued implementation efforts and have reaffirmed the August 10, 2026, reporting deadline. Although regulators have indicated that good-faith compliance efforts will be considered during the initial reporting period, companies should not assume that preparation can be deferred.

SB 261 applies to entities doing business in California with annual revenues exceeding $500 million. It requires publication of biennial climate-related financial risk reports based on recognized reporting frameworks.

Enforcement of SB 261 is currently stayed pursuant to a November 18, 2025, injunction issued by the Ninth Circuit. Oral argument occurred on January 9, 2026, and a decision could be issued at any time. Because the appeal raises constitutional issues that may have implications beyond SB 261, companies should continue monitoring developments closely. Importantly, the current injunction does not suspend SB 253 compliance obligations.

New York’s Climate Corporate Data Accountability Act

Companies with significant New York operations should also monitor developments in that state. In February 2026, the New York Senate passed the Climate Corporate Data Accountability Act, legislation that would require certain companies doing business in New York and generating more than $1 billion in annual revenue to disclose greenhouse gas emissions. As currently drafted, the bill would require Scope 1 and Scope 2 reporting beginning in 2028 and Scope 3 reporting beginning in 2029.

The legislation remains pending before the New York Assembly. If enacted, New York would become the second major U.S. jurisdiction to impose broad climate-reporting obligations on both public and private companies.

Companies already preparing for California compliance may find that much of the necessary governance, data collection and reporting infrastructure can be leveraged to satisfy future New York requirements.

European Union and International Standards

Climate disclosure obligations also continue to evolve outside the United States. The CSRD remains the most comprehensive sustainability reporting framework currently in force. Although recent legislative initiatives have delayed implementation for certain categories of companies and narrowed aspects of the regime, the underlying framework remains intact and continues to apply to many organizations with European operations.

At the same time, the ISSB continues to gain traction globally through IFRS S1 and IFRS S2. Numerous jurisdictions have adopted, endorsed or aligned with these sustainability disclosure standards, making them increasingly important for multinational organizations seeking a consistent global reporting framework.

Practical Recommendations

In light of these developments, companies should consider the following actions, as appropriate considering their operations.

Prepare for California Compliance Now

The August 10, 2026, SB 253 reporting deadline is approaching rapidly. Companies subject to the law should complete emissions inventory processes, establish internal controls, identify data owners and evaluate assurance-readiness.

Organizations that have not yet fully implemented data-collection systems should do so immediately. Future assurance requirements and expanded Scope 3 reporting obligations will require substantially greater sophistication than initial reporting efforts.

Companies subject to SB 261 should continue developing climate-risk disclosures while monitoring the Ninth Circuit appeal. Depending on the outcome, reporting obligations could resume on relatively short notice.

Confirm Whether You Are “Doing Business” in California

The California statutes apply broadly and may capture organizations that do not view themselves as California-focused businesses. Companies should evaluate whether they meet the applicable statutory thresholds and assess compliance obligations on a legal-entity basis where appropriate.

Monitor New York Developments

Companies with substantial New York operations or significant revenue streams should track the progress of the Climate Corporate Data Accountability Act through the legislative process. Organizations already investing in California compliance infrastructure are likely to be better positioned if New York adopts a substantially similar framework.

Map International Exposure and Build Multijurisdiction Reporting Systems

Companies with international operations should evaluate potential exposure under the CSRD and other sustainability reporting regimes. Where possible, organizations should build centralized systems capable of collecting, validating and reporting climate-related information across multiple jurisdictions. Common data architectures and governance processes can reduce duplicative effort and lower long-term compliance costs.

Practical measures may include:

• Centralizing emissions and sustainability data within a unified reporting platform;
• Harmonizing data collection methodologies across business units;
• Establishing cross-functional governance structures involving legal, finance, sustainability, operations and internal audit personnel;
• Engaging assurance providers early to identify gaps and prepare for future verification requirements; and
• Maintaining clear documentation of methodologies, assumptions and controls.

Continue Evaluating Climate Risks Under Existing SEC Disclosure Standards

The SEC’s proposed rescission of the climate rules does not alter existing obligations to disclose material climate-related risks where required under Regulation S-K or other federal securities law requirements. Public companies should continue evaluating climate-related risks through established materiality principles and ensure that existing disclosure controls and procedures appropriately address those risks.

Consider Participating in the SEC Comment Process

The proposed rescission presents an opportunity for companies, trade associations, investors and other stakeholders to provide input regarding the future direction of climate-related disclosures under the federal securities laws. Organizations with significant compliance experience or industry-specific concerns may wish to consider submitting comments during the rulemaking process.

Conclusion

The SEC’s proposed rescission of the climate rules marks a significant change in federal climate disclosure policy. It does not, however, eliminate the broader trend toward climate-related reporting obligations. With California’s first emissions reporting deadline approaching, New York considering comparable legislation, the CSRD continuing to apply across Europe and ISSB standards gaining global acceptance, companies should continue building the governance structures, data systems and reporting processes necessary to comply with an increasingly complex multijurisdictional landscape. Organizations that invest in scalable compliance infrastructure now will be best positioned to adapt efficiently as regulatory requirements continue to evolve.

For More Information

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