SEC Drops Defense of Climate Disclosure Rules

Strategic Insights -

The Securities and Exchange Commission (SEC) has abandoned its defense of climate-related disclosure rules, effective March 27, 2025, after a federal lawsuit was consolidated before the US Court of Appeals for the Eighth Circuit. The litigation challenged the validity of the rules, which were initially implemented on March 6, 2024. The SEC's decision to yield on its defense of the rules has led to a stay on the litigation, pending resolution. Eighteen states that intervened to defend the rules are now requesting the court to hold the litigation in abeyance.

Key Takeaways:

  • The SEC adopted final rules requiring climate-related disclosures in Form 10-K and Form 20-F annual reports and most registration statements on March 6, 2024.
  • The rules were challenged in federal litigation, which was consolidated before the US Court of Appeals for the Eighth Circuit.
  • The SEC abandoned its defense of the rules after a status report submitted to the court on an unspecified date.
  • Eighteen states that intervened to defend the rules requested the court to hold the litigation in abeyance.
  • The court agreed to hold the litigation in abeyance pending the outcome of the SEC's reconsideration of the rules.
  • The SEC urged the court to lift the stay on the litigation and continue considering the parties' arguments on the scope of the Commission's power to adopt the mandatory disclosure obligations on climate risk in the Rules.
  • Specialist advice should be sought about the specific circumstances of companies impacted by these changes.

Statistics:

  • The rules were adopted on March 6, 2024.
  • The litigation was consolidated before the US Court of Appeals for the Eighth Circuit.
  • Eighteen states intervened to defend the rules.
  • The SEC abandoned its defense of the rules on March 27, 2025.
  • The court agreed to hold the litigation in abeyance.

Sources:

  • [1] Securities and Exchange Commission press release (March 6, 2024)
  • [2] State of Iowa v. Securities and Exchange Commission, 24-cv-1522
  • [3] Goodwin Procter LLP's Mondaq article