Buried but not dead. The SEC, the US financial market regulator, recently submitted (click here) a status update to the Eighth Circuit Court regarding its intentions (or otherwise) surrounding the SEC’s climate disclosure rules established under the previous administration.
- The highly politicised saga of the SEC’s (currently stayed) climate disclosure rules continues. As a refresher, in March 2025 the SEC announced that it did not intend to defend court action taken against it to prevent the climate rules from entering into effect. The rules were originally implemented by the Democrat-led SEC during the Biden administration. Now that the Commission is Republican-led, they intend to allow the court action to “naturally” end the go-live of the rules rather than to rescind them through formal SEC procedures. On 23 July, at the request of the court in April this year, the SEC filed a status report providing an update on its intentions. The court, as part of the request, specifically asked whether the SEC intended to review or reconsider the rules, and whether it will enforce them if the legal challenges aimed at stopping them fail (which would seem unlikely given the SEC’s stated intention not to defend the rules – something it has little inclination to do);
- The SEC’s filing states that it has no intention of revisiting the rules at this time but avoids committing to whether it will enforce the rules if they are upheld by the court. The SEC, somewhat flimsily, argued that commenting further would amount to prejudging future decisions and insisted that the court should rule on the case to clarify the SEC’s authority on the matter. Democrat-appointed Commissioner Caroline Crenshaw strongly criticised (click here) the filing, claiming that the SEC is effectively side-stepping its legal responsibilities and attempting to offload difficult policy decisions onto the judiciary. She maintains that if the SEC wants to repeal the rule, it must engage in a formal rulemaking process with full transparency;
- Clearly the SEC is signalling a political and procedural retreat from implementing the climate disclosure rules without officially repealing them, to the displeasure of many. This arguably creates legal uncertainty for registrants and compliance officers, as the agency is likely to choose not to enforce the disclosure rules even if they survive challenge in the courts. It seems reasonably clear that the SEC is willing the court to set a negative precedent on the establishment of such rules to effectively “future proof” any future plans of the SEC to implement them again in future on the turn of administrations.
While the SEC’s climate disclosure rules are not yet dead and buried, regardless of the court’s ultimate ruling on this topic the SEC still has the avenue available to quash the rule through formal channels. Either way, the ESG agenda in the US seems to be firmly in retreat.
