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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 229, 230, 232, 239, and 249

[Release Nos. 33-11421; 34-105572; File No. S7-2026-19]

RIN 3235-AN76

Rescission of Climate-Related Disclosure Rules

AGENCY: Securities and Exchange Commission.

ACTION: Proposed withdrawal of final rules.

SUMMARY: The Securities and Exchange Commission (“Commission”) proposes to rescind

amendments to its rules under the Securities Act of 1933 (“Securities Act”) and Securities

Exchange Act of 1934 (“Exchange Act”) that require registrants to provide certain climaterelated information in their registration statements and annual reports.

DATES: Comments should be received on or before August 3, 2026.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic comments:

•

Use the Commission’s internet comment form (https://www.sec.gov/comments/s7-202619/rescission-climate-related-disclosure-rules).

•

Send an email to rule-comments@sec.gov. Please include File Number S7-2026-19 on

the subject line.

Paper comments:

•

Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange

Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number S7-2026-19. This file number should be

included on the subject line if email is used. To help the Commission process and review your

comments more efficiently, please use only one method of submission. The Commission will

post all comments on the Commission’s website (https://www.sec.gov/rules-regulations/publiccomments/s7-2026-19). Do not include personally identifiable information in submissions; you

should submit only information that you wish to make available publicly. The Commission may

redact in part or withhold entirely from publication submitted material that is obscene or subject

to copyright protection.

Studies, memoranda, or other substantive items may be added by the Commission or staff

to the comment file during this rulemaking. A notification of the inclusion in the comment file of

any such materials will be made available on the Commission’s website. To ensure direct

electronic receipt of such notifications, sign up through the “Stay Connected” option at

www.sec.gov to receive notifications by email.

A summary of the proposal of not more than 100 words is posted on the Commission’s

website (https://www.sec.gov/rules-regulations/2026/05/s7-2026-19).

FOR FURTHER INFORMATION CONTACT: David Russo, Senior Counsel, in the Office

of the General Counsel, at 202-551-5100, U.S. Securities and Exchange Commission, 100 F

Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION: The Commission is proposing to withdraw certain

previously adopted but not yet effective amendments to the following rules and forms:

Commission Reference

Regulation S-X

CFR Citation

(17 CFR)

§ 210.8-01

§ 210.14-01

§ 210.14-02

Article 8-01

Article 14-01

Article 14-02

Regulation S-K

Regulation S-T

Securities Act 1

Exchange Act 2

15 U.S.C. 77a et seq.

15 U.S.C. 78a et seq.

Items 1500 through

1508

Item 601

Item 405

Rule 436

Form S-1

Form S-3

Form S-11

Form S-4

Form F-3

Form F-4

Form 10

Form 20-F

Form 10-Q

Form 10-K

§§ 229.1500 through

229.1508

§ 229.601

§ 232.405

§ 230.436

§ 239.11

§ 239.13

§ 239.18

§ 239.25

§ 239.33

§ 239.34

§ 249.210

§ 249.220f

§ 249.308a

§ 249.310

Table of Contents

OVERVIEW .......................................................................................................................... 6

II.

ADOPTION OF THE FINAL RULES AND SUBSEQUENT LITIGATION ..................... 8

III. DISCUSSION OF PROPOSED RESCISSION................................................................... 15

A. Overview of Basis for Rescission: Lack of Authority and Reevaluation of Policy

Grounds ........................................................................................................................ 15

B. The Final Rules Exceed the Commission’s Statutory Authority ................................. 16

Scope of the Commission’s Disclosure Authority ................................................ 18

The Final Rules Exceed the Limitations on Mandatory Disclosures .................... 30

The Final Rules Should Be Rescinded in their Entirety ....................................... 44

C. Policy Reasons for Rescinding the Final Rules............................................................ 45

The Final Rules Are Unnecessary and Inconsistent with a Registrant-Specific,

Materiality-Based Approach to Disclosure that Best Serves the Interests of

Registrants and Investors. ..................................................................................... 47

The Final Rules Stray Well Beyond the Policy Concerns of the Federal Securities

Laws ...................................................................................................................... 56

The Final Rules Impose Significant Costs on Public Companies and Their

Shareholders that are Not Justified by the Informational Benefits They Provide to

Some Investors ...................................................................................................... 58

The High Costs of the Final Rules Are at Odds with the Commission’s Policy

Objectives of Facilitating Capital Formation and Promoting Public Company

Status ..................................................................................................................... 64

IV. ECONOMIC ANALYSIS ................................................................................................... 67

A. Introduction .................................................................................................................. 67

B. Economic Baseline ....................................................................................................... 68

Affected Parties..................................................................................................... 69

Current Regulatory Framework ............................................................................ 71

Current Market Practices ...................................................................................... 77

C. Benefits and Costs ........................................................................................................ 90

Benefits ................................................................................................................. 90

Costs.................................................................................................................... 100

Aggregate Monetized Benefits and Costs ........................................................... 108

D. Anticipated Effects on Efficiency, Competition, and Capital Formation .................. 120

E. Reasonable Alternatives ............................................................................................. 122

Request for Comment ................................................................................................. 123

PAPERWORK REDUCTION ACT .................................................................................. 124

VI. INITIAL REGULATORY FLEXIBILITY ACT ANALYSIS.......................................... 127

A. Reasons for, and Objectives of, the Proposed Action ................................................ 128

B. Legal Basis ................................................................................................................. 128

C. Small Entities Subject to the Proposed Amendments ................................................ 129

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements ............ 130

E. Duplicative, Overlapping, or Conflicting Federal Rules ............................................ 131

Significant Alternatives .............................................................................................. 131

G. Request for Comment ................................................................................................. 131

VII. CONGRESSIONAL REVIEW ACT................................................................................. 132

VIII. OTHER MATTERS........................................................................................................... 133

STATUTORY AUTHORITY .................................................................................................... 133

OVERVIEW

We propose to rescind the climate-related disclosure rules adopted by the Commission in

2024 (“Final Rules”). 3 Congress gave the Commission certain specific powers within the Federal

securities laws. Among those powers, the Commission’s governing statutes authorize the agency

to except from or add to the mandatory items of disclosure specified in the Securities Act and the

Exchange Act. 4 This authority, however, is limited by the text and context of these statutes.

Furthermore, even when acting pursuant to an explicit grant of authority, it is incumbent on the

Commission to implement a disclosure regime that elicits material information for investors

while being mindful of the costs imposed on registrants to collect and disclose that information.

When the Commission loses sight of these considerations, it risks not only imposing undue costs

on registrants 5 and impeding capital formation, but also harming the very investors it seeks to

protect.

The Final Rules were a dramatic overreach of the Commission’s statutory authority and,

independently, unsound as a matter of policy. Based on an incorrect view of the scope of its

authority, the Commission determined that it was appropriate to prescribe dozens of pages of

highly specific disclosure rules solely about climate-related matters 6 and apply the bulk of those

rules to virtually all public companies, regardless of size, industry, or specific circumstances.

See The Enhancement and Standardization of Climate-Related Disclosures for Investors, Release No. 33-11275

(Mar. 6, 2024) [89 FR 21668 (Mar. 28, 2024)] (“Adopting Release”). Terms not defined in this release are used

as defined in the Adopting Release. Because the Final Rules were never codified in the Code of Federal

Regulations (“CFR”) as a consequence of being stayed, see infra note 39, the proposed rescission of the Final

Rules would not require any amendments to the CFR. References herein to the CFR citations of the Final Rules

reflect what those citations would have been upon effectiveness, as set forth in the Adopting Release.

See, e.g., 15 U.S.C. 77g; 15 U.S.C. 78l.

For purposes of this release, we use the terms “registrants,” “public companies,” “companies,” and “issuers”

interchangeably.

As discussed below, the Final Rules require disclosure about, among other things, greenhouse gas (“GHG”)

emissions, the management of climate-related risks, and the financial statement effects of severe weather

The Final Rules also discounted the role of market forces in the flow of information

between registrants and investors. Disclosures mandated by the Commission are only some of

the information registrants provide to the marketplace. Investors and analysts often demand

additional information about a wide range of topics depending on their particular investment

strategies or non-investment interests. Registrants in turn may voluntarily provide such

information depending on the nature of their business and the investor base they wish to attract.

We expect this market-driven flow of information will continue following a rescission of the

Final Rules, but it is not the Commission’s role to require disclosure of particular information

because it is useful for any one investment strategy or desired by some political interests for the

purpose of influencing business practices. Rather, in exercising its authority to mandate

disclosure within the statutory limits imposed by Congress, the Commission should seek to adopt

rules that elicit information pursuant to the standard of materiality established by the Supreme

Court: information that a reasonable investor would consider important in buying or selling

securities. 7

Accordingly, as discussed in more detail in the sections that follow, we propose to

rescind the Final Rules in their entirety because they exceed the statutory limits on the

Commission’s disclosure authority. Furthermore, even if the Commission had authority to adopt

the Final Rules, several independent policy reasons support their rescission, including that:

•

The Final Rules are unnecessary and inconsistent with a registrant-specific,

materiality-based approach to disclosure;

events. See infra section II. We refer to these and related disclosure topics throughout this release as “climaterelated matters.”

See Basic Inc. v. Levinson, 485 U.S. 224 (1988).

•

The Final Rules stray well beyond the policy concerns of the Federal securities

laws;

•

The Final Rules impose substantial costs that are not justified by the informational

benefits they may provide to some investors; and

•

The Final Rules are at odds with the Commission’s policy objectives of

facilitating capital formation and promoting public company status.

II.

ADOPTION OF THE FINAL RULES AND SUBSEQUENT LITIGATION

On March 21, 2022, the Commission proposed rules that would require registrants to

include extensive new climate-related disclosures in their registration statements and periodic

reports, including detailed information about the impact and management of climate-related

risks, GHG emissions, scenario analysis, internal carbon prices, and certain climate-related

financial statement effects. 8 The Proposing Release was highly contentious, 9 and in response, the

Commission received a large number of comments from a variety of market participants,

environmental lobbying groups, and members of the public expressing starkly divergent views

about the proposed rules. 10

Some commenters supported the proposed rules, stating that climate-related risks can

have material impacts on a company’s financial position or performance. 11 Commenters in

See The Enhancement and Standardization of Climate-Related Disclosures for Investors, Release No. 33-11042

(Mar. 21, 2022) [87 FR 21334 (Apr. 11, 2022)] (“Proposing Release”); see also The Enhancement and

Standardization of Climate-Related Disclosures for Investors, Release No. 33-11061 (May 9, 2022) [87 FR

29059 (May 12, 2022)] (extension of comment period for Proposing Release); Resubmission of Comments and

Reopening of Comment Periods for Several Rulemaking Releases Due to a Technological Error in Receiving

Certain Comments, Release No. 33-11117 (Oct. 7, 2022) [87 FR 63016 (Oct. 18, 2022)] (reopening of comment

period for Proposing Release).

See, e.g., Richard Vanderford, SEC’s Gensler Bracing for Lawsuits over Climate Rule, WALL STREET JOURNAL

(Feb. 13, 2024), available at https://www.wsj.com/articles/secs-gensler-bracing-for-lawsuits-over-climate-rule60165fec.

Adopting Release at 21677-79.

Id. at 21677.

support of the proposed rules indicated, among other things, that adoption of mandatory, climaterelated disclosure rules would improve the timeliness, quality, and reliability of climate-related

information, which would facilitate investors’ cross-company comparisons of climate-related

risks and lead to more accurate securities valuations. 12

Many other commenters opposed the proposed rules and requested either that the

Commission not adopt the proposal or make significant revisions in the Final Rules. 13 Some

commenters asserted that the Commission lacked statutory authority to adopt the proposed

rules. 14 Others stated that existing voluntary reporting practices were sufficient to serve the needs

of investors and markets such that the proposed rules were unnecessary. 15 Opposing commenters

further stated that the proposed rules were overly prescriptive, that they were not bound in every

instance by a materiality qualifier, that their adoption would result in the disclosure of a large

volume of immaterial information that would be confusing to investors, and that mandating such

disclosure requirements would impose a significant burden on registrants while resulting in few

additional benefits for investors. 16

On March 6, 2024, the Commission approved the Final Rules by a 3-2 vote. While the

Final Rules included changes from the proposal in response to commenter concerns, the adopted

regulations continued to include numerous, highly prescriptive disclosure requirements. To

house the extensive new disclosure requirements, the Final Rules created a new subpart 1500 of

Id.

Id. at 21678.

Id. at 21683, n.172.

Id. at 21678.

Id.

Regulation S-K 17 and a new Article 14 of Regulation S-X. 18 Among other things, the Final Rules

require a registrant to consider and possibly disclose the following detailed items:

•

If a registrant is a large accelerated filer (“LAF”), or an accelerated filer (“AF”)

that is not otherwise exempted, and its Scope 1 emissions and/or its Scope 2

emissions metrics 19 are material, certain disclosure about those emissions,

including:

•

The volume of the emissions disclosed separately and each

expressed in the aggregate, in terms of CO2e 20 and, if any

constituent gas of the disclosed emissions is individually material,

such constituent gas disaggregated from other gases;

•

Scope 1 emissions and/or Scope 2 emissions in gross terms by

excluding the impact of any purchased or generated offsets;

•

The methodology, significant inputs, and significant assumptions

used to calculate the GHG emissions;

•

The organizational boundaries used when calculating the

registrant’s disclosed GHG emissions, including the method used

to determine those boundaries;

17 CFR 229.1500 through 17 CFR 229.1507.

17 CFR 210.14-01 through 17 CFR 210.14-02.

Under the GHG Protocol, Scope 1 emissions are direct GHG emissions that occur from sources owned or

controlled by the company. Scope 2 emissions are those emissions primarily resulting from the generation of

electricity purchased and consumed by the company. See Proposing Release, section I.D.2.

17 CFR 229.1500. “Carbon dioxide equivalent” or “CO2e” means the common unit of measurement to indicate

the global warming potential (“GWP”) of each greenhouse gas, expressed in terms of the GWP of one unit of

carbon dioxide. See id.

•

The operational boundaries used, including the approach to

categorization of emissions and emissions sources; and

•

The protocol or standard used to report the GHG emissions,

including the calculation approach, the type and source of any

emission factors used, and any calculation tools used to calculate

the GHG emissions; 21

•

If a registrant’s use of internal carbon pricing is material, the price per metric ton

of CO2e and the total price, including how the total price is estimated to change

over certain time periods; 22

•

Any climate-related risks that have materially impacted or are reasonably likely to

have a material impact on the registrant, including on its strategy, results of

operations, or financial condition; 23

•

Any oversight by the board of directors of climate-related risks, regardless of the

materiality of those risks, and any role by management in assessing and managing

the registrant’s material climate-related risks; 24

•

Any processes the registrant has for identifying, assessing, and managing material

climate-related risks and, if the registrant is managing those risks, whether and

how any such processes are integrated into the registrant’s overall risk

management system or processes; 25 and

17 CFR 229.1505.

17 CFR 229.1502(g).

17 CFR 229.1502(a).

17 CFR 229.1501(a).

17 CFR 229.1503.

•

If a registrant has set a climate-related target or goal that has materially affected

or is reasonably likely to materially affect the registrant’s business, results of

operations, or financial condition, certain disclosures about such target or goal,

including material expenditures and material impacts on financial estimates and

assumptions as a direct result of the target or goal or actions taken to make

progress toward meeting such target or goal. 26

•

With respect to financial statement disclosures:

•

The capitalized costs, expenditures expensed, charges, and losses

incurred as a result of severe weather events and other natural

conditions, such as hurricanes, tornadoes, flooding, drought,

wildfires, extreme temperatures, and sea level rise, subject to

applicable one percent and de minimis disclosure thresholds; 27

•

The capitalized costs, expenditures expensed, and losses related to

carbon offsets and renewable energy credits or certificates

(“RECs”) if used as a material component of a registrant’s plans to

achieve its disclosed climate-related targets or goals; 28 and

•

If the estimates and assumptions a registrant uses to produce the

financial statements were materially impacted by risks and

uncertainties associated with severe weather events and other

natural conditions, such as hurricanes, tornadoes, flooding,

17 CFR 229.1504.

17 CFR 210.14-02(c) and 210.14-02(d).

17 CFR 210.14-02(e).

drought, wildfires, extreme temperatures, and sea level rise, or any

disclosed climate-related targets or transition plans, a qualitative

description of how the development of such estimates and

assumptions was impacted. 29

In addition, registrants that are required to disclose Scopes 1 and/or 2 emissions must file

an attestation report of those emissions subject to phased-in compliance dates. 30 Further, the

Final Rules require a registrant that is not required to disclose its GHG emissions or to include a

GHG emissions attestation report pursuant to the Final Rules to disclose certain information if

the registrant voluntarily discloses its GHG emissions in a Commission filing and voluntarily

subjects those disclosures to third-party assurance. 31

The Final Rules exempt certain registrants from disclosure in limited circumstances. 32

Outside these limited circumstances, the Final Rules require almost every registrant to comply

with the vast majority of the new disclosure requirements after a transition period. 33 As the

Adopting Release noted, nearly every registrant will be required to start complying with the

Final Rules by the fiscal year beginning in 2027. 34

17 CFR 210.14-02(h).

17 CFR 229.1506. Pursuant to the Final Rules, an AF must file an attestation report at the limited assurance

level beginning the third fiscal year after the compliance date for disclosure of GHG emissions while an LAF

must file an attestation report at the limited assurance level beginning the third fiscal year after the compliance

date for disclosure of GHG emissions, and then file an attestation report at the reasonable assurance level

beginning the seventh fiscal year after the compliance date for disclosure of GHG emissions. Id.

Id.

For example, the Commission exempted smaller reporting companies (each an “SRC”) and emerging growth

companies (each an “EGC”) from the requirement to disclose GHG emissions data, and the Commission

completely exempted from the Final Rules private companies that are parties to business combination

transactions involving a securities offering registered on Form S-4 or F-4. See Adopting Release at 21733,

21744.

See Adopting Release at 21828-29.

Id.

Within 60 days of the Commission’s adoption of the Final Rules on March 6, 2024,

various parties petitioned for judicial review in multiple Federal courts of appeals. 35 On March

19, 2024, the Commission filed a Notice of Multicircuit Petitions for Review with the Judicial

Panel on Multidistrict Litigation (“JPML”), and on March 21, 2024, the JPML issued an order

consolidating the petitions for review in the U.S. Court of Appeals for the Eighth Circuit

(“Eighth Circuit”). 36 On April 4, 2024, the Commission, citing its authority pursuant to the

Exchange Act 37 and the Administrative Procedure Act, 38 entered a stay of the Final Rules and

ordered that “the Final Rules [would be] stayed pending the completion of judicial review of the

consolidated Eighth Circuit petitions.” 39

On March 27, 2025, the Commission voted to end its defense of the rules. The

Commission staff sent a letter to the court stating that the Commission withdraws its defense of

the rules and that Commission counsel are no longer authorized to advance the arguments in the

brief the Commission had filed. Thereafter, on September 12, 2025, the Eighth Circuit issued an

Order holding the consolidated petitions for review in abeyance “until such time as the . . .

Commission reconsiders the challenged Final Rules by notice-and-comment rulemaking or

renews its defense of the Final Rules.” 40 The Eighth Circuit explained that it is the Commission’s

See Iowa v. SEC, No. 24-1522 (8th Cir.), and consolidated cases.

Consolidation Order, In re Securities and Exchange Commission, The Enhancement and Standardization of

Climate-Related Disclosures for Investors, MCP No. 180 (J.P.M.L. Mar. 21, 2024).

15 U.S.C. 78y(c)(2).

5 U.S.C. 705.

The Enhancement and Standardization of Climate-Related Disclosures for Investors; Delay of Effective Date,

Release No. 33-11280 (Apr. 4, 2024) [89 FR 25804 (Apr. 12, 2024)]; see also Sec. & Exch. Comm’n, In the

Matter of the Enhancement and Standardization of Climate-Related Disclosures for Investors (Order Issuing

Stay), Release No. 33-11280 (Apr. 4, 2024) (order staying Final Rules).

Order, Iowa v. SEC, No. 24-1522 (8th Cir. Sept. 12, 2025). The Eighth Circuit’s decision to hold the

consolidated petitions for review in abeyance was made after (1) the Commission’s filing with the Eighth

Circuit dated Mar. 27, 2025, notifying the court and the parties in the litigation that the Commission had

“responsibility to determine whether its Final Rules will be rescinded, repealed, modified, or

defended in litigation.” 41 As a result of the current procedural posture, the Final Rules remain

stayed. The court has not made any decision on the merits of any arguments presented by any

petition for review of the Final Rules.

III.

DISCUSSION OF PROPOSED RESCISSION

A. Overview of Basis for Rescission: Lack of Authority and Reevaluation of

Policy Grounds

As noted above, we are proposing to rescind the Final Rules in their entirety because they

exceed the scope of the Commission’s statutory authority. In addition, even if a court were to

find that the Commission had authority to adopt the Final Rules, we have independent,

compelling policy reasons to rescind the rules in their entirety. The Final Rules are unnecessary

and inconsistent with a registrant-specific, materiality-based approach to disclosure that best

serves the interests of registrants and investors; stray well beyond the policy concerns of the

Federal securities laws; impose substantial costs on public companies and their shareholders that

are not justified by the informational benefits they may provide to some investors; and are at

odds with the Commission’s policy objectives of facilitating capital formation and promoting

public company status.

“determined that it wishe[d] to withdraw its defense of the [Final] Rules” and (2) a status report that the

Commission filed with the Eighth Circuit on July 23, 2025, wherein the Commission notified the Eighth Circuit

that it did not intend to review or reconsider the Final Rules at that time and requested that the court proceed to

decide the petitions for review.

Id.

The Final Rules Exceed the Commission’s Statutory Authority

A fundamental principle of constitutional and administrative law is that an administrative

agency must act within its statutory authority. 42 An agency acts unlawfully when it exercises

power beyond its authority. 43 Agencies must respond to their own unlawful acts; as the Supreme

Court recently put it, illegal agency action “presumably requires remedial action of some sort.” 44

The proper remedy for the Commission’s lack of statutory authority to adopt the Final Rules is

rescission.

An agency’s rulemaking power is determined by examining the text and context of the

relevant statutory provisions. Statutory provisions are not read in isolation; courts look to their

See, e.g., Bd. of Governors of Fed. Rsrv. Sys. v. Dimension Fin. Corp., 474 U.S. 361, 373 n.6 (1986) (holding

that an administrative agency, in this case the Federal Reserve Board, only has the power “to police within the

boundaries of the [relevant authorizing statute]” and not “to expand its jurisdiction beyond the boundaries

established by Congress”).

See West Virginia v. EPA, 597 U.S. 697, 723 (2022) (“Agencies have only those powers given to them by

Congress”); Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 327-328 (2014) (stating that to avoid “a severe blow to

the Constitution’s separation of powers,” an agency must act within the bounds established by Congress and

may not rewrite statutory terms “to suit its own sense of how [a] statute should operate”); City of Arlington v.

FCC, 569 U.S. 290, 297 (2013) (“No matter how it is framed, the question a court faces when confronted with

an agency’s interpretation of a statute it administers is always, simply, whether the agency has stayed within the

bounds of its statutory authority.”) (italics in original); K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988)

(“In determining whether a challenged regulation is valid, a reviewing court must first determine if the

regulation is consistent with the language of the statute.”); Stark v. Wickard, 321 U.S. 288, 309 (1944) (“When

Congress passes an Act empowering administrative agencies to carry on governmental activities, the power of

those agencies is circumscribed by the authority granted.”); Cal. Indep. Sys. Operator Corp. v. FERC, 372 F.3d

395, 398 (D.C. Cir. 2004) (stating that a Federal agency is a creature of statute, has no constitutional or common

law existence or authority, and has “only those authorities conferred upon it by Congress”) (italics in original)

(citation omitted).

Dep’t of Homeland Sec. v. Regents of Univ. of Calif., 591 U.S. 1, 22 (2020); see also id. at 46, 54 (Thomas, J.,

concurring in the judgment in part and dissenting in part) (reasoning for three justices that an agency should

rescind an unlawful action rather than “continue acting unlawfully [by] carr[ying] the program forward”). The

majority held that the Department of Homeland Security’s rescission of a program was arbitrary and capricious

in violation of the Administrative Procedure Act because the government did not adequately consider possible

alternatives or reliance interests. Id. at 24-33. This release considers those issues.

place in the overall statutory scheme. 45 Courts also apply the major questions doctrine to

determine the lawfulness of agency action. 46

In the Federal securities laws, Congress required specific disclosures for registrants

conducting public offerings in the United States or registering securities for trading on U.S.

exchanges. When enacting the Securities Act and the Exchange Act, Congress explicitly called

for disclosures of items central to an understanding of a registrant’s business, operation and

performance, financial condition, directors, management and control, capital structure, the rights

of security holders, and the terms of a registered offering. 47 These disclosures provide investors

with operational and financial information particular to the circumstances of the registrant.

Congress also granted the Commission authority to adopt rules eliminating, substituting,

or adding certain disclosures. When adopting such a rule, the Commission must follow the

directives and guardrails in the text and context of the governing statutes, as discussed below.

When the Commission exercises its legal authority to adopt a disclosure rule under the

statutes discussed below, in certain instances it must also determine whether the action is

necessary or appropriate in the public interest. 48 When making such a public interest

See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132-33 (2000); West Virginia v. EPA, 597 U.S.

at 721; Nat’l Fed’n of Indep. Bus. v. Dep’t of Lab., Occupational Safety & Health Admin., 595 U.S. 109 (2022);

Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 594 U.S. 758 (2021) (on application to vacate stay);

AMG Cap. Mgmt., LLC v. FTC, 593 U.S. 67 (2021); Util. Air Regul. Grp. v. EPA, 573 U.S. at 318-21; Texas v.

United States, 809 F.3d 134 (5th Cir. 2015).

See Learning Res., Inc. v. Trump, 146 S.Ct. 628, 638-639 (2026); Biden v. Nebraska, 600 U.S. 477, 502-07

(2023); West Virginia v. EPA, 597 U.S. at 721-24 (need for clear congressional authorization for assertions of

extravagant statutory power over the national economy); see also FCC v. Consumers’ Rsch., 606 U.S. 656, 70506 (2025) (Kavanaugh, J., concurring) (“[W]hen interpreting a statute and determining the limits of the statutory

text, courts presume that Congress . . . has not delegated authority to the President to issue major rules—that is,

rules of great political and economic significance—unless Congress clearly says as much. Courts presume that

Congress intends to make major policy decisions itself, not leave those decisions to agencies . . . . Congress

does not usually ‘hide elephants in mouseholes’ when granting authority to the President.” (citations omitted)).

See 15 U.S.C. 77aa; 15 U.S.C. 78l(b)(1). In this release, we refer to the disclosure items that Congress

enumerated in the foregoing provisions collectively as “business or financial characteristics.”

See, e.g., 15 U.S.C. 77g(a)(1); 15 U.S.C. 78l(b)(1).

determination, the Commission must “consider, in addition to the protection of investors,

whether the action will promote efficiency, competition, and capital formation.” 49 These

considerations are constraints on the exercise of authority, not sources of authority.

Courts have also recognized that federalism limits the Commission’s rulemaking

authority in areas of corporate governance regulated by State law. 50 Congress has traditionally

left corporate governance to the States to regulate, and it has spoken clearly on the rare occasions

when it has shifted that balance. 51

As discussed below, the Final Rules do not satisfy the statutory criteria for adopting

additional disclosure provisions under the Securities Act or Exchange Act. The disclosures

compelled by the Final Rules are not within the scope of the categories of disclosures Congress

required and do not comport with the directives Congress set for excepting from, substituting, or

adding to those disclosures. They also improperly intrude on State corporate law without a

statutory directive. Accordingly, we propose to rescind the Final Rules in their entirety.

Scope of the Commission’s Disclosure Authority

We first examine the text and context of Congress’s directions on mandatory disclosures

and then consider the Commission’s ability to make changes to them. The main statutory

15 U.S.C. 77b(b); 15 U.S.C. 78c(f); see also 15 U.S.C. 78w(a)(2) (requiring the Commission to consider the

effects on competition of any rules that the Commission adopts under the Exchange Act and prohibiting the

Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in

furtherance of the purposes of the Exchange Act).

See Bus. Roundtable v. SEC, 905 F.2d 406, 412 (D.C. Cir. 1990) (“As the Supreme Court has said,

‘[c]orporations are creatures of state law, and investors commit their funds to corporate directors on the

understanding that, except where federal law expressly requires certain responsibilities of directors with respect

to stockholders, state law will govern the internal affairs of the corporation.’” (citing Santa Fe Indus. v. Green,

430 U.S. 462, 479 (1977)) (emphasis in original)); see also id. at 408 (“[W]e find that the Exchange Act cannot

be understood to include regulation of an issue that is so far beyond matters of disclosure . . . and that is

concededly a part of corporate governance traditionally left to the states.”).

See infra note 126.

provisions discussed in the Adopting Release were sections 7(a)(1) 52 and 19(a) 53 of the

Securities Act and sections 12, 54 13 55 and 23(a)(1) 56 of the Exchange Act. 57

Text of the Disclosure Rulemaking Statutes in the Securities

Act and Exchange Act

Section 7(a)(1) of the Securities Act establishes that Schedule A 58 is the base disclosure

for a registration statement and also permits the Commission to except from or add to the

disclosure requirements enumerated in Schedule A. Section 7(a)(1) provides that a registration

statement for a public offering “shall contain the information” and documents “specified in

Schedule A” of the Securities Act. 59 Schedule A contains 32 disclosure items, such as the

business of the company, its capital structure, use of proceeds from the sale of securities, director

and officer compensation, material contracts, the terms of the offering and detailed balance sheet

and profit or loss statements.

Section 7(a)(1) gives the Commission the authority to except from or add to Schedule A’s

required disclosures in certain circumstances. The Commission may by rule provide that a class

of issuers does not need to include information listed in Schedule A if the Commission finds that

the information is not applicable to that class “and that disclosure fully adequate for the

15 U.S.C. 77g(a)(1) (“section 7(a)(1)”).

15 U.S.C. 77s(a) (“section 19(a)”).

15 U.S.C. 78l (“section 12”).

15 U.S.C. 78m (“section 13”).

15 U.S.C. 78w(a)(1) (“section 23(a)(1)”).

The Adopting Release also cites sections 10 and 28 of the Securities Act [15 U.S.C. 77j and 15 U.S.C. 77z-3],

and sections 3(b), 15, and 36 of the Exchange Act [15 U.S.C. 78c, 15 U.S.C. 78o, and 15 U.S.C. 78mm] as

sources of statutory authority. See, e.g., Adopting Release at 21912. For the same reasons as discussed herein

with respect to the main statutory provisions, the Commission does not view any of these additional provisions

as providing authority for the Final Rules.

15 U.S.C. 77aa (“Schedule A”).

Section 7(a)(1) states that a registration statement “shall contain” the information in Schedule A, not that the

Commission is “authorized” to require it, as the Adopting Release claimed. Contra Adopting Release at 21683.

protection of investors is otherwise required to be included within the registration statement.”

Section 7(a)(1) concludes with a provision authorizing the Commission to add disclosure

requirements to Schedule A: “Any such registration statement shall contain such other

information, and be accompanied by such other documents, as the Commission may by rules or

regulations require as being necessary or appropriate in the public interest or for the protection of

investors.” 60

Section 12 of the Exchange Act similarly requires certain categories of disclosures while

allowing the Commission to prescribe the level of detail and to alter the requirements under

specified conditions. Section 12 stipulates the information to be filed and made public by a

company registering a class of securities on a national securities exchange or that is required to

registration statement must contain 12 enumerated categories of information, such as the

financial structure and nature of the business, the terms of classes of securities, the financial

interests of directors and officers in the company, certain material contracts, and certain financial

statements. 61 Within those 12 categories, the Commission may require a registration statement to

include “[s]uch information, in such detail,” as to the issuer and any control persons “as

necessary or appropriate in the public interest or for the protection of investors . . . .” 62

Section 12(c) gives the Commission the authority to determine that an item listed in

section 12(b) is not applicable to a class of issuers. If it does, “the Commission shall require in

lieu thereof the submission of such other information of comparable character as it may deem

15 U.S.C. 77g(a)(1). Section 19(a) of the Securities Act similarly empowers the Commission to “prescribe . . .

the items or details to be shown” in a registrant’s “balance sheet and earning statement.” 15 U.S.C. 77s(a).

15 U.S.C. 78l(b)(1) (“section 12(b)(1)”).

Id.

applicable to such class of issuers.” 63 Unlike section 7(a)(1) of the Securities Act, section 12 of

the Exchange Act does not otherwise permit the Commission to add to the list of disclosure items

in section 12(b).

Section 13(a) of the Exchange Act provides the Commission with authority to prescribe

periodic disclosure rules for issuers with securities registered under section 12. 64 The

Commission shall require such an issuer “to keep reasonably current the information and

documents required to be included in or filed with” an application or registration statement 65 and

may require the issuer to file annual and quarterly reports. 66 Any rules promulgated under

section 13 must be “necessary or appropriate for the proper protection of investors and to insure

fair dealing in the security.” 67 As with section 12(c), section 13(c) instructs that if the

Commission concludes “any report required under subsection (a) in inapplicable to any specified

class or classes of issuers, the Commission shall require in lieu thereof the submission of such

reports of comparable character as it may deem applicable . . . .” 68

15 U.S.C. 78l(c) (“section 12(c)”) (“If in the judgment of the Commission any information required under

subsection (b) . . . is inapplicable to any specified class or classes of issuers, the Commission shall require in

lieu thereof the submission of such other information of comparable character as it may deem applicable to such

class of issuers.”).

15 U.S.C. 78m(a) (“section 13(a)”). The Commission may require an issuer meeting the terms of section

15(d)(1) of the Exchange Act, 15 U.S.C. 78o(d)(1), to file information and documents required pursuant to

section 13 in respect of a security registered pursuant to section 12.

15 U.S.C. 78m(a)(1).

See 15 U.S.C. 78m(a)(2).

15 U.S.C. 78m(a). 15 U.S.C. 78m(b)(1) provides that rules “in regard to reports” may prescribe the form of the

reports and certain accounting items, such as the details for a balance sheet and valuation methods for, among

other things, assets, liabilities, and depreciation. Section 19(a) of the Securities Act similarly provides the

Commission with authority to prescribe disclosure of the same list of accounting items and details.

15 U.S.C. 78m(c). Section 23(a)(1) of the Exchange Act—the other main provision of the Exchange Act cited

in the Adopting Release—empowers the Commission to “make such rules and regulations as may be necessary

or appropriate to implement the provisions of this chapter for which [it] [is] responsible or for the execution of

functions vested in [it] by this chapter, and may for such purposes classify persons, securities, transactions,

statements, applications, reports, and other matters within [its] . . . jurisdiction[], and prescribe greater, lesser, or

different requirements for different classes thereof.” 15 U.S.C. 78w(a)(1). This provision’s general terms do not

affect the specific disclosure-related authority discussed above.

These statutory provisions establish the Commission’s power to compel disclosures in

public offerings and by companies registering securities for public trading. Congress restricted

the information an issuer or reporting company must disclose to items central to an

understanding of the company’s business or financial characteristics. These categories of

information are fundamental to valuing the risks and returns of an investment in the registrant’s

securities.

The Commission’s Authority to Change Mandatory

Disclosures

As noted above, Congress permitted the Commission to make changes to the mandatory

disclosures within certain limits. In this way, Congress contemplated developments in mandatory

disclosure requirements but gave context and guidance for them in the governing statutes.

The relevant part of section 7(a)(1) of the Securities Act states that the Commission may

require the disclosure of “such other information” not adequately covered by Schedule A if such

item is “necessary or appropriate in the public interest or for the protection of investors.” 69

Section 7(a)(1) also provides that the Commission may exclude from or adopt a substitute for an

item in Schedule A for a class of issuers if it finds the item is not applicable and “that disclosure

fully adequate for the protection of investors is otherwise required to be included within the

registration statement.” 70 Section 12(b)(1) of the Exchange Act authorizes the Commission to

determine the “detail” for the twelve enumerated categories of disclosures listed by Congress for

15 U.S.C. 77g(a)(1); see also 15 U.S.C. 77s (allowing the Commission to prescribe “the items or details to be

shown in the balance sheet and earning statement” as part of its authority to prescribe “such rules and

regulations as may be necessary to carry out the provisions of this title, including rules and regulations

governing registration statements and prospectuses”).

15 U.S.C. 77g(a)(1).

applications to register securities on an exchange or in certain other circumstances. 71 And if one

of those enumerated categories “is inapplicable to any specified class or classes of issuers,” the

Commission “shall require in lieu thereof the submission of such other information of

comparable character as it may deem applicable to such class of issuers,” 72 closely tying the

Commission’s power to modify the required disclosures to Congress’s original specifications.

Under section 13(a) of the Exchange Act, the Commission has authority to prescribe rules

requiring issuers with securities registered under section 12 “to keep reasonably current” the

information and documents required by section 12(b)(1) for the registration statement and to file

annual and quarterly reports.

The Securities Act and Exchange Act work together in certain circumstances. Experience

with disclosures of reporting companies under section 12 of the Exchange Act may inform the

Commission about the need for or inapplicability of disclosures under section 7(a)(1) of the

Securities Act. Detailed disclosures or disclosures of comparable character or current

information added under section 12 for reporting companies may also guide the Commission’s

determination about disclosures necessary for the protection of investors in a registration

statement required by the Securities Act. This interrelationship between statutory provisions

provides the foundation for the Commission’s existing integrated disclosure system.

The Commission’s rulemaking with respect to disclosures must be “channel[ed]” by and

comparable to the kinds of disclosures recited in the statutes, 73 which refer to a registrant’s

15 U.S.C. 78l(b)(1) (the application “shall contain” “[s]uch information, in such detail . . . as the Commission

may by rules and regulations require, as necessary or appropriate in the public interest or for the protection of

investors, in respect of” those enumerated categories).

15 U.S.C. 78l(c).

FCC v. Consumers’ Rsch., 606 U.S. 656, 690 (2025); see also Circuit City Stores, Inc. v. Adams, 532 U.S. 105,

115 (2001) (open-ended terms in a statutory provision should be “controlled and defined by reference to the

business or financial characteristics. This follows from the text of the Commission’s enabling

statutes. As previously discussed, section 12 of the Exchange Act authorizes the Commission to

specify the “detail[s]” surrounding Congress’s chosen topics 74 and to substitute those topics with

others for certain issuers—provided (among other things) that those substitute disclosures are “in

lieu of” Congress’s specified fields and “of comparable character.” 75

Other requirements in sections 7(a)(1), 12(b)(1), and 13(a) also guide the Commission in

exercising its authority to adopt disclosure rules. The Commission must determine that a rule is

“necessary or appropriate in the public interest or for the protection of investors.” That public

interest determination also requires consideration of efficiency, competition, and capital

formation. 76 To be necessary, an addition to required disclosures should cover information not

adequately elicited by an existing mandatory disclosure. To be appropriate, the additional

disclosures must elicit information comparable to that elicited by the disclosures specified by

Congress.

Courts have consistently held that the inclusion of the “words ‘public interest’ in a

regulatory statute is not a broad license to promote the general public welfare. Rather, the words

take meaning from the purposes of the regulatory legislation.” 77 The purposes, in turn, are

enumerated categories” in that provision, covering only objects “similar in nature” to those enumerated

categories).

15 U.S.C. 78l(b)(1).

15 U.S.C. 78l(c). In keeping with these limitations, courts have struck down attempts to impose disclosures that

expand beyond those targeting the Exchange Act’s core concerns—guarding against, among other things,

“speculation, manipulation, fraud, [and] anticompetitive exchange behavior”—as exemplified by Congress’s

enumerated categories of information. Alliance for Fair Board Recruitment v. SEC, 125 F.4th 159, 164, 178

(5th Cir. 2024) (en banc) (invalidating SEC approval of Nasdaq rules requiring Nasdaq-listed companies to

“disclose information about the racial, gender, and sexual characteristics of their directors”).

See supra note 49.

NAACP v. Fed. Power Comm’n, 425 U.S. 662, 669 (1976); see also Bus. Roundtable v. SEC, 905 F.2d 406, 413

(D.C. Cir. 1990) (explaining that statutory language about the “public interest” “must be limited to ‘the

purposes Congress had in mind when it enacted [the] legislation’” (quoting NAACP, 425 U.S. at 670); see

discerned from the text and context of a statute, which limits the scope of what is necessary or

appropriate. 78 For mandatory disclosures in public offerings or periodic reports, this means that

any additional, substitute, or more detailed disclosure requirements must be related to the

registrant’s business or financial characteristics. 79 Congress did not license the agency to act as a

“roving commission to inquire into [the] evils” of corporate behavior “and upon discovery

correct them.” 80 Indeed, the fact that Congress required the Commission to consider efficiency,

competition, and capital formation when making a public interest determination further

illustrates that “public interest” was not intended to be construed in some vague, open-ended

sense but rather in terms of the public interest in well-functioning securities markets.

Likewise, the words “protection of investors” do not empower the Commission to

mandate any disclosure that an investor may find useful or desirable. 81 In the Adopting Release,

the Commission made general assertions that climate-related information was “important” to

investors 82 and that the Final Rules would make the disclosures more consistent, comparable,

and reliable. 83 Those considerations may play a role in the Commission’s assessment of whether

generally Consumers’ Rsch., 606 U.S. at 690 (explaining that the Supreme Court has “long held that ‘the words

‘public interest’ in a regulatory statute do not encompass ‘the general public welfare’ but rather ‘take meaning

from the purposes of the regulatory legislation’’”) (quoting NAACP, 425 U.S. at 669).

See Davis v. Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989) (explaining that “statutory language cannot be

construed in a vacuum,” but rather “the words of a statute must be read in their context and with a view to their

place in the overall statutory scheme”).

See supra note 73 and accompanying text.

Nat’l Fed’n of Indep. Bus. v. Dep’t of Lab., Occupational Safety & Health Admin., 595 U.S. 109, 126 (2022)

(Gorsuch, J. concurring) (quoting A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 551 (1935)

(Cardozo, J, concurring)).

See Davis, 489 U.S. at 809.

The Adopting Release used an expansive notion of “investor,” defining that term to include not only retail and

institutional investors but also “other market participants (such as financial analysts, investment advisers, and

portfolio managers) that use disclosures in Commission filings as part of their analysis to help investors.”

Adopting Release at 21671 n.26.

See, e.g., Adopting Release, section II.A.1.a.

a potential disclosure obligation is necessary or appropriate or promotes efficiency and capital

formation, but they are not a freestanding statutory authorization to expand disclosure beyond the

types of information Congress specified. If they were, there would be no meaningful limits on

the Commission’s statutory authority. 84 Under such a reading, the Commission could mandate

disclosure about virtually any topic, however contentious, esoteric, or parochial, provided that

some subset of investors may find the information relevant to their decisions to buy or sell the

registrant’s securities.

Expansive notions of the public interest and protection of investors do not provide a basis

for straying beyond the types of business or financial characteristics that Congress specified.

Generalized invocations of “importance to” and “interests of” investors or “investor demand” 85

are not adequately grounded in the text, context, and limitations of the law to provide a basis for

rulemaking. The statutes also do not mention consistency or comparability as a basis for a

disclosure rule. Notwithstanding the Commission’s assertions in the Adopting Release, these

justifications do not authorize the Commission to “update and build on” the disclosures specified

in the Federal securities laws “by requiring additional disclosures of information.” 86

Materiality is also a key part of the Commission’s application of legal authority when it

adopts disclosure rules. Information is material if there is a substantial likelihood that a

reasonable investor would consider it important or significant in deciding whether to buy or sell

Indeed, the Supreme Court recently rejected an authority analysis similar to the one used to support the Final

Rules. See Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 594 U.S. 758, 763-765 (2021). In that case,

in an action seeking to vacate the stay of a district court judgment, the Court examined whether the CDC

exceeded its authority by issuing a moratorium on evictions during the COVID-19 pandemic. The Court

concluded that the CDC likely exceeded its authority by instituting the eviction moratorium because the CDC

interpreted the Public Health Service Act too broadly. The Court explained that statutory language should be

read in context and succeeding sentences in a statute can inform grants of authority that appear in prior

sentences.

See, e.g., Adopting Release, section IV.B.1.

Contra Adopting Release at 21683.

a security. 87 The common interest of reasonable investors is in information regarding the

financial performance of a company, the pricing of securities, and the prospect for economic and

financial return from the disclosing company. 88 Accordingly, materiality is a concept inherently

rooted in financial considerations.

While “materiality” is not referenced in the statutory provisions that were relied upon to

promulgate the Final Rules and does not itself provide a separate basis for a disclosure

obligation, this concept bears directly on the Commission’s consideration of investor protection,

efficiency, and capital formation. Immaterial disclosures do not further the “public interest” or

“protection of investors”—indeed, they are likely to frustrate such objectives. The materiality

standard filters out information that a reasonable investor would not consider important, protects

investors from being buried in an avalanche of trivial information, and prevents the registrant

from having to collect and disclose every minor detail about its operations. 89 Therefore, assuring

that mandatory disclosures elicit material information is frequently part of the Commission’s

See 17 CFR 230.405 (“material” means “those matters to which there is a substantial likelihood that a

reasonable investor would attach importance in determining whether to purchase the security registered”); 17

CFR 240.12b-2 (“material” means “those matters to which there is a substantial likelihood that a reasonable

investor would attach importance in determining whether to buy or sell the securities registered”); see also

Basic Inc. v. Levinson, 485 U.S. 224 (1988).

See Sean J. Griffith, What’s “Controversial” About ESG? A Theory of Compelled Commercial Speech Under

the First Amendment, 101 NEB. L. REV. 876, 881 (2023) (“[F]ocusing on investors qua investors reveals a

common core—specifically, concern for the financial return of an investment.” (emphasis in original)); Eric C.

Chaffee, The New Old SEC, 85 MARYLAND L. REV. 468, 492-493 (2026) (“[Each of the Commission’s

governing statutes is] focused on providing investors with the truthful material information necessary to make

informed investment decisions, rather than attempting to protect investors in their day-to-day lives or in other

contexts”); Comm’r Elad Roisman, Can the SEC Make ESG Rules that are Sustainable? (June 22, 2021),

available at https://www.sec.gov/newsroom/speeches-statements/can-sec-make-esg-rules-are-sustainable

(“[W]hile any given shareholder may have bought securities for reasons other than or in addition to making

money, it seems clear that a ‘reasonable investor’ is someone whose interest is in a financial return on an

investment.”).

See Basic Inc., 485 U.S. at 231-32, 234, 238; see also Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27

(2011) (explaining and applying the Basic Inc. standard of materiality); TSC Indus., Inc. v. Northway, Inc., 426

U.S. 438, 448-49 (1976) (adopting a standard of materiality under Exchange Act Rule 14a-9).

required determination that such disclosures advance the goals of investor protection, efficiency,

and capital formation.

The Commission’s accepted past practices illustrate these limits on its authority in

operation. Current Regulation S-K, for example, contains instances of the Commission

exercising its authority to adopt disclosure rules based on enumerated items of disclosure in

Schedule A of the Securities Act and section 12(b)(1) of the Exchange Act. For example,

Schedule A requires disclosures about securities held by officers, directors, promoters, and large

shareholders and their intention to subscribe to purchases under the registration statement

(paragraph 7) and the purposes for which the offered securities will supply funds (paragraph 13),

but Schedule A does not explicitly require disclosures about shareholders intending to sell

securities pursuant to the registration statement. Item 507 of Regulation S-K 90 requires

disclosures about the names of selling shareholders, their material relationships with the issuer,

and the amount they plan to sell, but these disclosures are “channel[ed]” by the kinds of

disclosures recited in paragraphs 7 and 13 of Schedule A. 91

As another example, to address concerns with managerial self-dealing, paragraphs 14, 20,

22, and 24 of Schedule A and section 12(b)(1)(D) through (F) require disclosures of

remuneration to officers, directors, underwriters, and “other persons” over certain dollar amounts

and the interests of directors, officers, and large shareholders in the securities of the issuer and

material contracts they have with the issuer. Item 404 of Regulation S-K, 92 which requires

disclosure about transactions with related persons, is not identical to the enumerated items in

17 CFR 229.507.

FCC v. Consumers’ Rsch., 606 U.S. 656, 690 (2025).

17 CFR 229.404.

Schedule A, but it is channeled by Schedule A’s disclosures concerning managerial self-dealing.

Similarly, Item 404 spells out certain details related to the section 12(b)(1) disclosures. 93

The ability to require substitute or added disclosures also enables the Commission to

adapt current disclosure rules for novel financial assets or transaction structures that qualify as

securities or securities transactions, subject to the same directives and guardrails discussed

above. For example, instead of remuneration or payments to officers, directors, and promoters,

the Commission could substitute “information of comparable character.” 94

When read in the context of the mandatory disclosures in sections 7(a)(1) and 12(b)(1), it

is clear that these statutes do not authorize the Commission to mandate any and all information

that it deems desirable. Nor does section 13(a) give the Commission a general, freestanding

power to mandate ongoing disclosures. 95 Rather, disclosure rules adopted by the Commission

must be “channel[ed]” by 96 and comparable to the disclosures Congress specified in the Acts,

which concern the registrant’s business or financial characteristics. Despite suggestions to the

contrary in the Adopting Release, the Commission is not free to construct a new disclosure

regime out of whole cloth. In adopting the Final Rules, the Commission did not sufficiently

In formulating a substitute disclosure, the Commission frequently must consider materiality as part of its

evaluation of efficiency, competition, capital formation, and the protection of investors, as discussed below.

15 U.S.C. 78l(c).

Contra Adopting Release at 21683 n.177 and accompanying text (quoting Exchange Act section 13(a) [15

U.S.C. 78m(a)]). Section 19(a) of the Securities Act and section 23(a)(1) of the Exchange Act confer general

rulemaking authority. General rulemaking authority remains subject to statutory context and cannot be read to

expand the Commission’s authority to adopt disclosure regulations beyond the limitations set forth in the

federal securities laws. By their terms, sections 19(a) and 23(a)(1) may be used as necessary “to carry out” or

“to implement” other provisions in the Securities Act or the Exchange Act and, therefore, for purposes of

disclosure in a registration statement or periodic report, do not extend beyond the more specific terms in the

previously discussed statutory provisions. See New York Stock Exch. LLC v. SEC, 962 F.3d 541, 556 (D.C. Cir.

2020) (“[A] ‘necessary or appropriate’ provision in an agency’s authorizing statute does not necessarily

empower the agency to pursue rulemaking that is not otherwise authorized.”). Thus, the Commission could not

have relied on its general rulemaking power in Securities Act section 19(a) and Exchange Act section 23(a)(1)

to adopt the Final Rules.

Consumers’ Rsch., 606 U.S. at 690.

adhere to these limits or determine the best interpretation of the relevant statutes. 97 Instead, the

Commission relied on an impermissibly broad reading of its statutory authority.

The Final Rules Exceed the Limitations on Mandatory Disclosures

The Final Rules did not respect the limitations on the Commission’s authority and are

fundamentally different from the types of enumerated disclosures found in the Commission’s

governing statutes. Those enumerated disclosures refer to a company’s business or financial

characteristics. By contrast, the Final Rules mandate highly specific and granular information on

the sole topic of climate-related matters, such as operational and governance practices and

internal metrics (including GHG emissions) that many registrants may not track or use for

business purposes. 98

These disclosure obligations do not fit within the powers conferred by the statutes

discussed above. While the Commission in certain other circumstances has required disclosures

that are tailored to specific risks facing the disclosing company in a particular industry, 99 no prior

example comes close to the breadth of disclosures required by the Final Rules, which apply

across the board. The Final Rules are not comparable to the disclosures called for by the

Commission’s governing statutes, which refer to a company’s business or financial

characteristics.

The subject of each new disclosure mandated by the Final Rules, by contrast, was

climate-related risks and strategies for managing those risks, as well as the financial statement

effects of severe weather events and other natural conditions. Many of these disclosures were

See Loper Bright Enterprises v. Raimondo, 603 U.S. 369, 400 (2024) (explaining that “[i]n the business of

statutory interpretation, if it is not the best [interpretation], it is not permissible”).

See supra section II.

See, e.g., 17 CFR 210.12-29 (mortgage loans on real estate for certain real estate companies).

only secondarily or remotely about the past or immediate effects of climate-related matters on

the operations, revenue, expenses, capital structure, liquidity, management or controlling

shareholders of the registrant. For example, the Final Rules require disclosure about climaterelated impacts on third parties (such as suppliers, purchasers, or counterparties to material

contracts) 100 as well as transition risks—defined expansively to include, among other things, “the

actual or potential negative impacts on a registrant’s business . . . attributable to regulatory,

technological, and market changes, . . . changes in law or policy, reduced market demand for

carbon intensive products, . . . [and] competitive pressures associated with the adoption of new

technologies, and reputational impacts . . . .” 101 The Final Rules also require the disclosure of

internal analysis and metrics, such as scenario analysis 102 and internal carbon prices. 103

As discussed above, the Commission’s disclosure authority under its governing statutes

must be construed in light of the text and context of the surrounding statutory provisions.

Nothing in these provisions expressly empowers the agency to burden public companies and

their shareholders with such detailed (and costly) disclosures about one particular topic. Indeed,

the scope of the Final Rules stands in stark contrast to the more limited and targeted disclosures

the Commission has previously required on environmental matters, as discussed in section

III.C.1.a.

Nor does the inclusion of materiality qualifiers salvage the Final Rules from their legal

defects. While the Adopting Release claimed that such qualifiers would limit the scope, and

therefore the burdens, of the Final Rules, as discussed in more detail in section III.C.3, the use of

100

See 17 CFR 229.1502(b)(3).

101

17 CFR 229.1500.

102

See 17 CFR 229.1502(f).

103

See 17 CFR 229.1502(g).

such qualifiers in such a complex, interconnected, and highly prescriptive set of disclosure

requirements does not adequately cabin those requirements within the bounds of the

Commission’s authority. In particular, while the requirement to disclose Scope 1 and Scope 2

GHG emissions is qualified by materiality, 104 it nonetheless requires covered registrants to

devote significant time and resources to measure their emissions and determine whether they are

material, including establishing organizational boundaries and operational boundaries and

adopting a specific reporting protocol or standard. 105 Only after it has invested potentially

significant resources to perform this exercise can a registrant make a determination about

whether such metrics are material and therefore must be disclosed. 106 Rather than limiting the

costs and burdens of the Commission’s emissions reporting requirements, the rule’s materiality

qualifier effectively compels covered registrants to track and evaluate a metric they may not

otherwise use for business purposes.

Similarly, invoking the impact of climate-related risks on a registrant’s business, results

of operations, or financial condition is not sufficient, in itself, to justify the Final Rule’s myriad

highly specific disclosure requirements. For example, the Final Rules require registrants to

provide disclosures regarding their use of transition plans, 107 scenario analysis, 108 and internal

carbon prices, if material. 109 The Adopting Release repeatedly asserted that such disclosures

were necessary to value a registrant’s securities or evaluate its financial performance, 110 but the

104

17 CFR 229.1505(a)(1).

105

See Adopting Release at 21875.

106

Id.

107

See 17 CFR.229.1502(e).

108

See 17 CFR.229.1502(f).

109

See 17 CFR.229.1502(g).

110

Adopting Release at 21669, 21671, 21846-48.

exceedingly granular nature of the information required by the Final Rules goes well beyond

what must be disclosed in respect of the many other factors that may affect the valuation of a

registrant’s securities. As noted above, to be necessary, an addition to required disclosures

should cover material information not adequately elicited by an existing mandatory disclosure.

When climate change or other environmental issues, including transition risk, have materially

affected the operations or financial performance of a specific company, existing disclosure rules

require discussion of the effects. Indeed, the Commission’s Guidance Regarding Disclosure

Related to Climate Change 111 lists a variety of specific existing disclosure obligations that,

depending on the particular circumstances of a company, could require disclosure of climate

change matters. For example, Item 303 of Regulation S-K requires, among other things, a

company to disclose and discuss any known trend or uncertainty that has had a material positive

or negative consequence for the company’s results of operations. 112 The fact that existing

disclosure obligations already serve to provide investors with material information about

climate-related matters reinforces the conclusion that the Final Rules are not “necessary” to

protect investors. 113 Indeed, they may even serve to harm investors by eliciting information about

climate-related matters that goes well beyond what a reasonable investor needs to make an

informed investment decision. 114

In addition to creating a disclosure regime far beyond the kind authorized by the

Commission’s enabling statutes, the Final Rules also intrude on State authority over core matters

111

Release No. 33-9106 (Feb. 2, 2010) [75 FR 6290 (Feb. 8, 2010)] (“2010 Guidance”).

112

17 CFR 229.303 (Management’s discussion and analysis of financial condition and results of operations).

113

See 15 U.S.C. 77g(a)(1); 15 U.S.C. 78l(b)(1); see also 15 U.S.C. 78m(a) (requiring every issuer of a security

registered pursuant to section 12 to file certain reports with the Commission in accordance with such rules and

regulations “as the Commission may prescribe as necessary or appropriate for the proper protection of investors

and to insure fair dealing in the security”).

114

See infra section III.C.1.b.

of corporate governance. “No principle of corporation law and practice is more firmly

established than a State’s authority to regulate domestic corporations.” 115 Although the Final

Rules purport to require issuers only to disclose information, the effect of their requirements is to

impermissibly regulate issuers’ internal affairs. The many “ifs” in the Final Rules are telling in

this regard. While framed in terms of risks to and impacts on the registrant, the disclosure

mandates in the Final Rules effectively provide an aspirational framework for how public

companies should manage climate-related matters.

The Commission’s existing rules typically require disclosure of ongoing compliance or

legal matters when they are material—they do not pressure or require registrants to create and

maintain dedicated risk management systems that prioritize one category of risks above all

others. 116 By contrast, the Final Rules create a highly detailed and prescriptive regime focused on

a single category of risk. 117 For example, the Final Rules require disclosure of the board of

115

CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 89 (1987); see also Burks v. Lasker, 441 U.S. 471, 478

(1979) (“[T]he first place one must look to determine the powers of corporate directors is in the relevant State’s

corporation law.”).

116

See, e.g., Disclosures Pertaining to Matters Involving the Environment and Civil Rights, Release No. 33-5170

(July 19, 1971) [36 FR 13989 (July 29, 1971)] (interpreting Commission rules and forms to require disclosure

about “compliance with statutory requirements with respect to environmental quality” when such compliance

efforts “may necessitate significant capital outlays,” “may materially affect the earning power of the business,”

or “cause material changes in [the] registrant’s business”); Disclosure with Respect to Compliance with

Environmental Requirements and Other Matters, Release No. 33-5386 (Apr. 20, 1973) [38 FR 12100 (May 9,

1973) at 12100-01] (adopting amendments requiring registrants to disclose material effects of compliance with

environmental laws on the capital expenditures, earnings, and competitive position of the registrant and

administrative or judicial proceedings arising under environmental laws if “material to the business or financial

condition of the registrant” or relating to certain claims exceeding 10% of assets); see also 17 CFR

229.101(c)(2)(i), (h)(4)(xi) (requiring disclosure of certain material effects of compliance with environmental

regulations).

117

Similarly, the Final Rules contrast with the approach taken by the Commission in the 2010 Guidance, when it

explained that, in certain circumstances and for some companies, regulatory, legislative, and other

developments related to climate change “could have a significant effect on operating and financial decisions.”

2010 Guidance at 6291. As such, the Commission’s existing disclosure requirements—like those that require

disclosure of a registrant’s description of its business, legal proceedings, risk factors, and management’s

discussion and analysis—might apply to climate-related issues. In contrast to the Final Rules, these prior

initiatives are consistent with the Commission’s long-held recognition that types of information “which are of

importance only in certain circumstances have generally not been made the subject of specific disclosure

requirements.” Environmental and Social Disclosure Release, infra note 131.

directors’ role in managing climate-related risks, which overlaps with existing disclosure

requirements related to the role of the registrant’s board in risk oversight. 118 In addition, while

materiality qualifiers were added at the adopting stage, given the detailed nature of the

requirements, the Final Rules effectively require many registrants to conduct new analyses or

gather new data for the sole purpose of determining whether they have a disclosure obligation. 119

To house these extensive new reporting requirements, the Commission created a new

subpart 1500 of Regulation S-K as well as a new Article 14 of Regulation S-X. Each of these

regulations contain detailed line item requirements related to such varied matters as transition

plans, 120 scenario analysis, 121 internal carbon prices, 122 GHG emissions, 123 and the aggregate

amount of carbon offsets and RECs expensed. 124 Most of these items apply equally across all

types of registrants. The anticipated response of registrants to the creation of such a detailed

regime dedicated to a single category of risks is clear: all registrants will pay attention to climaterelated matters and dedicate significant board, executive, and employee resources to manage

118

See 17 CFR 229.407(h) (“[D]isclose the extent of the board’s role in the risk oversight of the registrant, such as

how the board administers its oversight function, and the effect that this has on the board’s leadership

structure.”).

119

See, e.g., 17 CFR 229.1505 (GHG emissions metrics). The Adopting Release acknowledges that in order to

comply with 17 CFR 229.1505, most, if not all, LAFs and AFs that are not EGCs or SRCs will need to assess or

estimate their Scope 1 and 2 emissions to reach a materiality determination. As a result, these registrants will, to

some extent, need to adopt controls and procedures to assess the materiality of their Scope 1 and 2 emissions

and determine whether disclosure is required if they do not already have them in place. Adopting Release at

21859.

120

17 CFR 229.1502(e).

121

17 CFR 229.1502(f).

122

17 CFR 229.1502(g).

123

17 CFR 229.1505.

124

17 CFR 210.14-02(e).

them. This broad mandate interferes with the management of companies and trenches upon the

traditional role of States in regulating corporations. 125

On the rare occasions when Congress has intervened in corporate governance, it has

given explicit direction for the Commission to do so. 126 Congress has not done so with respect to

management of climate-related matters. Such a conduct-altering regime, unrelated to managerial

self-dealing, 127 simply was not contemplated by Congress when it specified the fundamental

disclosures that a registrant should provide when conducting a public offering in the United

States or trading in U.S. markets. This effort to regulate corporate management interferes with

the role of the States in regulating corporate governance and contravenes the “clear statement”

rule that the Supreme Court applies when regulatory actions raise federalism concerns. 128

125

Cf. Bus. Roundtable v. SEC, 905 F.2d 406, 411-412 (D.C. Cir. 1990) (rejecting effort by Commission “to

establish a federal corporate law by using access to national capital markets as its enforcement mechanism”).

126

See, e.g., Exchange Act section 10A(m) (directing the Commission to adopt rules requiring national securities

exchanges to prohibit the listing of any security of an issuer that does not meet certain specified requirements

related to audit committee procedures and independence) [15 U.S.C. 78j–1(m)]; Exchange Act section 10C(f)

(directing the Commission to adopt rules to direct national securities exchanges and national securities

associations to prohibit the listing of any security of an issuer that is not in compliance with specified

requirements related to compensation committees) [15 U.S.C. 78j–3(f)]; Exchange Act section 14B (directing

the Commission to adopt rules requiring disclosure of the reasons why the issuer has chosen the same person to

serve as chairman of the board of directors and chief executive officer or different individuals to serve as

chairman of the board of directors and chief executive officer) [15 U.S.C. 78n-2]. Around the same time that

Congress enacted the Securities Act and Exchange Act, it also enacted the Public Utilities Holding Company

Act of 1935 [15 U.S.C. 79 et seq. (repealed 2005)] (“PUHCA”). Although now repealed, PUHCA provided the

Commission with extensive power to refashion the structure and business practices of an entire industry. See,

e.g., Am. Power & Light Co. v. SEC, 329 U.S. 90 (1946) (upholding the Commission’s authority under PUHCA

to require that each registered holding company, and each subsidiary company thereof, take such steps as the

Commission shall find necessary to ensure that the corporate structure or continued existence of any company

in the holding-company system does not unduly or unnecessarily complicate the structure, or unfairly or

inequitably distribute voting power among security holders, of such holding-company system). PUHCA thus

stood in sharp contrast to the two prior federal securities laws, which focused on disclosure. The history of

PUHCA demonstrates that Congress knows how to empower the agency to intervene in internal corporate

affairs when it wishes to do so.

127

See 15 U.S.C. 78l(b)(1)(D); 17 CFR 240.14a-101.

128

Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 594 U.S. 758, 764 (2021) (“Our precedents require

Congress to enact exceedingly clear language if it wishes to significantly alter the balance between federal and

state power . . . .”) (quoting U.S. Forest Serv. v. Cowpasture River Pres. Ass’n, 590 U.S. 604, 621-622 (2020)).

The past practices the Commission cited in the Adopting Release also do not justify the

Final Rules. According to the Supreme Court, “[i]t is telling” when an agency that “has never

before adopted a broad . . . regulation” over many decades now seeks to do so, suggesting “that

the mandate extends beyond the agency’s legitimate reach.” 129 Until the Final Rules, the

Commission had never before adopted a sweeping set of disclosure requirements on climaterelated issues; indeed, in prior years, it specifically declined to do so.

In adopting the Final Rules, the Commission pointed as precedent to environmental

disclosure requirements first adopted in the 1970s, asserting that “the Commission for the last

fifty years has also required disclosure about various environmental matters.” 130 But a complete

and balanced reading of the record from the 1970s about environmental disclosures tells a

different story. The dominant themes from the Commission at the time were doubts about its

powers and how investors would use Commission-mandated environmental disclosures. 131

The narrow disclosures adopted in the 1970s were in response to a specific congressional

directive contained in the National Environmental Policy Act of 1969 (“NEPA”), 132 which

required the Commission and other Federal agencies to develop procedures to consider

129

Nat’l Fed’n of Indep. Bus. v. Dep’t of Lab., Occupational Safety & Health Admin., 595 U.S. 109, 119 (2022).

130

Adopting Release at 21685.

131

See, e.g., Environmental and Social Disclosure, Release No. 33-5627 (Oct. 14, 1975) [40 FR 51656 (Nov. 6,

1975)] (“Environmental and Social Disclosure Release”). In the Environmental and Social Disclosure Release,

the Commission discussed commenters’ interest in registrants’ disclosures of the environmental impact of their

activities. Id. at 51663. The Commission noted that those “who supported social disclosure were virtually

unanimous in stating that . . . environmental, . . . or other social information is in fact economically significant.”

Id. at 51664. The Commission noted that the “majority” of investors who commented indicated that such

information might play a role in how they voted on shareholder proposals, while a “lesser number” indicated

that they would take this data into account in determining what securities to purchase, hold, or sell, and that

many of the religious institutions that commented stated they would use such information in deciding whether

to engage with management to “change some policy.” Id. The Commission concluded that “[a]t this time,

therefore, it appears that those investors who are interested in social disclosures would use this information

more in making voting rather than investment decisions.” Id. at 51665.

132

42 U.S.C. 4321 et seq.

environmental values in decision-making. In 1975, in considering its obligations under NEPA,

the Commission noted that “it is generally not authorized to consider the promotion of social

goals unrelated to the objectives of the Federal securities laws.” 133 It further observed that “the

discretion vested in the Commission under the Securities Act and the Securities Exchange Act to

require disclosure which is necessary or appropriate ‘in the public interest’ does not generally

permit the Commission to require disclosure for the sole purpose of promoting social goals

unrelated to those underlying these Acts.” 134 Rather, disclosure mandates under the Federal

securities laws had to relate to the financial condition of, and matters of economic significance

to, the disclosing company. 135

The Commission therefore proposed and ultimately adopted a small number of narrow

rules generally consistent with the disclosure framework in the Federal securities laws. For

example, under the 1975 amendments, a reporting company must disclose material effects on

capital expenditures, earnings, and competitive position from compliance with government

environmental regulation. 136 The 1975 rules did not include disclosure about environmental

strategies or plans or board oversight of environmental risks; nor did they include expansive

requirements that companies track and assess the environmental impact of their operations.

As recently as 2016, the Commission reconsidered its authority to require disclosures on

environmental and social issues as part of a concept release on the business and financial

disclosure requirements in Regulation S-K. 137 Summarizing its 1975 conclusion on lack of

133

Environmental and Social Disclosure Release at 51656.

134

Id. at 51660.

135

See id. at 51658.

136

Id. at 51667.

137

See Business and Financial Disclosure Required by Regulation S-K, Release No. 33-10064 (Apr. 13, 2016) [81

FR 23916 (Apr. 22, 2016)] (“Regulation S-K Concept Release”).

statutory authority, the Commission observed that, in 1975, following extensive proceedings on

these topics, the Commission concluded that it “generally is not authorized to consider the

promotion of goals unrelated to the objectives of the federal securities laws when promulgating

disclosure requirements, although such considerations would be appropriate to further a specific

congressional mandate.” 138 The Commission also observed that, since 1975, Congress had not

given new statutory authority for disclosures in these areas. 139 While the Commission in 2016

stated that the “role of sustainability and public policy information in investors’ voting and

investment decisions may be evolving” and solicited comment on the need for new sustainability

and social disclosures, it also noted concerns about such disclosures and ultimately determined in

2020 to revise, but not significantly expand upon, the provisions adopted in 1975. 140

In sum, until the Final Rules, the Commission has consistently declined to use its

statutory authority to mandate expansive environmental disclosures; instead, the Commission has

required certain targeted disclosures about regulatory compliance and legal liability that directly

bear on the financial condition of the disclosing company. The rulemaking in the 1970s does not

support the Commission’s statutory authority to issue the Final Rules, which stray beyond those

limits. It is precedent against that authority.

138

Id. at 23971 (footnote omitted).

139

Id. (“The current statutory framework for adopting disclosure requirements remains generally consistent with

the framework that the Commission considered in 1975.”).

140

Specifically, the Commission: (i) refocused the regulatory compliance disclosure requirement by including as a

topic all material government regulations, not just environmental laws; and (ii) implemented a modified

disclosure threshold that increased the existing quantitative threshold for disclosure of environmental

proceedings to which the government is a party from $100,000 to $300,000, but that also affords a registrant the

flexibility to select a different threshold that it determines is reasonably designed to result in disclosure of

material environmental proceedings, provided that the threshold does not exceed the lesser of $1 million or one

percent of the current assets of the registrant and its subsidiaries on a consolidated basis. See Modernization of

Regulation S-K, Items 101, 103, and 105, Release No. 33-10825 (Aug. 26, 2020) [85 FR 63726 (Oct. 8, 2020)].

Finally, and for similar reasons, the major questions doctrine further demonstrates that

the Commission lacked authority to promulgate the Final Rules. The Supreme Court has held

that agencies must have clear authorization from Congress when embarking on a new and

expansive regulation of a substantial policy area of “vast economic and political significance.” 141

Political controversies are for Congress to resolve, not administrative agencies with limited

delegated authority. 142 In addition, when “agencies assert[] highly consequential power beyond

what Congress could reasonably be understood to have granted,” or “claim[] to discover in a

long-extant statute an unheralded power representing a transformative expansion [of] . . .

regulatory authority,” “there is every reason to hesitate before concluding that Congress meant to

confer” the power claimed. 143 Moreover, “[w]hen an agency has no comparative expertise in

making certain policy judgments, . . . Congress presumably would not task it with doing so.” 144

Finally, an intrusion “into an area that is the particular domain of State law,” 145 also provides a

141

Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014) (quoting FDA v. Brown & Williamson Tobacco Corp.,

529 U.S. 120, 160 (2000)) (quotation marks omitted).

142

West Virginia v. EPA, 597 U.S. 697, 723 (2022) (“We presume that Congress intends to make major policy

decisions itself, not leave those decisions to agencies.” (citation and quotation marks omitted)).

143

Id. at 724-25 (citations and quotation marks omitted).

144

Id. at 729 (citation, quotation marks, and brackets omitted); see also Biden v. Nebraska, 600 U.S. 477, 518

(2023) (Barrett, J., concurring) (“Another telltale sign that an agency may have transgressed its statutory

authority is when it regulates outside its wheelhouse.”).

145

Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 594 U.S. 758, 764 (2021); see also Santa Fe Indus.,

Inc. v. Green, 430 U.S. 462, 479 (1977) (rejecting an interpretation of 17 CFR 240.10b-5 (“Rule 10b-5”) that

“would overlap and quite possibly interfere with state corporate law”); Bus. Roundtable v. SEC, 905 F.2d 406,

408 (D.C. Cir. 1990) (“[T]he Exchange Act cannot be understood to include regulation of an issue that is so far

beyond matters of disclosure . . . and that is concededly a part of corporate governance traditionally left to the

states.”); All. for Fair Bd. Recruitment v. SEC, 125 F.4th 159, 180 (5th Cir. 2024) (stating that “no part of the

Exchange Act even hints at SEC’s purported power to remake corporate boards using diversity factors”);

Environmental and Social Disclosure Release at 51660 (“Although disclosure requirements may have some

indirect effect on corporate conduct, the Commission may not require disclosure solely for this purpose.”). We

discuss how the Final Rules reflect an impermissible intrusion into the domain of State corporate law earlier in

this section.

strong indicator that, “absent a clear statement” from Congress, a Federal agency has exceeded

its statutory authority. 146

These indicia that the Commission transgressed the limits of its statutory authority under

the major questions doctrine are all present here. Whether and how public companies should

respond to the perceived causes and effects of climate change is unquestionably of “vast

economic and political significance” 147; answering those questions, even with respect to

disclosure, requires “balancing the many vital considerations of national policy implicated in

how Americans will get their energy.” 148 And as explained above, while the Final Rules purport

to require only disclosure, the effect of their requirements is to impermissibly regulate issuers’

internal affairs. In this regard, the Final Rules stray into areas far beyond the Commission’s

comparative expertise. Moreover, by effectively mandating certain risk management practices,

the Final Rules intrude on an area—corporate governance—traditionally governed by State law.

Thus, the major questions doctrine applies to the Final Rules, but as explained in the preceding

section, the Commission’s authorizing statutes do not provide the needed clarity to justify such a

dramatic expansion of regulatory authority.

146

West Virginia v. EPA, 597 U. S. at 736 (Gorsuch, J., concurring).

147

See Michael Jones-Correa, Idea #23, Climate Change as a Political Problem, IMPACT, VALUE & SUSTAINABLE

BUS. INITIATIVE, WHARTON SCH., UNIV. OF PENN. (Aug. 16, 2019), available at

https://impact.wharton.upenn.edu/climate-center/climate-change-as-a-political-problem/ (stating that “climate

change is as much a political problem as it is a scientific or technical one”); Elaine Kamarck, The Challenging

Politics of Climate Change, BROOKINGS INST. (Sept. 23, 2019), available at

https://www.brookings.edu/articles/the-challenging-politics-of-climate-change/ (stating that “climate change

remains the toughest, most intractable political issue we, as a society, have ever faced”); see also Cong. Budget

Off., The Risks of Climate Change to the United States in the 21st Century (Dec. 2024), available at

https://www.cbo.gov/publication/61146 (setting forth how climate change could affect, among other things,

GDP, real estate and financial markets, and the Federal budget).

148

West Virginia v. EPA, 597 U.S. at 729.

The assertion of regulatory power under the Final Rules represents a “transformative

expansion in [the Commission’s] regulatory authority.” 149 For example, the Final Rules require

LAFs and AFs to disclose their Scope 1 emissions and/or Scope 2 emissions, if material,

separately, each expressed in the aggregate, in terms of CO2e. 150 In addition, the Final Rules

require registrants to provide disclosures regarding their use of transition plans, 151 scenario

analysis, 152 and internal carbon prices, if material, 153 as well as descriptions of their board of

directors’ oversight of climate-related risks, regardless of materiality. 154 The scope of that

expansion is reflected in the costs that the Commission estimated the Final Rules will impose on

registrants. The Commission estimated that annual compliance costs per registrant averaged over

the first ten years of compliance could range from less than $197,000 to over $739,000. 155

Updating these figures for inflation and aggregating them across all affected registrants, we

estimate that rescinding the Final Rules could generate annualized savings of about $4.9 billion

per year over the next 10 years for all affected registrants. 156

As discussed in section III.B.1 and section III.B.2, Congress has not given the

Commission power to write regulations requiring such detailed and extensive disclosure of

climate-related information, let alone to essentially regulate issuers’ internal affairs through

149

Util. Air Regul. Grp. v. EPA, 573 U.S. 302, 324 (2014); see id. (“The power to require permits for the

construction and modification of tens of thousands, and the operation of millions, of small sources nationwide

falls comfortably within the class of authorizations that we have been reluctant to read into ambiguous statutory

text.”).

150

See 17 CFR 229.1505(a).

151

See 17 CFR.229.1502(e).

152

See 17 CFR.229.1502(f).

153

See 17 CFR.229.1502(g).

154

See 17 CFR 229.1501(a).

155

Adopting Release at 21875.

156

See infra section IV.C.3.

onerous disclosure requirements. To the contrary, questions about the country’s response to

climate change generally and about climate-related disclosures by public companies specifically

continue to be important and contentious. Congress is clearly aware of the potential and claimed

risks posed by climate change, yet it has not legislated directly nor instructed the Commission to

adopt regulations in response. 157 Instead, Congress has declined to enact climate-related

disclosure legislation. 158

In evaluating an agency’s assertion of statutory authority, the Supreme Court has

instructed that courts “must be guided to a degree by common sense as to the manner in which

Congress is likely to delegate a policy decision of such economic and political magnitude to an

administrative agency.” 159 Common sense would say that the Securities and Exchange

Commission is not the right agency to deal with the question of how public companies can or

should respond to climate change and related matters. The Commission clearly has no expertise,

scientific or otherwise, related to climate-related risks or the criteria or analytical frameworks to

be used in evaluating such risks. 160 Congress has created an agency—the Environmental

Protection Agency—and tasked that agency with collecting reports from major emissions

157

See, e.g., Letter from United States Senators Pat Toomey, Richard Shelby, Mike Crapo, Tim Scott, M. Michael

Rounds, Thom Tillis, John Kennedy, Bill Hagerty, Cynthia Lummis, Jerry Moran, Kevin Cramer & Steve

Daines (Jun. 15, 2022), https://www.sec.gov/comments/s7-10-22/s71022-20133994-303877.pdf (“Addressing

matters like global warming requires political decisions involving tradeoffs. In a democratic society, those

tradeoffs must be made by elected representatives, who are accountable to the American people, not unelected

financial regulators.”).

158

See, e.g., S. 1217, 117th Cong. (“Climate Risk Disclosure Act of 2021”); H.R. 2570, 117th Cong. (“Climate

Risk Disclosure Act of 2021”); H.R. 1187, 117th Cong. (2021) (“Corporate Governance Improvement and

Investor Protection Act”); S. 3481, 115th Cong. (2018) (“Climate Risk Disclosure Act”).

159

FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000).

160

See West Virginia v. EPA, 597 U.S. 697, 729 (2022) (“When an agency has no comparative expertise in making

certain policy judgments, we have said, Congress presumably would not task it with doing so.” (citations and

quotation marks omitted).

sources and making them available to the public. 161 In adopting the Final Rules, the Commission

acted well “outside its wheelhouse.” 162 Common sense suggests that Congress would not allocate

authority over climate change and related matters to the Commission.

In light of the controversy, costs, and intrusions into the operations of public companies

that would be generated by mandatory climate-related disclosure rules, this is a choice for

Congress, not the Commission, to make. That conclusion is reinforced by the mismatch between

the Commission’s area of expertise and the subject matter of climate change. Further, Congress

has not authorized the Commission to interfere in the corporate governance of registrants with

respect to climate change. Congress has continued to leave such corporate governance matters to

the States. The Commission’s asserted basis for the Final Rules does not satisfy the clear

evidence of congressional authorization required by the major questions doctrine. “Agencies

have only those powers given to them by Congress, and ‘enabling legislation’ is generally not an

‘open book to which the agency [may] add pages and change the plot line.’” 163

The Final Rules Should Be Rescinded in their Entirety

Even if the Commission had authority to adopt some of the Final Rules, the Final Rules

should nevertheless be rescinded in their entirety. Although the Commission stated in the

Adopting Release that it intended for the Final Rules to operate independently, 164 upon

reconsideration, we now conclude that the individual items of disclosure in the Final Rules are

161

42 U.S.C. 7414; see also Am. Elec. Power Co. v. Connecticut, 564 U.S. 410, 426 (2011) (Congress delegated to

the Environmental Protection Agency “the decision whether and how to regulate carbon-dioxide emissions from

power plants”).

162

Biden v. Nebraska, 600 U.S. 477, 518 (2023) (Barrett, J., concurring).

163

West Virginia v. EPA, 597 U.S. at 723 (citation omitted).

164

See Adopting Release at 21829. Courts give varying amounts of weight to such agency statements. See Nasdaq

Stock Mkt. LLC v. SEC, 38 F.4th 1126,1145 (D.C. Cir. 2022); Nat’l Ass’n. Mfrs. v. SEC, 105 F.4th 802, 815-816

(5th Cir. 2024).

pieces of a larger whole and cannot operate sensibly without the others. For example, the text of

the Final Rules sometimes explicitly connects one part of the rules to others. 165 In addition, parts

of the Adopting Release demonstrate the functional inter-relationship between different

disclosure requirements. For example, the Adopting Release states that the financial statement

disclosures “facilitate investors’ assessment of particular types of” climate-related risk and that

there is “significant overlap” between the narrative and financial statement disclosures. 166 As

another example, Rule 14-02(e)(1) requires disclosure of costs, expenditures, and losses for

carbon offsets and RECs. 167 The Adopting Release states that these disclosures are directly

connected to “a registrant’s plans to achieve its disclosed climate-related targets or goals” 168 and

“will complement the disclosures required by the amendments to Regulation S-K and will anchor

the disclosures required outside the financial statements to those required within the financial

statements.” 169 As a result, disclosure under these items is unlikely to be sensible to investors in

the absence of the other disclosures mandated by the Final Rules.

C. Policy Reasons for Rescinding the Final Rules

In addition to (and independent of) the legal authority defects discussed above, there are

strong policy arguments for rescinding the Final Rules in their entirety. As the Supreme Court

has stated, “[a]gencies are free to change their existing policies as long as they provide a

165

See 17 CFR 210.14-01(a) (providing that Article 14 disclosures are required in filings that are required to

include disclosure pursuant to subpart 1500 of Regulation S-K); see also Adopting Release at 21779 n.1744

(referencing 17 CFR 210.14-01(a)).

166

Adopting Release at 21670, 21799-21800.

167

See 17 CFR 201.14-02(e)(1).

168

Adopting Release at 21675, 21913.

169

Id. at 21800-01.

reasoned explanation for the change.” 170 On reconsideration, we have determined that the

Adopting Release gave inappropriate weight to several of the main justifications for adopting the

Final Rules, and we now reach a different policy judgment regarding the need for, and

appropriateness of, the Final Rules. Consequently, we propose to rescind the Final Rules in their

entirety.

Several independent policy judgments support a rescission of the Final Rules. First, the

Final Rules deviate from the Commission’s “long-standing commitment to a principles-based,

registrant-specific approach to disclosure” that is “rooted in materiality and facilitate[s] an

understanding of a registrant’s business, financial condition and prospects[.]” 171 The Final Rules’

sharp departure from these important tenets provides investors, at great cost, with an avalanche

of information that is unlikely to be material to the decision-making of a reasonable investor.

Second, the Final Rules require registrants to provide costly and lengthy disclosures about

climate-related matters, a divisive social and political issue that is well outside the policy

concerns of the Federal securities laws. In so doing, the Final Rules inappropriately intrude on

corporate decision-making. Third, the Final Rules impose substantial costs on public companies

and their shareholders that are not justified by the informational benefits they may provide to

some investors. Finally, imposing those same high costs on registrants is at odds with the

170

Encino Motorcars, LLC v. Navarro, 579 U.S. 211, 221 (2016). The Court in Encino Motorcars further noted

that “[w]hen an agency changes its existing position, it ‘need not always provide a more detailed justification

than what would suffice for a new policy created on a blank slate.’ . . . But the agency must at least ‘display

awareness that it is changing position’ and ‘show that there are good reasons for the new policy.’ . . . In

explaining its changed position, an agency must also be cognizant that longstanding policies may have

‘engendered serious reliance interests that must be taken into account.’” Id. at 221-22 (citing FCC v. Fox

Television Stations, Inc., 556 U.S. 502, 515 (2009)).

171

Modernization of Regulation S-K, Items 101, 103, and 105, Release No. 33-10825 (Aug. 26, 2020) [85 FR

63726 (Oct. 8, 2020)] at 63727.

Commission’s policy objectives of facilitating capital formation and promoting public company

status.

As discussed more fully below, a responsible approach to public company disclosure

demands that the Final Rules be rescinded in their entirety. 172

The Final Rules Are Unnecessary and Inconsistent with a RegistrantSpecific, Materiality-Based Approach to Disclosure that Best Serves the

Interests of Registrants and Investors.

The Final Rules are unnecessary because existing disclosure requirements already elicit

information about the material effects of climate-related matters. Furthermore, the Final Rules

prioritize one potential factor over others that may materially affect a registrant’s operations and

financial condition. Finally, recent events, such as the European Union’s efforts to narrow the

coverage and scope of recently adopted sustainability and due diligence directives and extend

their implementation deadlines, have highlighted the flaws in mandating such highly prescriptive

disclosure for an evolving area, such as climate-related matters, as in the Final Rules.

Existing Disclosure Obligations and Anti-Fraud Provisions

Already Elicit Information About the Material Effects of ClimateRelated Matters

The Final Rules should be rescinded because the Commission’s existing disclosure

requirements and anti-fraud provisions already elicit information about the effects of climaterelated matters in a way that is tailored to reflect registrants’ particular circumstances, is focused

on material information for investors, and does not impose upon registrants the additional costs

and burdens of the Final Rules. 173

172

We note that, because the effectiveness of the Final Rules has been stayed and the Final Rules have never

become effective, we do not expect that the proposed rescission would implicate any reasonable reliance

interests that market participants may have had in the operation of the rules.

173

See discussion infra section IV.B.2.a.1; see also discussion infra section IV.B.3.a and Adopting Release at

21831.

As the Commission highlighted in the 2010 Guidance, various disclosure requirements

apply to climate-related matters when they are material to a particular company. In particular, the

2010 Guidance highlighted Regulation S-K items related to description of business, legal

proceedings, risk factors, and management’s discussion and analysis. The 2010 Guidance also

noted that registrants must consider any financial statement implications in accordance with

applicable accounting standards. As the Commission acknowledged in the Adopting Release,

even prior to the adoption of the Final Rules, registrants had an obligation to consider material

impacts on the financial statements regardless of whether a material impact was driven by

climate-related matters. 174

In addition to existing line item and financial statement disclosure requirements, the

liability provisions of the Federal securities laws, including the anti-fraud provisions, serve to

protect investors from materially misleading or incomplete disclosures about climate-related

matters. For example, Sections 11 175 and 12 176 of the Securities Act impose liability for material

misstatements or omissions made in connection with registered offerings conducted under the

Securities Act, 177 and Exchange Act Section 10(b) 178 and Rule 10b-5 broadly prohibit fraudulent

174

Adopting Release at 21797-98 n.2068 and accompanying text (explaining that although U.S. GAAP and

International Financial Reporting Standards (“IFRS”) Accounting Standards do not refer explicitly to climaterelated matters, registrants have an obligation to consider material impacts when applying, for example,

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 330

Inventory (IAS 2 Inventories) and FASB ASC Topic 360 Property, Plant, and Equipment (IAS 36 Impairment

of Assets)).

175

15 U.S.C. 77k.

176

15 U.S.C. 77l.

177

See also 17 CFR 230.408 (in addition to the information expressly required to be included in a registration

statement, there shall be added such further material information, if any, as may be necessary to make the

required statements, in the light of the circumstances under which they are made, not misleading).

178

15 U.S.C. 78j(b).

and deceptive practices and untrue statements or omissions of material facts in connection with

the purchase or sale of any security. 179

We recognize that the Commission previously stated that it adopted the Final Rules

because of a “need to improve the consistency, comparability, and reliability of climate-related

disclosures for investors.” 180 We disagree, however, that these purported benefits justify

adoption of the Final Rules. As an initial matter, any assertions about the benefits of the

consistency and comparability of the disclosures elicited by the Final Rules should be discounted

because those benefits are substantially compromised by the inconsistent, variable, and often

speculative assumptions necessary to make many of those disclosures. 181 As a result, the type of

information elicited by the Final Rules would vary across even similarly-situated registrants,

depending on, for instance, whether they engage in certain practices, how they choose to report

certain information, how they determine which expenditures to include, what methodologies they

use, and how they exercise judgment in assessing which financial disclosures to make. 182

Moreover, as noted above, prior to adoption of the Final Rules, registrants were already required

to disclose information about the material effects of climate-related matters in a manner better

tailored to reflect registrants’ particular circumstances. The benefits of more tailored and

effective disclosure in this context justify any potential loss in comparability because they allow

179

See also 17 CFR 240.12b-20 (in addition to the information expressly required to be included in a statement or

report, there shall be added such further material information, if any, as may be necessary to make the required

statements, in the light of the circumstances under which they are made not misleading).

180

Adopting Release at 21679.

181

See, e.g., Adopting Release at 21810 (“The financial statement disclosures we are adopting may involve

estimation uncertainties that are driven by the application of judgments and assumptions”) and 21734-35

(“[T]he final rule will require a registrant to describe the methodology, significant inputs, and significant

assumptions used to calculate the registrant’s disclosed GHG emissions . . . [and] will require a registrant to

disclose whether it calculated its GHG emissions metrics using an approach pursuant to the GHG Protocol’s

Corporate Accounting and Reporting Standard, an EPA regulation, an applicable ISO standard, or another

standard.”).

182

See discussion infra section IV.C.2.a.3.

for more particularized insight into a registrant’s management, operations and financial

condition, which can contribute to better risk and return assessments by investors. By contrast,

the Final Rules are more apt to create information overload for investors, including through

disclosure of immaterial information, while imposing significant new costs for registrants.

In light of existing disclosure obligations, the Final Rules serve insufficient additional

purpose in informing investors about the material effects of climate-related matters. Indeed, in

our view, the Final Rules are likely to result in the disclosure of immaterial information, at great

cost to investors.

The Final Rules Prioritize the Effects of Climate-Related

Matters Over Other Factors that May Materially Affect a

Registrant’s Operations and Financial Condition

In adopting the Final Rules, the Commission departed from its existing, generally

principles-based approach to disclosure that for decades has elicited information about matters,

including climate-related matters, that materially affect a registrant’s operations or financial

condition. In our view, a disclosure regime that prioritizes a single potential factor above any

other that may affect the registrant and requires disclosure at the level of granularity called for by

the Final Rules is inferior to the Commission’s existing approach to disclosure that already

applies with equal force to climate-related matters.

The Final Rules impose a myriad of highly prescriptive regulations that mandate granular

disclosures focused exclusively on climate-related matters. For example, with respect to climaterelated risks only, registrants under the Final Rules would need to consider and possibly disclose:

(i) how a registrant’s board oversees and is informed of climate risk, regardless of materiality; 183

183

17 CFR 229.1501(a).

(ii) how a registrant’s management assesses and manages material climate risk; 184 (iii) which

management positions manage climate risk and the associated expertise of the individuals

serving in those roles; 185 (iv) the geographic location of physical climate risk; 186 and (v) how

climate risks affect items like a registrant’s products or services, suppliers, climate mitigation

activities, and expenditures for research and development. 187

Similarly, the financial statement requirements prioritize the effects of severe weather

events and other natural conditions by imposing relatively low percentage thresholds for when

such effects must be separately reported in the notes to the financial statements. Specifically, the

Final Rules require disclosure in the income statement of expenditures expensed as incurred and

losses if such amounts (in the aggregate) equal or exceed one percent of the absolute value of

income or loss before income tax expense or benefit (subject to a $100,000 de minimis

threshold) 188 and require disclosure of capitalized costs and charges recognized on the balance

sheet if the absolute value of such amounts (in the aggregate) equals or exceeds one percent of

the absolute value of stockholders’ equity or deficit (subject to a $500,000 de minimis

threshold). 189 These examples, including the specified thresholds, make clear that the Final Rules

cannot be justified as eliciting disclosure of material information. Given their exceedingly

184

17 CFR 229.1501(b).

185

17 CFR 229.1501(b)(1).

186

17 CFR 229.1502(a)(1).

187

17 CFR 229.1502(b).

188

17 CFR 210.14-02(b)(1).

189

17 CFR 210.14-02(b)(2).

granular requirements, the Final Rules would inevitably result in the disclosure of immaterial

information about climate-related matters. 190

Requiring such granular disclosures about a single type of risk, trend or event is at odds

with a disclosure system that is intended to elicit information about the most significant factors

affecting a registrant’s operations and financial condition. 191 The Commission’s disclosure

regime generally does not require this level of detailed disclosure for other factors affecting a

registrant’s business. 192 Requiring such attention by registrants on climate-related matters,

specifically, may lead to registrants devoting an inappropriate amount of attention to managing

and reporting on such matters, which may not be among the most significant factors affecting the

registrant’s business. The Final Rules’ misplaced focus, however, is not limited to impacts on a

registrant’s allocation of resources. The sheer volume of disclosures responsive to the Final

Rules may hurt investors’ abilities to ascertain relevant information about the other factors

affecting a registrant because the climate-related disclosures could overshadow material

disclosures about those other factors.

190

This becomes evident when one considers that, prior to the adoption of the Final Rules, registrants already had

an obligation to consider material impacts on the financial statements, including those that may be driven by

climate-related matters. See, e.g., 2010 Guidance at 6295 n.69 (stating that “registrants must also consider any

financial statement implications of climate change issues in accordance with applicable accounting standards,

including [FASB] [ASC] Topic 450, Contingencies, and FASB [ASC] Topic 275, Risks and Uncertainties”).

191

Registrants face a litany of risks in their operations. However, as the Commission has previously stated,

disclosure of risks should be focused on the “most significant” or “principal” factors that make a registrant’s

securities speculative or risky. See Modernization of Regulation S-K, Items 101, 103, and 105, Release No. 3310825 (Aug. 26, 2020) [85 FR 63726 (Oct. 8, 2020)].

192

While the Commission does require specialized disclosure for certain types of offerings and transaction

structures and for particular industries such as oil and gas, these requirements are not focused on a specific type

of risk, trend or event and, unlike the Final Rules, do not require virtually every registrant to devote time and

resources to determining whether it may have a disclosure obligation under these regulations. See, e.g., 17 CFR

229.901 through 229.915 (roll-up transactions); 17 CFR 229.1601 through 229.1610 (special purpose

acquisition companies); 17 CFR 229.1000 through 229.1016 (mergers and acquisitions); 17 CFR 229.1201

through 229.1208 (registrants engaged in oil and gas producing activities).

Moreover, as discussed in section III.C.3, the Commission’s attempt to mitigate the

burdensome granularity of the adopted requirements by adding materiality qualifiers throughout

the Final Rules fails to adequately mitigate their distorting effects on registrant disclosures.

Given the complexity of making the materiality determinations required by the Final Rules,

many registrants may err on the side of over-disclosure, burdening both investors and registrants

with an avalanche of climate-related information.

Thus, in our view, the Final Rules are inconsistent with and inferior to the Commission’s

long-standing, registrant-specific approach to disclosure of factors materially affecting a

registrant’s operations and financial condition and therefore should be rescinded.

Recent Developments Underscore Why a Flexible, MaterialityBased Approach is Preferable

Recent efforts to scale back, set aside, or otherwise revise various climate reporting

regimes at the international level further underscore why the Commission was misguided in

adopting costly and prescriptive requirements built around shifting investor preferences and

reporting trends. Investors are not monolithic and have differing risk appetites, investment

strategies, and analytical methods—and in some cases non-financial interests—that affect their

particular investment decisions. In designing a disclosure regime, the Commission should not

seek to cater to the specific informational needs of every subset of investors about each emergent

topic. Rather, as the Supreme Court directed when delineating a materiality standard for the

Federal securities laws, 193 the Commission should look to whether the reasonable investor

would consider the information important in buying or selling securities—and as discussed

above, the common interests of reasonable investors is in information regarding the financial

193

See Basic Inc. v. Levinson, 485 U.S. 224 (1988).

performance of a company, the pricing of securities, and the prospect for economic and financial

return from the disclosing company. 194 Moreover, investors generally are better served by

regulatory requirements that can be adapted to registrants’ specific circumstances. Such bespoke

disclosures are more likely to provide material information than the one-size-fits-all disclosure

approach of the Final Rules. If, over time, market forces lead to coalescence around certain

disclosure practices, such practices are likely to be more responsive to the changing needs of

investors than the top-down prescriptive approach of the Final Rules.

The soundness of these basic principles is well illustrated by the challenges faced by

other climate-risk reporting regimes since the Final Rules were adopted. In adopting the Final

Rules, the Commission observed several ongoing developments related to climate-risk reporting,

which included, at the time, announcements by several jurisdictions to adopt, apply, or otherwise

be informed by the International Sustainability Standards Board (“ISSB”) standards. 195 The

Adopting Release also highlighted the European Union’s (“EU”) adoption of the Corporate

Sustainability Reporting Directive (“CSRD”), which requires certain large and listed companies

and other entities, including non-EU entities, to report on sustainability-related issues in line with

the European Sustainability Reporting Standards. 196 In taking note of such developments, the

Commission acknowledged that these laws could reduce the compliance burden of the Final

Rules to the extent they impose similar requirements on registrants subject to them. 197

194

See supra section III.B.1.b.

195

As noted in the Adopting Release, the IFRS Foundation formed the ISSB in November 2021, and in June 2023,

the ISSB issued General Requirements for Disclosure of Sustainability-related Financial Information and

Climate-related Disclosures (“IFRS S2”). Adopting Release at 21680. The Adopting Release also observed that

several jurisdictions, including Australia, Brazil, Canada, Hong Kong, Japan, Malaysia, Nigeria, Singapore, and

the United Kingdom, had announced plans to “adopt, apply, or otherwise be informed by the ISSB standards.”

Id.

196

Id.

197

See id. at 21681.

Since the adoption of the Final Rules only two years ago, there has been a noticeable

effort to step back from these initiatives, calling into question the Commission’s decision to

follow them with its own highly prescriptive approach. These developments also undermine the

assumption that the emergence of other reporting regimes would help to mitigate the significant

costs of the Final Rules. For example, entities that set international standards for climate-risk

reporting regimes, such as the ISSB and the EU, have revised their climate-related disclosure

standards, having found them to be burdensome, overly complex, and/or duplicative. The ISSB

has recently amended IFRS to “reduce complexity, the risk of duplicative reporting and the cost

of applying specific greenhouse gas emissions disclosure requirements.” 198 In February 2026, the

EU adopted legislation revising the CSRD and the Corporate Sustainability Due Diligence

Directive (“CSDDD”) to simplify rules on sustainable finance reporting and decrease compliance

burdens. 199 Specifically, the EU removed around 80% of previously covered companies from the

scope of the CSRD, narrowed the scope of the CSDDD, and postponed the implementation

timelines of both Directives, among other changes. 200

These developments reinforce our determination that highly prescriptive disclosure

requirements based on shifting investor preferences and reporting trends are inferior to a

198

ISSB, Amendments to IFRS S2, IFRS Sustainability Disclosure Standard, Amendments to Greenhouse Gas

Emissions Disclosures (Dec. 2025),

https://www.ifrs.org/content/dam/ifrs/publications/amendments/english/2025/issb-2025-1-amendments-ifrss2.pdf. This IFRS Sustainability Disclosure Standard indicates that the climate-related disclosure requirements

were amended in response to “challenges entities face in implementing IFRS S2 when applying specific

greenhouse gas emissions disclosure requirements.” Id., paragraph BC80A.

199

See Directive (EU) 2026/470 (Feb. 24, 2026); Directive (EU) 2025/794 (Apr. 14, 2025); European Commission,

Directorate-General for Financial Stability, Financial Services and Capital Markets Union, Omnibus Package,

Newsletter (Apr. 1, 2026), available at https://finance.ec.europa.eu/news/omnibus-package-2025-04-01_en;

Council of the European Union, Council Signs Off Simplification of Sustainability Reporting and Due Diligence

Requirements to Boost EU Competitiveness, Press Release (Feb. 24, 2026), available at

https://www.consilium.europa.eu/en/press/press-releases/2026/02/24/council-signs-off-simplification-ofsustainability-reporting-and-due-diligence-requirements-to-boost-eu-competitiveness/.

200

See supra note 199.

registrant-specific, materiality-based reporting regime focused on the information a reasonable

investor would consider important in making an investment decision.

The Final Rules Stray Well Beyond the Policy Concerns of the

Federal Securities Laws

An additional policy reason for rescinding the Final Rules is that they do not respond to a

gap in investor protection in the securities disclosure regime; rather, they concern the divisive

and unsettled political and social issue of climate regulation. The Commission’s role is to protect

investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. It is not

to regulate how public companies manage the effects of climate-related matters or to hijack the

public company reporting regime to further social policies unrelated to the aims of the Federal

securities laws. The Commission’s disclosure requirements should inform investors about a

registrant’s operations and finances; it is not the province of the Commission to drive changes in

those operations absent specific direction from Congress. 201 The Final Rules, with their granular

and highly prescriptive requirements, inappropriately put a thumb on the scale with respect to

registrants’ decisions about whether and how to manage those effects. Indeed, under the Final

Rules, even registrants for which the effects of climate-related matters may have little to no

direct relevance to their particular facts and circumstances must consider specific aspects of

climate-related matters on at least an annual basis to determine whether they are required to

disclose anything. For example, in order to comply with Item 1505, most, if not all, LAFs and

AFs that are not EGCs or SRCs will, to some extent, need to adopt controls and procedures to

assess the materiality of their Scope 1 and 2 emissions and determine whether disclosure is

201

See supra section III.B.2 for further discussion of how the Final Rules intrude on State control over corporate

governance by effectively regulating issuers’ internal affairs.

required if they do not already have them in place. 202 Such conduct-altering effects demonstrate

that the Final Rules are different in kind from existing disclosure obligations and stray well

beyond what is required in order to inform and protect the reasonable investor.

Separate and apart from the question of whether the Commission has legal authority to

promulgate the Final Rules discussed in section III.B, as a policy matter, the Commission does

not view disclosure rules focused solely on climate-related matters as an appropriate exercise of

agency rulemaking authority. The Commission has no interest in pushing the limits of its

regulatory authority. Whether and to what extent companies should be generally required to

disclose intrusive climate-related information is a matter of significant political and practical

importance. Absent a clear statutory directive to the contrary, those matters belong to the

People’s elected representatives, not agency officials, to decide.

As discussed above, more than fifty years ago, the Commission stated that it does not

have discretion under the Securities Act or the Exchange Act to require disclosure for the sole

purpose of promoting social goals unrelated to those underlying these Acts. 203 We agree with the

sentiments in the Commission’s 1975 statement and with the dissenting views expressed at the

time of the Adopting Release by Commissioners Hester M. Peirce and Mark T. Uyeda. 204 The

202

See Adopting Release at 21859.

203

Environmental and Social Disclosure Release at 51660; see supra section III.B.2.

204

Commissioner Hester Peirce dissented from the adoption of the Final Rules, saying that they promise “to spam

investors with details about the Commission’s pet topic of the day—climate.” Comm’r Hester M. Peirce, Green

Regs and Spam: Statement on the Enhancement and Standardization of Climate-Related Disclosures for

Investors (Mar. 6, 2024), available at https://www.sec.gov/newsroom/speeches-statements/peirce-statementmandatory-climate-risk-disclosures-030624. Commissioner Mark Uyeda made similar points, saying that the

Final Rules are “climate regulation promulgated under the Commission’s seal” and “the culmination of efforts

by various interests to hijack and use the Federal securities laws for their climate-related goals.” Comm’r Mark

T. Uyeda, A Climate Regulation under the Commission’s Seal: Dissenting Statement on The Enhancement and

Standardization of Climate-Related Disclosures for Investors (Mar. 6, 2024), available at

https://www.sec.gov/newsroom/speeches-statements/uyeda-statement-mandatory-climate-risk-disclosures030624.

Final Rules stray well beyond the policy concerns of the Federal securities laws and should be

rescinded in their entirety.

The Final Rules Impose Significant Costs on Public Companies and

Their Shareholders that are Not Justified by the Informational Benefits They

Provide to Some Investors

The significant costs of the Final Rules provide a separate, compelling reason to rescind

them in their entirety. In imposing new disclosure obligations, the Commission should assess

whether the benefits of the information required to be disclosed—considered from the

perspective of the reasonable investor—justify the costs of providing the disclosure. The Final

Rules fall well short of this standard. By eliminating the costly disclosure requirements in the

Final Rules, the proposed rescission would broadly benefit market efficiency, competition, and

capital formation.

By the Commission’s own estimation, the Final Rules will significantly increase the costs

associated with public company disclosures. Indeed, the Commission estimated that depending

on the registrant, annual compliance costs (averaged over the first ten years of compliance) could

range from less than $197,000 to over $739,000. 205 Updating these figures for inflation and

aggregating them across all affected registrants, we estimate that rescinding the Final Rules

could generate annualized savings of about $4.9 billion per year over the next 10 years for all

affected registrants. 206

In the Adopting Release, the Commission acknowledged the significant additional

burdens that the Final Rules will impose on registrants but nonetheless asserted that “those

burdens are justified by the informational benefits of the disclosures to investors.” 207 We

205

Adopting Release at 21875.

206

See infra section IV.C.3.

207

Adopting Release at 21671.

disagree with the Commission’s determination that such a significant imposition of costs is

warranted in order to increase the disclosures across registrants about a single type of risk that

some registrants may face. This conclusion is bolstered by the fact that, to the extent this risk is

material, information about that risk should be elicited by existing disclosure requirements, as

discussed in section III.C.1.a. Thus, any marginal or theoretical informational benefits to be

derived from the Final Rules do not and cannot justify the substantial burdens they impose on

public companies and their shareholders.

We recognize that some commenters to the Proposing Release indicated that investors

have faced and may continue to face costs associated with obtaining or verifying information

related to a registrant’s climate-related risks or management thereof. 208 However, we do not

agree that it is appropriate to burden all shareholders of almost all public companies with the

high costs of the Final Rules in order to subsidize the informational demands of certain investors

who choose to focus their investment strategies on climate-related matters or who have interests

other than the pursuit of a financial return that are driving their informational demands. There are

multitudes of investment strategies, and investors bear all sorts of costs to search for and verify

information based on their chosen strategy. They should be free to do so. Similarly, individual

registrants may want to attract climate-focused investors and choose to provide additional

information. They should be free to do so as well. But the entire market should not be forced to

bear the costs of providing more particularized information than what the reasonable investor

needs for an investment decision. Market-based solutions to demands for particular information

are more appropriate. Therefore, notwithstanding that some investors will not receive some of

208

See id. at 21678, n.113; see also id. at 21853 (“Commenters noted that with the limitations to the currently

available climate-related disclosures, extensive costs in the form of data gathering, research and analysis are

needed to process them and to fill data gaps where possible in forming investment decisions.” (citation

omitted)).

the informational benefits described in the Adopting Release, 209 we have determined that the

proposed rescission is the appropriate course of action for a disclosure regime focused on

providing material information to reasonable investors.

Furthermore, despite the Commission’s repeated assertions in the Adopting Release, the

layering of materiality qualifiers throughout the Final Rules fails to adequately mitigate the

overall burdens imposed on registrants in the context of the Final Rules’ highly prescriptive

disclosure requirements. 210 For example, the Final Rules require certain registrants to disclose

Scope 1 and Scope 2 GHG emissions, if material. 211 The Adopting Release estimated that the

compliance costs to a registrant for these disclosures would be $151,000 in the first year of

compliance and $67,000 annually in subsequent years. 212 Moreover, as the Adopting Release

acknowledges, the costs of assessing and monitoring the materiality of a registrant’s emission

“could be significant” even in situations where the registrant ultimately determines that they do

not need to provide disclosure. 213 The Adopting Release did not separately quantify these

particular costs, which would arise from the efforts of a registrant to measure its Scope 1 and

Scope 2 emissions, including establishing organizational boundaries and operational boundaries

209

Section IV.C.2.a. of the Adopting Release identifies several benefits of the Final Rules, which are discussed in

more detail below.

210

Adopting Release at 21698 (explaining that the Commission added an explicit materiality qualifier to Item

1502(b) to help address concerns that the proposed rule could be “unduly burdensome for registrants”). See id.

at 21700-01 (stating that subjecting Item 1502(d) to “materiality” would “help to mitigate the compliance

burden”).

211

17 CFR 229.1505(a)(1). As a tacit acknowledgement of the difficulty of making materiality determinations in

the context of emissions metrics, the Adopting Release provided guidance and several detailed examples of

when GHG emissions could be considered “material.” See Adopting Release at 21733.

212

See Adopting Release at 21875.

213

Id. at 21733.

and adopting a specific reporting protocol or standard. 214 Only then, after it has invested

potentially significant resources to perform this exercise, can a registrant make a determination

about whether such metrics are material. 215 Thus, the Final Rules also require a complicated

analysis even to determine whether disclosure is required, 216 saddling every covered registrant

with the costs of collecting the necessary information and calculating emissions.

The difficulty of making materiality determinations under the Final Rules is further

compounded by the complex and overlapping nature of the required disclosures. For example,

the Final Rules would require registrants to disclose any climate-related target or goal if such

target or goal has materially affected or is reasonably likely to materially affect the registrant’s

business, results of operations, or financial condition. 217 The Commission asserted that investors

“need detailed information about a registrant’s climate-related targets or goals in order to

understand and assess the registrant’s transition risk strategy and how the registrant is managing

the material impacts of its identified climate-related risks.” 218

The Commission adopted this requirement notwithstanding the fact that, elsewhere in the

Final Rules, a registrant is required to describe any climate-related risks that have materially

214

Id. at 21875 (“While commenters provided estimates of the overall costs of measuring and assessing GHG

emissions and making disclosure under [the Task Force on Climate-Related Disclosures (“TCFD”)] disclosure

frameworks, they did not provide a level of detail that would enable us to reliably disaggregate the materiality

determination from the costs of disclosure more broadly.”).

215

Id. (“While [the Commission has] not provided a standalone cost estimate of making such materiality

determinations, [the Commission’s] estimates of the costs of governance disclosure, disclosure regarding the

impacts of climate-related risks on strategy, business model, and outlook, and risk management disclosure begin

with TCFD disclosure as a starting point. Thus, to the extent that a materiality or similar assessment is included

in the TCFD disclosure, this cost is reflected in the Commission’s compliance cost estimates with respect to

[these] disclosure items.” (citation omitted).

216

Id. at 21733-21734. In either scenario, a registrant must first assume the burden of calculating its Scope 1 and 2

emissions in order to determine whether such emissions fit within the Commission’s vague notion of materiality

in this context, or are “reasonably likely,” to be material at some future date. Id.

217

See 17 CFR 229.1504(a).

218

Adopting Release at 21723.

impacted or are reasonably likely to have a material impact on the registrant, including on its

strategy, results of operations, or financial condition. 219 In addition, if a registrant has adopted a

transition plan to manage a material transition risk, it must describe the plan and update its

annual report disclosure about the transition plan each fiscal year by describing any actions taken

during the year under the plan. 220 The use of materiality qualifiers in such a complex,

interconnected, and highly prescriptive set of disclosure requirements does not adequately

mitigate the overall burdens of producing those disclosures.

Because the error cost of miscalculating a disclosure obligation includes a potential

enforcement action by the Commission or a securities fraud class action, registrants are left with

the difficult choice of either making their best judgments about materiality and risking being

subject to liability for coming to the wrong conclusion or disclosing information that may not be

material in an effort to avoid liability. Investors do not benefit if “management’s fear of exposing

itself to substantial liability may cause it simply to bury the shareholders in an avalanche of

trivial information—a result that is hardly conducive to informed decisionmaking.” 221

As these examples show, the Commission’s use of materiality qualifiers does not

adequately mitigate the burdens of the climate-related disclosure requirements. Moreover, in the

context of the complex and overlapping nature of the Final Rules’ disclosure obligations, such

materiality qualifiers do not meaningfully limit the information that a registrant feels compelled

to disclose, burying investors in disclosures of limited value. Indeed, the numerous materiality

determinations required by the Final Rules merely mask how the rules reached well beyond what

a reasonable investor would consider important in buying or selling securities.

219

See 17 CFR 229.1502(a).

220

See 17 CFR 229.1502(e)(1).

221

TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 448-49 (1976).

We similarly disagree that the informational benefits of the Final Rules justify the

significant costs they would impose. The Adopting Release asserts several benefits of the Final

Rules, such as: (1) that the information will enable investors to better assess material risks in

climate-related reporting and facilitate comparisons across firms and over time; (2) the

information is relevant to ensuring that the risk is correctly priced into the securities; (3) the use

of a standardized disclosure framework will “mitigate agency problems arising from registrants

being able to selectively disclose . . . information, which reduces transparency and impairs

investors’ ability to effectively assess the potential financial impacts of a registrant’s climaterelated risks”; and (4) providing “better information” will reduce information asymmetries

between managers and investors as well as amongst investors, which “will improve liquidity and

reduce transaction costs for investors . . ., and may lower firms’ cost of capital.” 222 Although we

acknowledge that the Commission may consider these kinds of benefits when adopting new

disclosure rules, we disagree that these policy goals should be pursued at such significant costs.

As discussed in section III.B.2, any assertions about the benefits of the consistency and

comparability of the disclosures elicited by the Final Rules should be discounted because those

benefits are substantially compromised by the inconsistent, variable, and often speculative

assumptions necessary to make many of those disclosures. Also, it is far from clear that these

“standardized” disclosures would serve the informational needs of investors and the marketplace

better than existing principles-based requirements that allow for more particularized insight into

a registrant’s management, operations, and financial condition.

In crafting a fit-for-purpose disclosure regime, the Commission should consider not only

the informational benefits to be derived from the required disclosures but also the costs to

222

See Adopting Release, section IV.C.1.a; id. at 21849.

produce those disclosures, which are ultimately borne by investors themselves. In doing so, the

Commission should take into account whether the required disclosures benefit existing and

potential investors in most companies, or only those with particularized investment strategies or

informational needs. In our evaluation, as we assess these factors, any informational benefits to

be derived from the Final Rules cannot justify the significant costs they would impose on public

companies and their shareholders.

The High Costs of the Final Rules Are at Odds with the Commission’s

Policy Objectives of Facilitating Capital Formation and Promoting Public

Company Status

The Commission’s current agenda is focused on restoring the vigor of public securities

markets and encouraging companies to go public and stay public. 223 The number of public

companies has diminished significantly since 2000, 224 with some observers pointing to the cost

of public company disclosure as one deterrent. 225

As discussed in section III.C.3, the Final Rules add substantially to the cost and

complexity of public disclosures by issuing and reporting companies. If the Final Rules were to

223

See, e.g., Chairman Paul S. Atkins, Revitalizing America’s Markets at 250 (Dec. 2, 2025), available at

https://www.sec.gov/newsroom/speeches-statements/atkins-120225-revitalizing-americas-markets-250;

Chairman Paul S. Atkins, Statement on Reforming Regulation S-K (Jan. 13, 2026), available at

https://www.sec.gov/newsroom/speeches-statements/atkins-statement-reforming-regulation-s-k-011326. We

also note that facilitating capital formation is one of the three prongs of the Commission’s tripartite mission and

a factor that the Commission must consider when making public interest determinations in the context of

rulemaking. See supra note 49 and accompanying text.

224

See U.S. Securities and Exchange Commission Staff, SEC Statistics & Data Visualizations: Reporting Issuers,

Number of Reporting Issuers by Calendar Year (2004-2024) (last updated Aug. 12, 2025), available at

https://www.sec.gov/data-research/statistics-data-visualizations/reporting-issuers/number-reporting-issuerscalendar-year-2004-2024 (indicating that the number of reporting issuers has decreased from 9,656 in 2004 to

7,902 in 2024, which represents an approximately 18.2% decline); EY, The Declining Number of Public

Companies and Mandatory Reporting Requirements (June 2022), available at https://accf.org/wpcontent/uploads/2022/06/EY-ACCF-The-declining-number-of-public-companies-and-mandatory-reportingrequirements-June-2022.pdf (considering the 2000-2019 period and estimating that “[t]here were at least 800

fewer US companies traded on major US exchanges at the end of 2019 because of mandatory reporting

requirements.”).

225

See, e.g., Michael Dambra, Laura Casares Field & Matthew Gustafson, The JOBS Act and IPO Volume:

Evidence that Disclosure Costs Affect the IPO Decision, 116 J. FIN. ECON. 121 (2015), which suggests

regulatory burden is an important consideration in the going-public decision.

go into effect, they would be in direct contravention of the Commission’s current policy

objectives of promoting public company status and facilitating capital formation.

The Final Rules increase the overall costs associated with accessing and participating in

capital markets. This increase in costs has a deterrent effect on such participation, thereby

reducing market liquidity and depth, which ultimately hinders, rather than facilitates, capital

formation. Costly regulation can also divert registrants’ resources that could otherwise be spent

on production, investment, or innovation. In addition, it can reduce the incentives of registrants

to implement otherwise efficient business strategies, transition plans, or goals because of direct

and indirect costs of disclosing them. Such disclosure requirements may disproportionately affect

smaller firms with resource constraints and limit their ability to grow and compete.

Regulatory costs can also influence the size of the public markets, if companies decide to

exit the markets or remain privately held to avoid regulatory costs. This avoidance strategy

widens the transparency gap between public and private companies, negatively affecting

competition between public and private companies as well as capital markets’ information

efficiency. Depending on market conditions and other factors, registrants may also pass on their

compliance costs to third parties, such as consumers and workers. Beyond the desire to avoid

direct compliance costs, some companies may avoid going public if they fear they will have to

provide disclosure about an array of socially and politically contentious issues. Such effects,

taken together, reduce overall productivity, constrain growth opportunities, and depress

economic efficiency, thus reducing future cash flows, earnings expectations, and shareholder

returns.

The high costs imposed by the Final Rules and related adverse effects undermine the

Commission’s goals of facilitating capital formation and improving the accessibility and

attractiveness of public company status. The Commission declines to impose such burdens on

registrants and therefore proposes to rescind the Final Rules in their entirety.

Request for Comment

1) Should we rescind the Final Rules in their entirety as proposed? Why or why not?

2) Are there aspects of the Final Rules that remain within the Commission’s statutory

authority and should be retained? If so, how would these items of disclosure be able to

operate sensibly without the rescinded portions of the Final Rules?

3) Are there alternatives to outright rescission that we should consider? For example,

should we amend the Final Rules so that they apply to a smaller subset of registrants

or in more limited circumstances? Alternatively, should we propose to replace the

Final Rules with less prescriptive and less costly disclosures about climate-related

matters? If so, how would such disclosures improve upon the information already

elicited by existing disclosure obligations? What information about climate-related

matters does a reasonable investor need to make informed investment decisions?

4) Does the proposed rescission negatively affect any reasonable reliance interests that

market participants may have had in the operation of the Final Rules, notwithstanding

that the rules were stayed prior to effectiveness? Have any costs been incurred in

preparing to comply with the Final Rules, even though the Final Rules have been

stayed? If so, please explain why and describe the type and magnitude of those costs.

5) Do existing disclosure requirements serve to elicit adequate disclosure about climaterelated matters, when material to a specific registrant? Why or why not? Should we

revise the 2010 Guidance to provide updated guidance about how existing disclosure

obligations may elicit information about climate-related matters?

6) Have recent developments in climate reporting practices affected the rationale for the

Final Rules? If so, how?

7) If the Final Rules were to go into effect, to what extent would they impact firm

decisions about whether to become or remain a public company?

IV.

ECONOMIC ANALYSIS

A. Introduction

We are mindful of the costs imposed by, and the benefits obtained from, our rules.

Securities Act section 2(b) and Exchange Act section 3(f) require us, when engaging in

rulemaking where the Commission is required to consider or determine whether an action is

necessary or appropriate in the public interest, to consider, in addition to the protection of

investors, whether the action will promote efficiency, competition, and capital formation. 226 In

addition, Exchange Act section 23(a)(2) requires the Commission to consider the effects on

competition of any rules that the Commission adopts under the Exchange Act and prohibits the

Commission from adopting any rule that would impose a burden on competition not necessary or

appropriate in furtherance of the purposes of the Exchange Act. 227 We are likewise sensitive to

the economic effects of rescinding our existing rules, which may involve the reconsideration of

the benefits, costs, and impacts on efficiency, competition, and capital formation that were

assessed when adopting those rules.

226

See 15 U.S.C. 77b(b); 17 U.S.C. 78c(f).

227

See 17 U.S.C. 78w(a)(2).

We are proposing to rescind the Final Rules in their entirety for the reasons articulated in

section III. The proposed rescission would significantly reduce regulatory compliance costs for

registrants affected by the Final Rules.

We consider below the potential benefits and costs of the proposed rescission and the

likely effects of rescission on efficiency, competition, and capital formation. Many of the

benefits and costs are impracticable to quantify or estimate with any degree of certainty. Where

we are unable to quantify the economic effects of the proposed rescission, we provide a

qualitative assessment of the potential effects and encourage commenters to provide data and

information that would help quantify the benefits and costs of the proposed rescission, and the

potential impacts of the proposed rescission on efficiency, competition, and capital formation.

B. Economic Baseline

The baseline against which the benefits and costs and the effects on efficiency,

competition, and capital formation of the proposed rescission are measured consists of current

requirements for climate-related disclosures and current market practices that relate to such

disclosures. 228 For purposes of defining the baseline for this Economic Analysis, we treat the

Final Rules as if they are in effect even though the Commission has stayed their implementation.

Below we describe the parties who are likely to be affected by the Final Rules and therefore the

proposed rescission, as well as existing rules or laws that require or elicit climate-related

disclosures and the current market practice related to reporting on climate-related matters.

228

See, e.g., Nasdaq Stock Mkt. LLC v. SEC, 34 F.4th 1105, 1111-14 (D.C. Cir. 2022). This approach also follows

SEC staff guidance on economic analysis for rulemaking. See SEC Staff, Current Guidance on Economic

Analysis in SEC Rulemakings (Mar. 16, 2012), available at

https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf (“The economic

consequences of proposed rules (potential costs and benefits including effects on efficiency, competition, and

capital formation) should be measured against a baseline, which is the best assessment of how the world would

look in the absence of the proposed action.”); id. at 7 (“The baseline includes both the economic attributes of

the relevant market and the existing regulatory structure”).

Affected Parties

The proposed rescission of the Final Rules would apply to registrants filing Securities

Act and Exchange Act registration statements as well as Exchange Act annual and quarterly

reports. The Adopting Release identifies several parties likely to be affected by the Final Rules,

and they would be the same parties affected by a rescission of the Final Rules. The parties likely

to be affected are: registrants subject to the disclosure requirements imposed by the Final Rules,

as detailed below; users of information about climate-related matters, such as investors, analysts,

and other market participants; and third-party service providers who may collect, review, and

process this information, including assurance providers and ratings providers. 229

In particular, the Final Rules require both domestic registrants and foreign private issuers

affected by the Final Rules to disclose highly granular information on climate-related matters in

a standardized and centralized format in Commission filings. The affected parties that directly

benefit from the Final Rules include specific subgroups: those investors who would use this

information as part of their particular investment strategies; financial intermediaries who act on

behalf of investors (e.g., asset managers, investment advisers, pension fund managers) to the

extent they incorporate climate-related risks when constructing investment portfolios and

evaluating registrants’ risk profiles; and stakeholders who would use the expanded climate

disclosures for advocacy or political purposes. 230 The affected parties that incur direct costs from

the Final Rules include all aforementioned registrants and by extension their shareholders—

229

See Adopting Release, section IV.A.1

230

See Adopting Release, at 21683 n.172. Such purposes could include promoting particular conceptions of

acceptable corporate behavior, compelling corporations and officials to regularly speak on climate-related

issues, or initiating progressively broader or more frequent disclosure demands that could significantly increase

the burden of making disclosures. See, e.g., Hans B. Christensen, Luzi Hail & Christian Leuz, Mandatory CSR

and Sustainability Reporting: Economic Analysis and Literature Review, 26 REV. ACCT. STUD. 1176 (2021).

broadly speaking all investors in these registrants, which is a class of investors broader than the

subgroup of investors directly benefiting from the Final Rules.

The Final Rules affect both domestic registrants and foreign private issuers filing

registration statements and periodic reports with the Commission, but they would not apply to

Canadian registrants that use the Multijurisdictional Disclosure System and file their Exchange

Act registration statements and annual reports on Form 40-F. 231 We estimate that during calendar

year 2025, excluding asset-backed securities issuers, there were 6,766 registrants that filed on

domestic forms and on Form 20-F. 232 We also estimate that 2,348 of these registrants were

LAFs, 541 were AFs that are not SRCs or EGCs (non-exempt AFs) and 3,877 were all other

registrants (AFs that were SRCs or EGCs, and non-accelerated filers ( “NAFs”)).

Out of these registrants, there were approximately 5,703 registrants that filed on domestic

forms, and approximately 1,063 foreign private issuers that filed on Form 20-F. Among

registrants that filed on domestic forms, approximately 36 percent were LAFs, 7 percent were

non-exempt AFs, and 56 percent were AFs that were SRCs or EGCs, and NAFs. In addition, we

estimate that among the foreign private issuers that filed on Form 20-F approximately 27 percent

were LAFs, 11 percent were non-exempt AFs, and 62 percent were AFs that were SRCs or

EGCs, and NAFs.

The Final Rules would also require disclosures in registered offerings, except with

respect to business combination transactions involving a company not subject to the reporting

231

The number of domestic registrants and foreign private issuers that would be affected by the Final Rules, if they

go into effect, is estimated as the number of companies, identified by Central Index Key (“CIK”), that filed a

unique Form 10-K, Form 10-KT, Form 20-F, or amendments to these forms, during calendar year 2025,

excluding asset-backed securities issuers. The estimates for SRCs, EGCs, AFs, LAFs, and NAFs are based on

data obtained by Commission staff using a computer program that analyzes Commission XBRL filings and

manual review of filings by Commission staff.

232

There were 15 issuers with filer status missing among Form 10-K filers and one issuer with filer status missing

among Form 20-F filers in 2025. These registrants are not included into the total registrants count.

requirements of section 13(a) or 15(d) of the Exchange Act. In many cases, registrants would be

able to meet these requirements by incorporating by reference from their periodic reports.

Registrants that have not previously filed periodic reports, such as companies conducting initial

public offerings, would not have previously filed such reports to incorporate by reference. In

2025, there were approximately 810 such companies that conducted registered offerings on Form

S-1 or F-1. 233

Current Regulatory Framework

Commission Disclosure Requirements

2010 Guidance and Existing Rules

Apart from the Final Rules, existing Commission disclosure requirements may,

depending on the circumstances, require or elicit disclosure of certain climate-related matters. 234

The 2010 Guidance emphasizes that certain existing disclosure requirements in Regulation S-K

and Regulation S-X may require disclosure about climate-related matters. 235 With respect to the

most pertinent non-financial statement disclosure rules, we note that: Item 101 of Regulation S-K

(Description of business) expressly requires disclosure regarding certain material costs and

233

This estimate was calculated by searching EDGAR for all registrants who filed a Form S-1 or F-1 in the year

2025. If multiple registration statements were filed in 2025 by the same registrant, the earliest was used. This

list of registrants was then compared to a list of periodic reports (Forms 10-K, 10-Q, 20-F, and 8-K) filed on

EDGAR since 2018. Approximately 810 registrants filed registration statements in 2025 that had not previously

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