On Friday, the Securities and Exchange Commission (SEC), which regulates financial markets in the United States, moved to rescind a rule passed in the last years of the Biden administration that required publicly traded companies to provide information about climate change to investors.
“The 2024 Climate Rules generated national controversy since they were first proposed,” Paul S. Atkins, the SEC chairman, wrote in a statement. “Some commenters supported the proposal, but many commenters argued that the 2024 Climate Rules, as proposed, were outside the scope of the Commission’s authority and were flawed for policy reasons.”
Poster at a march: one side shows a clear Earth with animals and trees, the other with a darkened Earth with fires, oil wells, climate crisis. Below, the words “You Decide.” [dmncwndrlch, Pixabay]
The rules would have required publicly traded companies to disclose information to investors about the ways they both participate in and are at risk from climate change, including specific information about greenhouse gas emissions directly caused by their business if that information would be likely to influence someone’s decision on whether to invest.
As The Hill reports, the rules were originally adopted in March 2024, when the SEC Board of Commissioners contained three Democratic appointees and two Republicans. Gary Gensler, who was chairman at the time, said the rule “benefits investors and issuers alike” because climate change was becoming a bigger concern for both investors and companies, and these disclosures would have provided clear information to compare different companies.
The adopted rules were significantly pared back from the original proposal, which would have required disclosures about greenhouse gasses from a company’s supply chain and from use of its products – which would have, for example, required oil companies to report on the emissions caused by their product being burned.
Despite the narrowed scope of the rules, they were immediately challenged in court, and when Donald Trump was elected later that year, his new administration made it clear that they had no interest in maintaining them. The SEC announced it would not defend the rules in court in March 2025, and the rules were held in abeyance until now.
Notably, the SEC commissioners now consist of three Republicans and zero Democrats.
“We must re-examine the costs, burdens, and benefits of disclosure mandates to make becoming and remaining a public company more attractive again,” said Atkins. “SEC disclosure obligations should comply with the Commission’s statutory authority, be guided by materiality as the North Star, avoid the practical effect of dictating corporate behavior, and be imposed only when the expected benefits justify the likely costs and burdens.”
“Materiality” has a specific meaning in this context – and that meaning isn’t “physical, tangible stuff.” “Materiality is an accounting principle which states that all items that are reasonably likely to impact investors’ decision-making must be recorded or reported in detail in a business’s financial statements,” notes the Harvard Business School. “If a transaction or business decision is significant enough to warrant reporting to investors or other users of the financial statements, that information is “material” to the business and cannot be omitted.”
In essence, the argument Gensler advanced in 2024 was that information about a company’s role in and risks under climate change were pertinent for investors, while Atkins’s argument today is that it’s too much trouble for companies to tell investors how rising temperatures and extreme weather could ruin their investments.
Nothing about this is surprising; businesses that feel they have something to brag about in regards to sustainability and climate readiness already voluntarily include that information. The argument from the business lobby is that including this information is too cumbersome and onerous, but then, they say that about every regulation; the real issue here is that many companies would rather not have to disclose even the meager amount of information proposed under the 2024 rules.
Atkins claims that he wants the SEC to avoid “dictating corporate behavior.” To that, I have two responses. First: strictly speaking, nothing about these rules actually did that. The 2024 rules only require the disclosure of information; companies can pollute all they want, they would just have to tell their investors about it. It would only influence corporate decision-making if investors care.
Second: it’s ridiculous to claim the SEC is above “dictating corporate behavior.” The SEC exists because history has repeatedly shown that markets function best when investors have access to reliable information and clear rules. Whether the disclosure concerns financial leverage or climate-related risks, the SEC’s role is to ensure investors can make informed decisions. The SEC’s job is to make sure investors know the risks before they choose to support a given company, and thereby incentivize good corporate behavior. To the extent the private sector behaves in a trusted, transparent manner, it’s because of this.
Above all, this demonstrates that even the most mild, non-intrusive climate change regulation, perfectly aligned with the structures of corporate capitalism, will continue to face strong opposition from business interests and many conservative policymakers. For those of us who care about the planet and the life that depends on it – a category that includes most Pagans – that suggests that there’s no point in being accommodating to the polluters. No matter how deep the climate crisis gets or how minimal the regulation proposed, corporate interests are going to refuse to comply – so we might as well push to regulate them as highly as the moment demands.
At the moment, though, while the SEC has made its intentions clear to rescind these rules, there are 60 days for the public to comment. I will be adding mine to make clear that I want the 2024 rules to remain in place; I hope that you will too.
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