Rescinding US SEC’s Disclosure Rule Will Blindfold Investors to Climate Risk

If you’re one of the roughly 3 in 5 American adults who directly own shares, save money through a pension or contribute to a 401(k), the U.S. Securities and Exchange Commission's (SEC) latest proposal deserves your attention. The SEC wants to rescind its 2024 climate disclosure regulation, a rule designed to give investors more consistent information about the growing climate-related financial risks facing companies.

Those risks are now, quite literally, on companies’ doorsteps. Wildfire smoke clogs our cities’ air. Extreme heatwaves slash worker productivity, costing the U.S. $100 billion a year. The SEC rule, finalized in 2024 but never allowed to take effect, would have required public companies to disclose financially material climate-related risks like these in their annual reports.

Rescinding the rule would not eliminate climate risk from the market — it simply blindfolds investors to it, at their own expense. Climate risk should not become the exception to smart financial management simply because it has become politically contentious.

It’s in investors’ financial interests to stop SEC from repealing this rule. Without standardized climate disclosure, investors lack information on risks, such as the impacts of extreme weather or costs of the energy transition away from fossil fuels. Such risks could affect the value of investments and pensions for decades to come, if not disclosed and managed. 

Investors Asked for a Climate Disclosure Rule

A Ceres analysis of comment letters submitted to the SEC from 320 institutional investors collectively owning or managing more than $50 trillion in assets found strong support for standardized climate risk disclosure. The investors managing your pensions and stock portfolios are on record saying they are best served by consistent climate risk disclosures.

CalSTRS, which today manages more than $400 billion in assets for around one million California educators, told the SEC in 2021 that standardized climate disclosure helps protect their hard-earned retirement savings.

Support was so strong that some investors and environmental groups argued the final rule didn't go far enough, pointing to the SEC's decision to drop an earlier draft requirement for disclosing Scope 3 emissions, companies' product and supply chain emissions.

Climate Risks Are Real and Growing

The U.S. now experiences an average of 20 separate weather disasters causing at least $1 billion in damage on average every year — while the world had its hottest 11-year stretch on record, confirmed by the World Meteorological Organization. Hurricanes, wildfires, floods can all affect companies’ operations, as do rising seas, heat and changing rainfall. Consider a food manufacturer facing drought-related supply gaps, like we see in U.S. beef markets today, or investors holding mortgages tied to coastal property impacted by rising seas.

The rule addresses these physical risks and companies’ “transition risks” from moving to a low-carbon economy, like new regulations, changing technology, shifting markets and reputational hits. Heavy emitting sectors such as energy are especially affected. A BloombergNEF report found that global energy transition investment hit a record $2.3 trillion in 2025, growth that persisted despite policy rollbacks — a sign that markets are already pricing in the shift away from fossil fuels.

Knowing these risks is now fundamental information for investors.

A Retreat from the SEC's Own Mission

The SEC exists to protect investors by ensuring companies disclose material financial risks. Stripping investors of standardized climate information abandons that mission and leaves a gap others are filling. California has its own climate disclosure law, a few states have similar bills they are considering, and the European Union and International Sustainability Standards Board already require it. Yet this patchwork falls short of uniform reporting requirements for all public companies.

SEC's rescission proposal leans on two arguments: that the rule exceeds its statutory authority, and that compliance costs outweigh the reliability of what companies would be disclosing. Neither is persuasive. The first was already rebutted in 2022, when a bipartisan working group, including four former SEC Chairs and 17 law and finance scholars, concluded there is no legal basis to doubt SEC’s authority here.

On the second, as co-founder of the Greenhouse Gas Protocol and lead author of its Corporate Standard, now used by 97% of S&P 500 companies, I can attest that rigorous GHG accounting standards already exist. And "too much estimation uncertainty" could apply to other parts of financial reporting — asset valuations, impairments, and contingent liabilities all rest on judgment and assumptions. SEC surely wouldn’t revoke those rules, though.

Rescinding the rule is unlikely to reduce compliance costs anyway. Companies already face costs reporting to a patchwork of rules from California and international bodies. Those costs are dwarfed by what investors stand to lose from leaving climate risks undisclosed and unmanaged.

What Investors Can Do to Keep Climate Disclosure on the Table

This isn't a Washington regulatory fight that matters only to environmental groups. It's about whether investors of all sizes have the information they say they need to protect their investments. Comparable, decision-useful information has guided securities regulation since the 1929 stock market crash.

It’s not too late for investors to have a say. The rescission is still a proposed rule, open for comment through August 3, 2026. The SEC will then review public comments and issue a final rule.

Investors deserve access to material financial information that many of the world's largest asset managers have explicitly requested. Without it, investors will be operating blind in a rapidly changing world — and people’s retirement plans will pay the price.

Note: Janet’s daughter, a former Los Angeles primary school teacher, is a plan member of CalSTRS.