SEC’s Climate Disclosure Rule Faces Uncertain Future as Uyeda Calls for Delay

Key Takeaways

• SEC climate disclosure rule under fire: Acting Chair Mark Uyeda calls for delay in legal defense of the controversial rule.
• Rule criticized: Uyeda and fellow Republican commissioners argue the SEC overstepped its mandate, while opponents warn it could harm the economy.
• State regulations gaining traction: California’s climate disclosure laws could fill the regulatory gap if federal rule stalls.
• Legal uncertainties persist: The SEC’s defense of the rule remains on hold as it reevaluates its position in court.

Deep Dive

The battle over the SEC’s climate disclosure rule has entered a new phase, and the winds are shifting—this time, away from the aggressive push for federal mandates. On February 11, Acting SEC Chair Mark Uyeda signaled a significant change by requesting that a federal appeals court delay oral arguments in the ongoing lawsuit against the rule. This request is just the latest in a series of developments that point to a deepening uncertainty about the future of the rule, which mandates that companies disclose climate-related risks to investors.

For some, this move is a breath of fresh air. Uyeda, who assumed his role in January following Gary Gensler’s resignation, has long been an outspoken critic of the rule. He and fellow Republican Commissioner Hester Peirce were among the dissenting voices when the rule was initially adopted, arguing that it overstepped the SEC’s authority by addressing issues outside the agency’s mandate. The rule, finalized in March 2024, requires public companies to disclose the risks they face from climate change, both in terms of physical risks (like wildfires) and the economic shifts linked to the transition to a low-carbon economy.

But the deeper question remains whether the SEC should even be in the business of regulating climate disclosures? For Uyeda, the answer is no. In his statement, he called the rule “deeply flawed” and warned that it could harm both the capital markets and the broader economy. He pointed to President Trump’s January 20 executive order instituting a regulatory freeze, which aligns with the current administration’s push to limit climate-related language in federal rule-making.

In other words, the SEC’s once-staunch defense of the climate disclosure rule is now on shaky ground.

Yet, not everyone is on the same page. Commissioner Caroline Crenshaw, a Democrat, expressed strong disapproval, suggesting that Uyeda was using this delay to push his own policy preferences, a move she described as an “end-run” around the commission’s authority. Meanwhile, critics from the business world, particularly those represented by the U.S. Chamber of Commerce and state attorneys general, argue that the rule imposes unnecessary burdens on companies and investors. After all, they say, the SEC’s existing disclosure rules already require businesses to share information about material financial risks, including those related to climate change.

Despite the legal challenges, the rule’s future has seemed increasingly uncertain since its adoption. While the SEC has put enforcement on hold until the court makes a decision, the broader question now is whether the agency will even continue to defend the rule in court. With the regulatory freeze still in place, some speculate that the SEC may not put up much of a fight.

In the meantime, many eyes are turning to state-level climate regulations, which could fill the void if the federal rule collapses. California’s SB 253 and SB 261, which are poised to affect thousands of U.S. businesses, remain firmly in effect. These state laws are expected to drive climate-related disclosures and compliance requirements, pushing businesses to prepare for climate risk reporting by 2026.

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