SEC Climate Disclosure Rule FAQ

The SEC’s final rule on climate disclosure was originally set to take effect in May 2024, but implementation is currently stayed by the SEC pending ongoing legislation. While the Commission under the Biden Administration stated it would vigorously defend the rule, the landscape shifted after but with a new SEC chairman was confirmed. on March 27, 2025 a majority of commissioners voted, to end their defense of the rule, despite the objections of Commissioner Caroline Crenshaw. Ceres also opposed this step.  

Now, the rule will be defended by a multi-state coalition of 19 attorneys general who had intervened in the litigation.  They represent more than a quarter of a trillion dollars in public funds.  
 
No matter what happens to the SEC rule, there is a clear trend toward climate risk disclosure rules from financial regulators worldwide. The EU Corporate Sustainability Reporting Directive (CSRD) and California’s climate disclosure laws will likely impact thousands of U.S. companies, as will climate disclosure regulations adopted by jurisdictions worldwide that adhere to the International Sustainability Standards Board (ISSB) standards. Companies should ensure they have systems in place to collect, analyze and disclose climate risk information, paying particular attention to developments in the areas of assurance and GHG emissions disclosure. 

The rule was proposed in response to significant investor demand for corporate disclosure of material climate risks. For 25 years, investors have sought this information, concerned about financial risks related to climate change that undermine their investments.  

Investors first asked the SEC improve climate risk disclosure in 2003. Progress was slow, leading to investor petitions from 2007 to 2009 that resulted in the SEC’s 2010 Commission Guidance Regarding Disclosure Related to Climate Change. Meanwhile, global demand for disclosure grew steadily, leading to the formation of the Task Force on Climate-related Financial Disclosures, the International Sustainability Standards Board (ISSB) and Global Statements from investors representing more than $29 trillion asking governments to mandate climate risk disclosure in financial reporting.   Also, in the United States, disclosure standards developed by the Sustainability Accounting Standards Board were adopted by hundreds of companies. 

The SEC requested extensive public feedback on climate risks in 2021, and proposed rules in 2022. Today, over 35 countries have adopted or are on track to adopt the ISSB climate-related disclosure standards. Companies and investors continue to ask for aligned global standards for climate risk disclosure to ensure efficient data collection and provide certainty to companies. 

The rule covers both domestic registrants and foreign private issuers. It applies to large accelerated filers and accelerated filers, which are subject to all of the final rule's provisions. The rule also applies to non-accelerated filers, smaller reporting companies, and emerging growth companies, and these groups are exempt from certain disclosure requirements.  

Regardless of pending litigation, it’s clear that corporate executives understand the benefits of standardized disclosure and increased transparency for their investors. After the US presidential election, 85% of 1,601 global business leaders surveyed said they will move forward with their climate disclosure plans despite political shifts and other pushback against disclosure requirements. This makes sense given that the occurrence of severe weather events and physical risks from climate change are only increasing and having real impacts on supply chains, infrastructure, workforces and other operational factors for companies. 

The CSRD has the most extensive climate disclosure requirements because it requires reporting of both financial impacts to the company from sustainability risks, as well as the company’s impacts on its stakeholders and the broader society, known as double materiality. The CSRD also spans a range of sustainability topics beyond climate. Aspects of the ISSB standards are more robust than the SEC’s rule, although there is good interoperability between the two.  

The California laws focus on Scopes 1-3 GHG emissions (SB 253) and TCFD- or ISSB-aligned climate risk reporting (SB 261). There is significant overlap between the California laws and the SEC’s final rule, which is similarly underpinned by the TCFD framework and Greenhouse Gas Protocol-aligned emissions reporting. Aspects of the SEC rule, including the disclosure of climate-related financial statement metrics, go beyond the requirements of the California laws.  California’s emissions disclosure law includes Scope 3 emissions, while the SEC rule does not. 

 All of these frameworks have different implementation dates and processes. The California laws require regulatory implementation before companies begin disclosing. These laws are also being challenged in court. The ISSB standards become effective through legislation or rulemaking on a country-by-country basis. We expect some variations in the specific rules each country chooses to adopt, as well as variance in the applicability of those rules to U.S.- and other non-EU companies. Over 35 countries have adopted or are on track to adopt the ISSB Standards. Finally, the final state of the CSRD rules are currently in flux as European policymakers consider simplification measures as part of an Omnibus legislative package. Both the CSRD and ISSB frameworks encompass issues beyond climate change, which will factor into many companies’ decisions about which sustainability issues they assess and disclose. 

Because aspects of these climate disclosure requirements are not final, we recommend monitoring them and seeking additional advice. The requirements are regularly discussed in materials written by accountants, lawyers and others. The ISSB’s climate disclosure educational materials and sustainability knowledge hub are helpful resources, and their Transition Implementation Group fields questions from preparers and stakeholders about climate risk and sustainability disclosure. For more information on the implementation topics currently under consideration in California, refer to the comment letter Ceres submitted to the California Air Resources Board in March 2025. 

Many companies will continue to use voluntary climate risk disclosure to communicate with their full range of stakeholders. Ceres’ vision for corporate sustainability transparency and disclosure (including climate risks) is included in our Roadmap 2030. We encourage companies to recognize the value of sustainability disclosure and its ability to stimulate ingenuity and strategic thinking, improve sustainability performance, increase competitiveness in a resource-constrained economy and create value for shareholders. We encourage companies to deliver both quantitative and qualitative information in ways that are consistent, decision-useful and comparable, ensuring disclosures are accessible and relevant to shareholders and other stakeholders. For more information, see Ceres Roadmap 2030, Transparency and Disclosure. 

The SEC’s climate disclosure rule is an important step forward to better protect retirement savers, individual investors, and all market participants (see Ceres statement). The rule mandates the disclosure of consistent, comparable, and material information on physical- and transition-related climate risks vital to investment decision-making. Climate information in SEC filings requires a level of scrutiny and diligence from companies that is lacking in voluntary reporting, which is typically made outside of SEC filings in corporate sustainability reports or elsewhere. While the rule does not include Scope 3 greenhouse gas (GHG) emissions disclosure, investor demand for that information continues to grow and many companies will be required to disclose this data in other jurisdictions.  

See Ceres’ multiple comments on the proposed rule:  

• March 2024: Ceres summarized the final rule and compared the provisions in the proposed and final rule. 

• April 6, 2023: Joint letter with Persefoni on additional details related to costs to issuers and investors, as well as counterarguments to misleading arguments related to the cost-benefit analysis 

• March 28, 2023: Joint letter with Center for Audit Quality on alternatives to proposed Regulation S-X financial statement requirements 

• February 1, 2023: Evidence regarding increased disclosures of emissions data & TCFD-aligned information 

• December 12, 2022: Joint business coalition letter with recommendations on key provisions plus possible amendments 

• December 2, 2022: Data on support for rulemaking, investor use cases, issuers’ support for Scope 1 and 2 disclosure, link to letter by 86 Chief Financial Officers to the International Sustainability Standards Board 

• November 10, 2022: Articles on businesses leading on Scope 3 emissions disclosure/management and risks to investors 

• June 17, 2022: Main comments on proposed rule 

• June 10, 2021: Recommendations in response to request for public input on climate change disclosure 

If you would like to learn more about the rules, check out these external resources. 

• Comment: SEC Climate Disclosure Rules: Four potential paths under President Trump 

• Amicus brief filled by institutional investors  

• Green Biz 2024: A New Era of Corporate Climate Disclosure with Mindy Lubber of Ceres  

• Comment: The new U.S. federal disclosure rule is an important step towards a water-secure future by Kirsten James 

• Witness Testimony at the U.S. Senate Meeting of the Senate Climate Change Task Force June 12, 2024 

• Project Frame Community Meeting: How does the SEC’s climate disclosure rule impact early-stage investors? 

• Volts Podcast “What’s the Deal With “Scope 3” Emissions?”