What Happened
Reuters reported Tuesday that the Securities and Exchange Commission is crafting regulations to undo a Biden-era climate disclosure rule, according to a notice on the Office of Management and Budget website.
The 2024 rule required publicly traded companies to tell investors about certain climate-related risks, emissions, and spending. It was already stayed while industry groups and Republican-led states challenged it in court. Under Trump, the SEC voted last year to stop defending the rule, and an appeals court suspended consideration of the case.
An SEC spokesperson told Reuters the agency was working to rescind the rule to return to its "core mandate" of requiring corporate disclosures focused on information material to investors.
Why This Matters
The whole point of securities disclosure is that investors should not have to read tea leaves, smoke signals, or the local floodplain map to figure out whether a company is sitting on expensive risk.
Companies spend money on insurance, supply chains, facilities, energy, and disaster planning. Climate risk can hit all of that. The argument is not whether every earnings report needs to become a weather channel. The argument is whether investors get comparable, required information or a choose-your-own-disclosure buffet.
The Dumb Part With The Core Mandate Escape Hatch
"Core mandate" sounds clean until you remember that material risk is the core mandate. If a company's factories, crop inputs, insurance costs, shipping routes, or physical assets are exposed to climate-related losses, pretending that is somehow outside investor protection is a neat little magic trick.
The rule was already watered down, sued, stayed, and left in regulatory purgatory. Now the agency is preparing the formal burial. That is government by Etch A Sketch: write the rule, sue the rule, pause the rule, stop defending the rule, then announce the rule was never really invited to the investor-protection party.
The Bottom Line
The SEC may act after OMB finishes reviewing the draft regulations, Reuters says. The timeline is uncertain, but the direction is not subtle.
Investors can still ask companies about climate risk. Companies can still disclose it voluntarily. But voluntary disclosure is also how you get a marketplace where every company explains the scary parts in a different font, if it explains them at all.
Sources
Reuters: Wall Street regulator moves to scrap Biden-era climate rule
U.S. Securities and Exchange Commission