SEC Climate-Related Disclosure Rules

Executive Summary

The SEC Climate-Related Disclosure Rules are the most legally fraught major financial-market climate disclosure regulation in the world. They were adopted by the Commission on 6 March 2024 in a 3–2 vote with then-Chair Gary Gensler in the majority; they were stayed by the Fifth Circuit on 15 March 2024 within days of adoption; they were voluntarily stayed by the SEC itself on 4 April 2024 pending judicial review; the consolidated litigation (more than nine federal lawsuits) was assigned to the U.S. Court of Appeals for the Eighth Circuit; the SEC defended the rule through briefing that concluded in September 2024; on 27 March 2025 the Commission — under Acting Chair Mark Uyeda and following the change in administration — voted to end its defence of the rule and withdrew its arguments from the court; on 24 April 2025 the Eighth Circuit granted intervenor states’ motion to hold the cases in abeyance pending further SEC action; on 23 July 2025 the SEC filed a status report asking the court to terminate the abeyance and decide the case on the merits; in September 2025 the Eighth Circuit reaffirmed the abeyance, stating that the case would be held until the SEC “reconsiders the challenged Final Rules by notice-and-comment rulemaking or renews its defense of the Final Rule”; and on 4 May 2026 the SEC submitted a formal proposed rescission to the Office of Information and Regulatory Affairs (OIRA) for review — the procedural step that begins the notice-and-comment rulemaking the court demanded.

Four things distinguish this rule from every adjacent climate disclosure framework. First, it is a never-effective rule with active practitioner relevance. The rule has not applied to a single Form 10-K filing, yet large accelerated filers built compliance scaffolding for it through 2024 and into 2025 in anticipation of FY2025 first reporting, and that scaffolding is now repurposed for California SB 253, CSRD ESRS E1, and voluntary IFRS S2 reporting. Second, it is the only major federal climate disclosure rule the United States has ever adopted. The 2010 SEC Commission Guidance on climate disclosure (Release No. 33-9106) is interpretive and remains in force, but Release No. 33-11275 was the only attempt at a prescriptive federal rule with line-item disclosure requirements, a phased filer schedule, and a Regulation S-X financial-statement component. Third, its substantive content is much narrower than the 2022 proposal. Scope 3 disclosure was eliminated; Scope 1 and Scope 2 were qualified by materiality and limited to large accelerated filers and accelerated filers; smaller reporting companies, emerging growth companies, and non-accelerated filers were exempted from GHG disclosure; financial-statement quantitative thresholds were narrowed; the proposed board-expertise disclosure was eliminated; a safe harbour was added for forward-looking transition-plan and scenario disclosures. Fourth, it sits inside an active legal-doctrine inflection. The Supreme Court’s June 2024 decision in Loper Bright Enterprises v. Raimondo ended Chevron deference; the West Virginia v. EPA major-questions doctrine constrains agency rulemaking on questions of vast economic and political significance; any future SEC climate rulemaking must clear a statutory-authority test that the 2024 rule never had to clear in a final merits decision because the SEC withdrew before the court ruled.

For a U.S. public company in May 2026, the operational reality is that the SEC Climate Rule imposes no compliance obligation today, the practical probability of mandatory federal climate disclosure under this rule is now low and falling as the rescission process proceeds, and the disclosure work practitioners actually need to do is being driven by California SB 253 (large accelerated filers and many accelerated filers above the $1bn revenue threshold doing business in California), the SB 261 TCFD-aligned risk reports (currently paused by Ninth Circuit injunction at the $500m threshold), CSRD third-country reach for issuers with material EU subsidiaries or branches, voluntary IFRS S2 alignment as the global private-sector baseline, and the 2010 SEC Commission Guidance that has never been rescinded and that the Division of Corporation Finance continues to enforce through comment letters. The compliance work survives the rule’s fate. The decision tree in §30 below sets out what each archetype of registrant should actually do now.

What the Rule Is — and Its Current Legal Status

The SEC Climate-Related Disclosure Rules are a set of amendments to Regulation S-K and Regulation S-X published by the U.S. Securities and Exchange Commission as Enhancement and Standardization of Climate-Related Disclosures for Investors, Release No. 33-11275, on 6 March 2024. The rule was published in the Federal Register on 28 March 2024 at 89 Fed. Reg. 21668. The rule, had it taken effect, would have added a new Subpart 1500 (Items 1500 through 1508) to Regulation S-K imposing narrative climate-related disclosure obligations on SEC registrants in registration statements and annual reports (Forms 10-K, 20-F, and S-1 / S-3 / S-11 / F-1 / F-3 / F-4 registration statements), and a new Article 14 to Regulation S-X imposing financial-statement footnote disclosure of the effects of severe weather events, other natural conditions, carbon offsets, and renewable energy credits where material.

The rule has never taken effect. Its effective date was scheduled for 28 May 2024 (60 days after Federal Register publication). On 15 March 2024 the U.S. Court of Appeals for the Fifth Circuit granted an administrative stay in response to litigation filed by oil-field-services firms Liberty Energy and Nomad Proppant Services. On 21 March 2024 the U.S. Judicial Panel on Multidistrict Litigation consolidated the nine then-pending federal lawsuits and assigned the consolidated case to the U.S. Court of Appeals for the Eighth Circuit, where it was captioned State of Iowa v. U.S. Securities and Exchange Commission, No. 24-1522. On 4 April 2024 the SEC issued a voluntary stay of the rule’s effective date pending judicial review of the consolidated litigation; the Commission stated at the time that it believed the rule was a lawful exercise of its regulatory authority and that the voluntary stay was intended to allow the appellate process to proceed without operational uncertainty for registrants.

Substantive scope

As adopted, the rule applied to all SEC registrants (domestic and foreign) other than asset-backed issuers. It imposed five major categories of disclosure: (i) narrative disclosure of climate-related risks material to business, strategy, results of operations, or financial condition; (ii) disclosure of board and management oversight of those risks; (iii) disclosure of risk-identification, assessment, and management processes; (iv) for large accelerated filers and accelerated filers only, quantitative disclosure of Scope 1 and Scope 2 GHG emissions if material, with phased limited and reasonable assurance; and (v) financial-statement footnote disclosure under Article 14 of Regulation S-X covering severe weather and other natural-condition impacts, carbon offsets, and renewable energy credits where material to climate targets.

The rule explicitly did not require Scope 3 GHG disclosure. The 2022 proposal had included a Scope 3 requirement that would have applied if material or if the company had a Scope 3 target; the final rule eliminated the Scope 3 requirement entirely in response to overwhelming commenter opposition. This is the single largest substantive difference between the proposal and the final rule and is the area of greatest practitioner confusion (see §5 below).

Current legal status

As of 26 October 2026, the rule’s status is: adopted but never effective; under voluntary SEC stay; the subject of consolidated Eighth Circuit litigation in indefinite abeyance; abandoned by the SEC in its own defence; the subject of a formal rescission proposal (sent to OIRA on 4 May 2026 and proposed by the Commission on 29 May 2026 as Release No. 33-11421; comments closed 3 August 2026; no final vote yet); and the subject of a Commission statement that “[t]he Commission does not intend to review or reconsider the Rules at this time” filed with the court on 23 July 2025. The Eighth Circuit, in its September 2025 order, stated that the cases will be held in abeyance “until such time as the Securities and Exchange Commission reconsiders the challenged Final Rules by notice-and-comment rulemaking or renews its defense of the Final Rule.” The 4 May 2026 OIRA submission is the procedural step that begins the notice-and-comment rulemaking the court demanded. The formal rescission, when proposed and finalised through notice-and-comment, would remove the rule from the Code of Federal Regulations and from Subpart 1500 of Regulation S-K and Article 14 of Regulation S-X.

What the rule is not

Three distinctions matter. First, the SEC Climate Rule is not the SEC’s only mechanism for requiring climate-related disclosure. The 2010 Commission Guidance Regarding Disclosure Related to Climate Change (Release No. 33-9106), issued in February 2010 under then-Chair Mary Schapiro, remains in force and continues to be enforced through Division of Corporation Finance comment letters; it interprets the existing materiality-based disclosure framework under Items 101, 103, 303, and 503 of Regulation S-K and Rule 408 to require climate-related disclosure where material under the existing standards. The rescission of Release No. 33-11275, if completed, would not affect the 2010 Guidance.

Second, the SEC Climate Rule is not a stand-alone GHG accounting methodology. The rule references the GHG Protocol Corporate Accounting and Reporting Standard for calculation methodology and would have required registrants to disclose the emission factor source and the calculation method; the rule itself does not prescribe a calculation algorithm. The methodology comes from the GHG Protocol Corporate Standard and the GHG Protocol Scope 2 Guidance.

Third, the SEC Climate Rule is not the same as voluntary TCFD-aligned disclosure that many U.S. companies have undertaken since 2017. Voluntary TCFD reports follow a similar four-pillar architecture but sit outside Form 10-K and 20-F filings, are not subject to SEC enforcement, and do not invoke the Article 14 of Regulation S-X financial-statement disclosure requirements that distinguish the SEC rule from every other major climate disclosure framework.

Why the Rule Was Proposed

The SEC Climate Rule was the product of a five-year policy and investor-demand build-up that the Commission under Chair Gary Gensler determined had created sufficient investor need for standardised, comparable, and reliable climate disclosure to justify exercising the agency’s disclosure-mandating authority. Understanding the proposal’s policy logic is necessary to make sense of why the final rule looked the way it did and why any future SEC climate rulemaking would have to clear different doctrinal hurdles than the 2024 rule did.

The 2010 Commission Guidance gap. In February 2010 the SEC, under then-Chair Mary Schapiro, issued Commission Guidance Regarding Disclosure Related to Climate Change (Release No. 33-9106). The Guidance interpreted the existing Regulation S-K items to require climate-related disclosure where material; it did not impose new line-item requirements. Through the 2010s, investor commenters increasingly argued that the Guidance had failed to produce comparable, decision-useful climate disclosure; that disclosure was inconsistent across filers; that material climate-related risks were being omitted or buried; and that the Guidance lacked the prescriptive structure necessary to enable comparison across registrants in a given industry. The 2022 proposing release explicitly framed the 2010 Guidance as the baseline that the proposed rule was designed to upgrade.

The TCFD proliferation. The Task Force on Climate-related Financial Disclosures published its final recommendations in June 2017. Through 2018–2022 a substantial fraction of large U.S. public companies adopted TCFD-aligned voluntary reporting, often producing stand-alone climate or sustainability reports that sat alongside but outside the Form 10-K. The 2022 SEC proposing release explicitly drew on the TCFD four-pillar architecture (Governance, Strategy, Risk Management, Metrics & Targets) and on the eleven recommended disclosures, with U.S.-specific adaptations to fit the Regulation S-K framework. The TCFD framework was retired by the Financial Stability Board in October 2023; the SEC’s reference architecture at the time of the 2024 final rule was therefore TCFD even though the international standard-setting baton had passed to the ISSB. See the TCFD Recommendations reference page for the substantive framework.

Investor petition activity. Between 2018 and 2022 the SEC received multiple formal petitions for rulemaking from investor groups requesting prescriptive climate-related disclosure standards. The 2022 proposing release cites investor demand as a primary policy driver: large institutional investors representing more than $130 trillion in assets under management had publicly supported mandatory standardised climate disclosure, and the SEC’s mandate to “establish disclosure requirements that elicit information important to investors” under Section 7 of the Securities Act and Section 13 of the Securities Exchange Act provided the statutory authority claim.

The international convergence pressure. By 2022 the EU’s CSRD legislative process was advancing toward final adoption (achieved 14 December 2022, published in the Official Journal 16 December 2022), the UK had finalised its mandatory TCFD-aligned regime, and the IFRS Foundation had established the ISSB and was developing IFRS S1 and IFRS S2. The proposing release explicitly cites international convergence as a policy consideration: failure to act would leave U.S. registrants subject to overlapping foreign disclosure regimes without a coherent U.S. framework that could anchor methodology choices and reduce duplication.

The Rulemaking Timeline — March 2022 Proposal to March 2024 Final Rule

The SEC Climate Rule rulemaking unfolded over almost exactly two years from proposing release to final rule, generated a record-shattering comment file, and went through substantial revisions in response to commenter feedback before final adoption.

The Final Rule vs the 2022 Proposal

The single most-searched comparison practitioners run on the SEC Climate Rule is the proposal vs final rule diff. The final rule’s narrowing was the news in March 2024 and remains the most consequential structural fact about Release No. 33-11275 — it is also the principal reason commenters supporting more ambitious disclosure expressed disappointment with the final rule. The table below documents the major substantive differences.

The Legal Challenge Timeline — Fifth Circuit Stay to Eighth Circuit Consolidation

The SEC Climate Rule faced litigation before it was published in the Federal Register. The complete legal-challenge timeline, taken from primary docket sources, runs as follows.

The Trump Administration’s Response — March 2025 Defence Withdrawal to May 2026 Rescission Proposal

The Trump administration’s response to the SEC Climate Rule unfolded in three discrete phases through 2025 and into 2026. Each phase represents a different posture by the SEC under successive Acting and confirmed Chairs.

Phase 1 (January–March 2025): defence pause and delay tactics under Acting Chair Uyeda. From the 21 January 2025 inauguration until the 27 March 2025 vote to withdraw defence, the SEC under Acting Chair Mark Uyeda pursued a strategy of pausing the litigation through procedural means — asking the Eighth Circuit to delay oral argument (11 February 2025), signalling internal Commission review of the rule. The 27 March 2025 vote crystallised the posture: the Commission would not defend the rule. Acting Chair Uyeda’s statement called the rule “costly and unnecessarily intrusive” and said the goal of the action was “to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”

Phase 2 (April–September 2025): abeyance management and the merits-decision gambit. Following the abeyance grant on 24 April 2025 and the Senate confirmation of Paul Atkins as SEC Chair on 15 April 2025, the SEC’s posture pivoted in July 2025 from “do nothing” to a more aggressive procedural move: ask the Eighth Circuit to terminate the abeyance and decide the rule on the merits. The 23 July 2025 status report was unusual in administrative-law terms: an agency declining to defend its own rule while simultaneously asking the court to rule against it. Practitioners and academics noted that a merits loss in the Eighth Circuit could have produced a binding precedent constraining future SEC climate rulemaking under any future administration — with the practical effect of “locking in” the rollback by removing the SEC’s statutory authority rather than just the current Commission’s preferences. The Eighth Circuit’s September 2025 order rejected this gambit, preserving the rule on paper while requiring the SEC to choose between rescission and merits defence.

Phase 3 (October 2025–May 2026): formal rescission rulemaking. Following the September 2025 order, the SEC’s only remaining path to removing the rule was notice-and-comment rulemaking. Through late 2025 and early 2026 the SEC staff prepared a recommendation to rescind. On 4 May 2026 the formal rescission proposal was submitted to the Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget for executive-branch review — the procedural step that precedes publication of a proposed rule in the Federal Register. An SEC spokesperson confirmed that staff is “preparing a recommendation to the Commission to rescind the agency’s 2024 climate rules” and that Chair Atkins is focused on “returning the agency to its core mandate — in line with its legal authority — restoring a materiality-focused approach to securities regulation.”

What rescission looks like procedurally

The rescission process from the 4 May 2026 OIRA submission to a final rescinded rule runs through five steps: (1) OIRA review of the proposed rescission, typically 30–90 days; (2) Commission vote on a proposed rescission rule; (3) publication of the proposed rescission in the Federal Register with a public comment period (typically 60 days, though the SEC has discretion on length); (4) Commission consideration of comments and vote on a final rescission rule; (5) publication of the final rescission in the Federal Register. A final rescission rule would itself be potentially subject to judicial challenge under the Administrative Procedure Act — intervenor states or NGO petitioners could argue that the rescission is arbitrary and capricious or fails to engage with the record. A realistic timeline from May 2026 OIRA submission to final rescinded rule is 12–24 months absent litigation; longer with litigation.

Current Legal Status — The Rule on Paper vs the Rule in Practice

The SEC Climate Rule’s status as of 11 May 2026 is one of the strangest postures in U.S. administrative law: a rule that has been finally adopted by the relevant agency, published in the Code of Federal Regulations, never been effective, never been enforced, abandoned by its own promulgating agency in litigation, and is now in active rescission. The rule exists on paper but does not exist in practice. Practitioners need to be able to talk about both states simultaneously.

The rule on paper

Release No. 33-11275 has not been rescinded or vacated. The amendments to 17 CFR Parts 210, 229, 232, 239, and 249 that the rule made — the addition of Subpart 1500 (Items 1500–1508) to Regulation S-K and Article 14 to Regulation S-X — remain in the CFR. The SEC’s voluntary stay of 4 April 2024 has stayed the effective date but has not vacated the rule. The Eighth Circuit has not ruled on the merits and is unlikely to do so under the September 2025 order. The rule could in principle still be defended by the SEC at some future date (under a future administration), affirmed by the Eighth Circuit, and made effective by lifting the stay. As a matter of formal administrative law, the rule is alive.

The rule in practice

The rule has never been effective. No company has filed under it. The SEC under Chair Atkins has formally stated that it does not intend to review or reconsider the rule and has now submitted a formal rescission proposal to OIRA. The SEC’s enforcement priorities under the current Commission have publicly shifted away from climate disclosure enforcement; the Division of Enforcement’s Climate and ESG Task Force, established under the previous administration, has been deprioritised. The practical probability that the rule will ever take effect in its current form is very low and falling as the rescission proceeds.

What “never effective” means for accounting and audit

Auditors and audit committees need to understand the practical implication: the rule has not created any accounting, internal-control, or financial-statement requirement. The Article 14 of Regulation S-X disclosures — the financial-statement footnote disclosure of severe weather and natural-condition impacts, capitalised costs and losses, carbon offset and REC expenditures — are not required and were never required. PCAOB audit standards and the audit committee’s existing climate-related risk oversight obligations under standard financial-statement and ICFR requirements remain unchanged by the rule’s adoption or its current status.

What Still Applies Regardless

The most consequential section of this page for practitioners in May 2026. “The SEC rule is dead, so I have no climate disclosure obligation” is the most damaging misreading of the current posture and the single most common error in board-level discussions of U.S. climate disclosure. The reality is that the obligations that don’t go away even if Release No. 33-11275 is fully rescinded are extensive, are operationally demanding, and in some cases have deadlines sooner than the SEC rule would have imposed.

Governance Disclosures Under the Rule

The Governance disclosures required by Subpart 1500 of Regulation S-K would have required registrants to describe the board of directors’ oversight of climate-related risks and the role of management in assessing and managing climate-related risks. Specifically, Item 1501 would have required disclosure of:

• The board of directors’ oversight of climate-related risks, including identification of any board committee or subcommittee responsible for the oversight of climate-related risks and a description of the processes by which such committee is informed about climate-related risks.
• Management’s role in assessing and managing material climate-related risks, including identification of any management position or committee responsible for assessing and managing such risks, a description of the relevant expertise of such persons (in general terms), and a description of the processes by which management is informed about and monitors climate-related risks.

Three features of the governance disclosure as adopted are worth noting. First, the final rule eliminated the proposed requirement to disclose the climate expertise of specific board members — the proposal would have required naming directors with climate-related expertise and describing that expertise; the final rule limited the disclosure to general descriptions of the oversight process and management expertise without naming individual directors. Second, the final rule did not require disclosure of how frequently the board is informed of climate-related risks or how the board sets climate-related goals — both proposed elements that were removed in response to commenter concerns. Third, the governance disclosures were not materiality-qualified in the same way as the strategy and metrics disclosures; the governance disclosures would have applied universally to all registrants in scope (i.e., all SEC registrants other than asset-backed issuers).

Strategy Disclosures Under the Rule

The Strategy disclosures (Item 1502 of Regulation S-K) would have required registrants to disclose any climate-related risks reasonably likely to have a material impact on the registrant’s business strategy, results of operations, or financial condition. The disclosure would have covered:

• Identification of material climate-related risks, distinguishing between physical risks (acute and chronic) and transition risks (regulatory, market, technological, reputational, policy).
• The time horizon over which each material climate-related risk is reasonably likely to manifest (short, medium, or long term, with the registrant defining the horizons).
• The actual and potential impacts of identified material climate-related risks on the registrant’s business strategy, results of operations, or financial condition.
• Whether and how the registrant uses scenario analysis to assess the resilience of its business strategy to climate-related risks, including, if scenario analysis is used, a description of the scenarios used, the parameters and assumptions, and the projected principal impacts.
• Whether the registrant maintains an internal carbon price, and if so, a description of the price, the rationale, and the units used.
• The registrant’s transition plan, if any, including identification of the transition plan, a description of how it is being implemented, and the metrics and targets used to measure progress.

The strategy disclosures were materiality-qualified throughout. The rule’s safe harbour from private liability extended specifically to the forward-looking aspects of the strategy disclosure — scenario analysis, internal carbon price, transition plan, and targets — recognising the forward-looking nature of these disclosures and the need to encourage registrants to make them without exposure to private litigation under Rule 10b-5 for projections that subsequently proved inaccurate.

Risk Management Disclosures Under the Rule

Item 1503 of Regulation S-K would have required disclosure of the registrant’s processes for identifying, assessing, and managing material climate-related risks, including:

• A description of the registrant’s processes for identifying, assessing, and managing material climate-related risks.
• Whether and how those processes are integrated into the registrant’s overall risk management system or processes.
• Identification of whether the registrant has adopted any transition plan addressing climate-related risks.

The risk management disclosure mapped to the TCFD Risk Management pillar but adopted a less prescriptive approach than the proposing release. The proposing release would have required more detailed descriptions of how the registrant identifies, assesses, and prioritises climate-related risks; the final rule consolidated these into a single high-level process description.

Metrics and Targets Disclosures Under the Rule

The Metrics and Targets disclosures (Items 1504 through 1506 of Regulation S-K, plus the Reg S-X Article 14 financial-statement disclosures discussed separately in §16) would have required disclosure of:

• Scope 1 and Scope 2 GHG emissions — for LAFs and AFs only, if material, with phased limited and reasonable assurance. Discussed in detail in §14.
• Climate-related targets and goals — if the registrant had set any climate-related target or goal that has materially affected or is reasonably likely to materially affect the registrant’s business, results of operations, or financial condition, the rule would have required disclosure of the target or goal, the scope of activities encompassed by it, the timeline, the means of meeting the target, any interim targets, progress toward meeting the target, and the use of carbon offsets or RECs in meeting the target. The carbon-offset and REC disclosure would have flagged whether the use of these instruments was material to achieving the target.
• Material expenditures and impacts — expenditures and the financial impacts of climate-related risks, transition activities, and target-related activities, where material. The detail of this disclosure was split between Subpart 1500 of Reg S-K (qualitative disclosure of expenditures and material impacts as part of strategy, transition plan, and targets and goals) and Article 14 of Reg S-X (quantitative footnote disclosure in audited financial statements of capitalised costs, charges, and losses related to severe weather events and other natural conditions).

Scope 1 and Scope 2 Disclosure Requirements

The Scope 1 and Scope 2 GHG emissions disclosure was the centrepiece of the final rule’s quantitative content and one of the areas where the final rule diverged most significantly from the 2022 proposal. Three features defined the Scope 1 and Scope 2 disclosure as adopted.

Materiality qualifier. The proposing release would have required Scope 1 and Scope 2 disclosure from all registrants regardless of materiality. The final rule added a materiality qualifier: LAFs and AFs would have been required to disclose Scope 1 and Scope 2 emissions only if material. The SEC’s adopting release explained that emissions would typically be material to a registrant if there is “a substantial likelihood that a reasonable investor would consider the information important when determining whether to buy or sell securities or how to vote.” The materiality determination would have been the registrant’s own; the SEC declined to specify a quantitative materiality threshold.

Filer category exemptions. The proposal would have applied to all registrants. The final rule limited GHG disclosure to LAFs and AFs only. Smaller reporting companies (SRCs), emerging growth companies (EGCs), and non-accelerated filers were exempted entirely from GHG disclosure. This narrowed the in-scope population from approximately 5,300 registrants under the proposal to approximately 2,800 under the final rule.

Delayed timing. The proposal would have required GHG disclosure in the annual report at the time of filing. The final rule allowed domestic registrants to file Scope 1 and Scope 2 disclosure (and any related assurance) on a delayed basis — by the due date of the second-fiscal-quarter Form 10-Q for the following year — rather than in the annual report. This was a meaningful accommodation: it gave registrants approximately seven additional months after the fiscal year-end to complete the GHG inventory and (where applicable) the attestation.

What the rule demanded substantively

For registrants subject to the requirement and for which emissions were material, the rule would have required disclosure of:

• Scope 1 and Scope 2 emissions disaggregated by constituent gas (CO₂, CH₄, N₂O, and others where material), expressed in metric tons of CO₂e.
• For Scope 2, the calculation method used (location-based or market-based) and, if market-based, the role of RECs in the calculation.
• The organisational boundary applied, with disclosure of how the organisational boundary differs from the scope of the consolidated financial statements (if it does).
• The type and source of emission factors used, but not the numeric value of each factor.
• The calculation method and methodology references.
• Limited assurance (LAFs and AFs) phasing to reasonable assurance (LAFs only) over the rule’s phase-in period.

Scope 3 — Why It Was Dropped and Where Practitioners Find the Obligation Now

The elimination of Scope 3 disclosure from the final rule was the single most consequential narrowing from the 2022 proposal and is the area of greatest practitioner confusion. Three things matter for understanding the current state.

The proposal’s Scope 3 framework. Release No. 33-11042 would have required disclosure of Scope 3 GHG emissions if material or if subject to a climate-related target including Scope 3. The proposal recognised the methodological challenges of Scope 3 disclosure and included a safe harbour for Scope 3 disclosures from private liability. The proposal’s Scope 3 framework drew on the GHG Protocol Scope 3 Standard‘s 15-category architecture.

Why it was dropped. The adopting release identifies four primary reasons. First, commenters argued that Scope 3 data quality was insufficient to support reliable disclosure for the majority of registrants, and that requiring disclosure would have driven registrants to publish unreliable estimates. Second, commenters argued that Scope 3 disclosure would impose disproportionate compliance costs on smaller registrants in the supply chain who would face de facto disclosure requests from their large-registrant customers. Third, commenters argued that the materiality of Scope 3 was inherently subjective and would produce inconsistent disclosure across similarly situated registrants. Fourth, and most significantly, commenters argued that Scope 3 disclosure raised significant statutory authority and major-questions issues that would expose the rule to greater legal risk than the Scope 1 and Scope 2 disclosures. The SEC’s adopting release effectively conceded the legal-risk argument: eliminating Scope 3 was a deliberate doctrinal hedge.

Where Scope 3 disclosure obligations exist now for U.S. companies. The Scope 3 ground that the proposal would have covered is now occupied by:

• California SB 253 — mandatory Scope 3 disclosure from 2027 for U.S. companies with revenues > $1bn doing business in California. The CARB rulemaking is determining the Scope 3 framework, organisational boundaries, GHG accounting methods, and assurance standards for 2027 and beyond.
• CSRD ESRS E1 — mandatory Scope 3 disclosure for U.S. companies in scope of CSRD third-country reach (with EU Omnibus revisions narrowing the scope).
• IFRS S2 — mandatory Scope 3 disclosure for voluntary IFRS S2 adopters and for U.S. registrants in jurisdictions that have endorsed IFRS S2 (UK, Japan, Canada, Australia, others).
• UK Mandatory Climate Disclosures — Scope 3 expected for UK-listed U.S. companies with material value chain emissions.
• SBTi Corporate Net-Zero Standard — mandatory Scope 3 inventory and target architecture for U.S. companies with validated SBTi commitments. See SBTi Corporate Net-Zero Standard reference page.
• PCAF financed emissions — for U.S. banks, insurers, and asset managers, Scope 3 Category 15 disclosure under PCAF for portfolio emissions reporting.

Practitioners should treat the SEC rule’s elimination of Scope 3 as a U.S. federal regulatory choice that did not eliminate the underlying disclosure pressure — it simply moved the obligation from a (never-effective) federal regulation to state law, foreign regulation, and voluntary frameworks. The Scope 3 inventory work is still required; the regulatory venue is just different.

Financial Statement Requirements — Article 14 of Regulation S-X

The financial-statement disclosure component of the rule is the feature that distinguishes Release No. 33-11275 most clearly from every adjacent climate disclosure framework. The rule added a new Article 14 to Regulation S-X requiring disclosure of climate-related impacts in the footnotes to the audited financial statements, within the scope of the financial-statement audit and subject to internal control over financial reporting (ICFR).

As adopted, Article 14 would have required disclosure of:

• Capitalised costs, expenditures expensed, charges, and losses related to severe weather events and other natural conditions (hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, sea level rise) where the aggregate of those amounts (excluding insurance recoveries) exceeded a 1% threshold of the relevant financial-statement line item.
• Capitalised costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits (RECs) where material to the registrant’s plan to achieve disclosed climate-related targets.
• If material, the financial estimates and assumptions used in the financial statements that have been materially impacted by severe weather events, other natural conditions, or disclosed climate-related targets and transition plans.

The Article 14 requirements were narrowed substantially from the proposal. The proposal would have required line-item-by-line-item disclosure of climate impacts on financial-statement line items, exposing essentially every line of the financial statements to climate-related impact analysis. The final rule abandoned the line-item-by-line-item structure and limited the disclosure to a discrete set of events and expenditures with a quantitative threshold for severe weather and a materiality test for offsets and RECs.

The Article 14 financial-statement disclosure is the structural feature that distinguishes the SEC rule from every other major climate disclosure framework. CSRD ESRS E1, IFRS S2, and California SB 253 all require quantitative GHG and climate-related disclosures but place them outside the audited financial statements (typically in a management report or stand-alone sustainability statement). The SEC rule was unique in pulling specific climate-related financial impacts into the audited financial statements with ICFR scope and audit attestation. This is the feature that gave the rule its greatest practical bite — and, given the audit-and-ICFR implications, also its greatest implementation cost.

Attestation Requirements — Limited vs Reasonable Assurance

The rule would have required phased third-party attestation of Scope 1 and Scope 2 GHG emissions disclosure, with the level of assurance and the timing depending on the filer category.

The attestation provisions were among the most heavily commented elements of the rule because of their cost implications — limited assurance under ISAE 3000 or AT-C 105/205 (the AICPA’s framework) is a significantly different exercise from the consistency audit that historically applied to climate-related strategic-report disclosure under U.S. practice. Reasonable assurance, comparable to a financial-statement audit standard of assurance, is a substantially more demanding exercise still. The extended phase-in periods (6 years to limited assurance; 10 years to reasonable assurance for LAFs) were designed to allow audit firms to build capacity and registrants to build internal control infrastructure.

The attestation requirements are now moot under Release No. 33-11275 but remain relevant comparators for the assurance requirements emerging under California SB 253 (limited assurance for Scope 1 and 2 starting in 2027) and CSRD ESRS E1 (mandatory limited assurance from initial implementation, trajectory to reasonable assurance).

Filer Category Compliance Schedule

As originally adopted, the rule would have phased compliance over multiple years depending on filer category and disclosure type. The schedule below documents the compliance dates as set in Release No. 33-11275 for a calendar-year registrant. None of these dates is operative today because the rule has never been effective; the schedule is included as a historical record and as a baseline for what any revived rule would likely use as a starting point.

The phased schedule was the SEC’s principal accommodation to commenters concerned about implementation cost. It is also the principal reason the rescission of the rule, if completed, will not impose substantial transition costs — no filer was required to file under the rule before FY2025, and the SEC’s voluntary stay of April 2024 means no FY2025 first reporting has occurred under the rule’s authority.

GHG Methodology Connection — What the Rule Demanded of the Inventory

For registrants that would have been in scope of the Scope 1 and Scope 2 disclosure (LAFs and AFs with material emissions), the rule did not prescribe a calculation methodology directly but referenced the GHG Protocol as the operative framework. The adopting release explained that registrants would calculate Scope 1 and Scope 2 emissions using:

• Calculation framework: GHG Protocol Corporate Accounting and Reporting Standard for the consolidation framework (equity share, financial control, or operational control approach) and the Scope 1 and Scope 2 boundary definitions.
• Scope 2 method: GHG Protocol Scope 2 Guidance for the dual location-based and market-based reporting where market-based instruments are used.
• Emission factors: registrants would have been permitted to choose emission factors from any reputable published source — EPA emission factors for U.S. operations, IEA grid emission factors for non-U.S. electricity, supplier-specific factors where available. The rule required disclosure of the type and source of emission factors (e.g., “2024 EPA emission factor for mobile combustion”) but did not require disclosure of the numeric value of each factor.
• Organisational boundary: registrants would have disclosed the consolidation approach used (equity share / financial control / operational control) and disclosed how the organisational boundary for GHG reporting differs from the scope of the consolidated financial statements, if it does.

The methodology requirements were intended to allow flexibility for registrants while ensuring that the resulting disclosures were comparable across filers in the same industry. Registrants would also have been permitted to make reasonable estimates when calculating GHG emissions, with appropriate disclosure of the estimation methodology — another accommodation to data quality concerns raised in the comment process.

GWP Basis Under the Rule — AR5, AR6, and the Specific Language

The rule’s specific language on Global Warming Potential (GWP) is one of the under-discussed but operationally important features. The adopting release allowed registrants to use either the most recent IPCC GWP values (AR6, published in 2021) or the GWP values used in the most recent EPA Inventory of U.S. Greenhouse Gas Emissions and Sinks (which has historically used AR5 GWP values, published in 2014). The choice of GWP basis would have been disclosed and applied consistently across the inventory.

The flexibility is significant. AR5 and AR6 GWP-100 values differ for several non-CO₂ gases — most notably for methane (CH₄), where AR6 increased the GWP-100 value from 28 (AR5) to 27.0 for non-fossil methane and to 29.8 for fossil methane (small but measurable differences); and for nitrous oxide (N₂O), where AR6 reduced the GWP-100 from 265 (AR5) to 273 (a small upward revision). For registrants with significant methane or refrigerant emissions, the choice of GWP basis can materially affect the CO₂e total. See the IPCC AR6 GWP values reference page for the full operative dataset and the Global Warming Potential glossary for the underlying concept.

This is one of the areas where the SEC rule diverged from CSRD ESRS E1 (which mandates AR6) and from IFRS S2 (which references the “latest” IPCC values, generally interpreted as AR6 from 2022 reporting). U.S. registrants using the EPA AR5 basis under a (hypothetical) operative SEC rule would have produced GHG numbers that differed from the same registrant’s CSRD or IFRS S2 disclosures unless reconciled. The rescission of Release No. 33-11275 removes this divergence prospectively.

Scope 2 Method Choice — Location-Based vs Market-Based

The rule’s treatment of Scope 2 reporting method was substantively similar to the GHG Protocol Scope 2 Guidance’s dual-reporting expectation but did not impose mandatory dual reporting. The rule required registrants to disclose the calculation method used (location-based or market-based) and, if market-based, to disclose whether and how RECs factored into the gross emissions calculation. The rule did not require both methods to be disclosed.

This is another area of practical divergence from the operative alternative frameworks. GHG Protocol Scope 2 Guidance recommends dual reporting when market-based instruments are used (i.e., disclose both location-based and market-based figures). CSRD ESRS E1 mandates dual reporting. California SB 253’s implementing regulations are converging on dual reporting expectations. The SEC rule, by allowing a single-method disclosure, would have produced disclosures less comparable across registrants in the same industry where some used market-based instruments and others did not.

For practitioners building a Scope 2 inventory in 2026 to meet California SB 253, CSRD ESRS E1, or voluntary IFRS S2 alignment, the safer methodology choice is dual reporting (both location-based and market-based) where market-based instruments are used. The GreenCalculus Scope 2 Electricity Calculator implements the dual-reporting approach using the 2026 IEA grid factor set. See also the Scope 2 location-based vs market-based comparison.

SEC Rule vs CSRD ESRS E1 — The Dual-Reporter’s Side-by-Side

For U.S. registrants with EU operations, the comparison between the SEC Climate Rule (as it would have applied) and CSRD ESRS E1 is the most operationally important framework comparison — even though the SEC rule never took effect. The comparison clarifies which framework would have demanded more, where they would have converged, and what survives the SEC rule’s never-effective status.

For substantive coverage of CSRD ESRS E1, see the CSRD / ESRS E1 reference page.

SEC Rule vs IFRS S2 — Convergence and Divergence

IFRS S2 Climate-related Disclosures, published by the International Sustainability Standards Board in June 2023, fully incorporates the TCFD recommendations and is the international baseline that the SEC’s 2022 proposal and 2024 final rule were converging toward. Three areas of substantive convergence and three areas of substantive divergence matter for practitioners.

Convergence

Four-pillar architecture. Both the SEC rule and IFRS S2 follow the TCFD four-pillar architecture (Governance, Strategy, Risk Management, Metrics & Targets) and the eleven recommended disclosures within those pillars. The rule’s Subpart 1500 of Reg S-K maps cleanly onto the IFRS S2 disclosure architecture.

Materiality framing. Both operate on a financial-materiality framing — information material to enterprise value, in IFRS S2’s language. This is a major convergence point with TCFD and the U.S. securities-law materiality test, and a major divergence from CSRD’s double materiality.

Scenario analysis. Both require disclosure of scenario analysis where used to assess resilience, with similar accommodations for forward-looking statement liability.

Divergence

Scope 3. IFRS S2 requires Scope 3 disclosure with industry-based categories and prescribes detailed content. The SEC rule eliminated Scope 3 entirely.

Industry-based metrics. IFRS S2 includes detailed industry-based metric requirements derived from the SASB Standards, requiring industry-specific quantitative disclosures. The SEC rule did not impose industry-based metric requirements.

Financed emissions. IFRS S2 imposes detailed financed emissions disclosure requirements on financial institutions, drawing on the PCAF framework. The SEC rule did not impose financed-emissions disclosure obligations on financial institution registrants beyond the general Scope 1 / Scope 2 materiality framework.

For U.S. registrants voluntarily aligning with IFRS S2 in 2026, the operational reality is that IFRS S2 demands more than the SEC rule would have, particularly on Scope 3, industry-based metrics, and financed emissions. The compliance build for a (hypothetical) operative SEC rule would have been a subset of the work required for IFRS S2 alignment. See the IFRS S2 reference page for substantive coverage.

California SB 253 and SB 261 — The State-Level Rules That Fill the Federal Gap

The single most important fact about U.S. climate disclosure in 2026 is that California has filled the federal gap. SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act), both signed into law in October 2023 and amended by SB 219 in 2024, impose climate disclosure obligations on companies doing business in California that materially exceed what the (never-effective) SEC rule would have required.

SB 253 substantive content

• Scope: U.S.-organised entities with annual total global revenues > $1 billion that do business in California. Estimated scope: approximately 5,300 entities.
• Disclosure required: Scope 1, Scope 2, and Scope 3 GHG emissions in accordance with the GHG Protocol Corporate Standard.
• Initial reporting deadline: 10 November 2026 for Scope 1 and Scope 2 (earlier drafts set 30 June and then 10 November 2026; the regulation in force since 12 October 2026 sets 10 November). Scope 3 from 2027.
• Assurance: Limited assurance on Scope 1 and Scope 2 starting in 2027; assurance expectations expected to escalate to reasonable assurance through subsequent rulemaking.
• First-year transition relief: CARB is exercising enforcement discretion for the first year of SB 253 compliance under its August 2025 enforcement notice, accepting “good faith efforts” from companies using “the most recent and reliable data available.”

SB 261 substantive content

• Scope: U.S.-organised entities with annual total global revenues > $500 million that do business in California (excluding insurance companies). Estimated scope: approximately 10,000 entities.
• Disclosure required: Biennial climate-related financial risk report aligned with the TCFD framework or an equivalent standard (CARB has identified TCFD, IFRS S2, and the European Sustainability Reporting Standards as acceptable equivalents).
• Original deadline: 1 January 2026.
• Current status: On 18 November 2025 the U.S. Court of Appeals for the Ninth Circuit granted an injunction pausing enforcement of SB 261 in response to Chamber of Commerce v. CARB. CARB issued an Enforcement Advisory on 1 December 2025 confirming that reporting is voluntary until the Ninth Circuit rules on the appeal. CARB opened a public docket on 1 December 2025 for voluntary reports. A similar motion for injunction on SB 253 was denied; SB 253 remains in effect.

The CARB implementing regulations

On 26 February 2026 CARB approved the initial implementing regulations for SB 253 and SB 261 unanimously. The initial regulations define key terms (including “doing business in California” and “revenue”) and establish the 10 November 2026 deadline for first-year SB 253 Scope 1 and Scope 2 reporting. A separate CARB rulemaking is ongoing through 2026 to establish:

• The Scope 3 framework for 2027 and beyond.
• Organisational boundaries and consolidation approach.
• GHG accounting methods and emission factor sources.
• Limited assurance standards starting 2027 for Scope 1 and 2.
• Reasonable assurance trajectory for later years.
• Reporting format and structure.

Why California matters

For practitioners building U.S. climate disclosure infrastructure in 2026, California SB 253 is the operative federal-substitute regime. The threshold ($1bn revenue doing business in California) captures the vast majority of large U.S. public companies; the methodology (GHG Protocol Corporate Standard) is the same one the SEC rule would have used; the Scope 1, Scope 2, and Scope 3 disclosure obligation matches what IFRS S2 demands. The Scope 3 obligation that the SEC rule eliminated is alive in SB 253 from 2027. The state-by-state regulatory pattern that the SEC rule was intended to pre-empt did not materialise because the rule itself did not take effect; California is now the de facto federal disclosure regime for U.S. public companies above the relevant threshold.

Foreign Private Issuers and the SEC Rule

Foreign private issuers (FPIs) — non-U.S. companies registered with the SEC and listed on U.S. exchanges, filing on Form 20-F — were within the scope of the SEC Climate Rule on the same basis as domestic registrants. The rule’s Subpart 1500 of Reg S-K disclosure requirements would have applied to FPI Form 20-F filings, with two notable accommodations:

• Timing: FPIs do not file on the same fiscal year-end basis as domestic registrants, and the SEC’s adopting release accommodated FPI reporting cycles with the same fiscal-year-based phase-in schedule.
• Equivalent-disclosure accommodation: The SEC has historically allowed FPIs to meet certain disclosure requirements through home-country equivalent disclosures — for example, FPIs reporting under IFRS rather than U.S. GAAP. The adopting release did not provide an explicit equivalence carve-out for FPIs already reporting under CSRD ESRS E1 or IFRS S2 in their home jurisdiction, but practitioners expected the SEC under future guidance to recognise such equivalence to reduce duplicative disclosure burden.

The rule’s never-effective status removes the FPI disclosure burden under U.S. federal law. FPIs that are also in scope of CSRD ESRS E1 (the modal large European-headquartered FPI listed on a U.S. exchange) continue to face their primary climate disclosure obligation through their home-jurisdiction filings. FPIs that voluntarily adopt IFRS S2 face the IFRS S2 disclosure burden through their home-jurisdiction filings.

The Major Questions Doctrine and Loper Bright — The Legal Landscape for Any Future SEC Climate Rulemaking

The legal landscape in which any future SEC climate rulemaking would proceed is substantially different from the one the 2022 proposal and 2024 final rule operated in. Two Supreme Court decisions reshape the doctrinal environment: West Virginia v. EPA (June 2022), which entrenched the major-questions doctrine; and Loper Bright Enterprises v. Raimondo (June 2024), which ended Chevron deference. Both decisions came during or after the SEC Climate Rule’s adoption, and both materially constrain future rulemaking.

The major-questions doctrine

The major-questions doctrine, as articulated by the Supreme Court in West Virginia v. EPA, holds that agencies must point to “clear congressional authorization” when they assert authority to make decisions of vast economic and political significance. The doctrine is a substantive limitation on agency rulemaking: even where the statute could plausibly be read to authorise the rule, courts will require clear congressional authorisation for rules that decide major questions, and will not infer authority from ambiguous statutory language.

The major-questions exposure for the SEC Climate Rule was always meaningful and was the principal reason the Gensler-era SEC narrowed the proposal so substantially before final adoption. The narrower the rule, the smaller the exposure: eliminating Scope 3 in particular removed the disclosure category most clearly subject to major-questions analysis (Scope 3 would have effectively required disclosure of climate impacts across entire value chains, well beyond the registrant’s own operations). The materiality qualifier on Scope 1 and Scope 2 similarly reduced exposure by tying the disclosure to the well-established materiality doctrine under securities law.

Loper Bright

The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo (decided 28 June 2024, four months after the SEC rule’s adoption) ended Chevron deference — the doctrine under which courts had deferred to reasonable agency interpretations of ambiguous statutes. Post-Loper Bright, courts apply their own best reading of the statute without deferring to the agency. The SEC’s authority to require climate-related disclosure under Section 7 of the Securities Act and Section 13 of the Securities Exchange Act will now be reviewed without the deference that historically applied to such interpretations.

The combined effect of the major-questions doctrine and Loper Bright is that any future SEC climate rule must clear a substantially higher statutory-authority bar than the 2022 proposal would have faced. The Gensler-era SEC’s narrowing of the proposal was a doctrinal hedge against this environment; the Trump-era SEC’s withdrawal from the defence, rather than litigating the merits, preserved the statutory-authority question as undecided rather than producing a binding precedent against the SEC. The result is that the legal landscape for any future climate rulemaking is shaped by the doctrinal environment but not by a specific precedent on SEC climate-disclosure authority.

What a Revived or Replacement Rule Might Look Like

The probability of a revived SEC climate rule under the current administration is very low. The probability of a replacement rule under a future administration depends on political and doctrinal factors that are not predictable. Three plausible scenarios merit attention.

Scenario 1: Full rescission with no replacement. The most probable near-term outcome. The 4 May 2026 OIRA submission proceeds through notice-and-comment; the rule is rescinded in final form; no replacement is proposed. U.S. registrants face no federal SEC climate disclosure rule and rely on California SB 253, CSRD reach, voluntary IFRS S2 adoption, and the 2010 Commission Guidance for their climate disclosure framework.

Scenario 2: Rescission and narrower replacement. A possibility under a future administration. A replacement rule could be narrower than Release No. 33-11275 even before its narrowings — perhaps focused exclusively on the 2010 Commission Guidance updates, materiality-qualified narrative disclosure, with no quantitative GHG disclosure mandate. The probability depends on the political configuration of a future Commission and the doctrinal environment at that time.

Scenario 3: Convergence with IFRS S2 / UK SRS architecture. A long-horizon possibility. A future SEC could adopt a rule structured around IFRS S2 endorsement, similar to the UK SRS pathway, that would harmonise U.S. disclosure with the international baseline. Such a rule would face the same major-questions and Loper Bright constraints but could draw legitimacy from the substantial international adoption of IFRS S2.

For practitioners, the relevant takeaway is that the disclosure work being done under California SB 253, CSRD reach, and voluntary IFRS S2 alignment is fundamentally durable. Any future federal SEC climate rule will likely converge with these frameworks rather than diverge from them. The methodology investment is forward-compatible.

Investor Pressure as the Parallel Track

The principal driver of climate disclosure for U.S. public companies in 2026, in the absence of an operative federal SEC rule, is investor pressure. Three categories of investor action shape the practical disclosure environment regardless of the rule’s status.

Major institutional investor expectations. BlackRock, Vanguard, State Street, and other large institutional investors representing trillions of dollars in U.S. public equity continue to publicly expect TCFD-aligned or IFRS S2-aligned climate-related disclosure from their portfolio companies. Annual stewardship priorities and proxy voting guidelines from these investors typically include climate disclosure expectations and may include voting against directors of companies that fail to make adequate disclosure. The CDP framework, used by approximately 23,000 companies globally, remains the primary investor-facing climate disclosure questionnaire.

Proxy advisor recommendations. ISS and Glass Lewis continue to issue voting recommendations that consider climate-related disclosure adequacy. For companies in the S&P 500 and Russell 3000, climate disclosure adequacy is increasingly a factor in proxy advisor voting recommendations on director elections, shareholder proposals on climate disclosure, and management-sponsored say-on-pay votes.

Lender requirements. Sustainability-linked loans (SLLs) and sustainability-linked bonds (SLBs) have become standard features of corporate debt markets. These instruments tie pricing to ESG performance metrics that typically include GHG emissions reduction trajectories or other climate-related KPIs. U.S. companies issuing SLLs or SLBs effectively commit to ongoing climate-related disclosure through the life of the instrument, with financial-pricing consequences for missing the targets.

The investor-pressure track is durable across regulatory changes. Even full rescission of Release No. 33-11275 with no replacement rule does not eliminate the disclosure pressure from these channels.

Worked Example — Large Accelerated Filer Compliance Path

The following worked example illustrates how a hypothetical large accelerated filer that was preparing for FY2025 first reporting under the SEC Climate Rule should think about its compliance posture in May 2026. The company in this example: is a U.S.-incorporated large accelerated filer on the Russell 1000; has $4.2 billion in annual revenue; has operations in 14 U.S. states (including California) and seven EU member states (including Germany); has voluntarily reported under TCFD since 2019. Numbers are illustrative.

The 2024–2025 build

Through 2024 and into early 2025, in anticipation of FY2025 first reporting under the SEC rule, the company:

• Built a Scope 1 and Scope 2 GHG inventory under the GHG Protocol Corporate Standard with operational control consolidation and AR5 GWP-100 (the EPA basis), with planned migration to AR6 once the SEC rule’s phase-in dictated.
• Implemented internal controls over the climate-related disclosure data, treating the Scope 1 and Scope 2 inventory as ICFR-relevant in anticipation of Article 14 of Reg S-X disclosures.
• Engaged its audit firm for limited assurance readiness under AT-C 105/205.
• Built governance scaffolding around board climate oversight, including expanded audit-committee oversight of climate disclosure controls.

The May 2026 posture

The SEC rule is in active rescission. The FY2025 first reporting obligation that drove the build does not exist. The company faces the following live obligations:

• California SB 253 (in scope: > $1bn revenue, doing business in California): Scope 1 and Scope 2 reporting deadline 10 November 2026 for FY2025. Scope 3 from 2027.
• California SB 261 (in scope: > $500m revenue): currently paused by Ninth Circuit injunction; voluntary reporting available.
• CSRD ESRS E1: depending on the company’s specific EU subsidiary structure and the EU Omnibus revisions, potentially in scope for FY2028 third-country reporting.
• 2010 SEC Commission Guidance: continues to require materiality-based climate-related disclosure in Form 10-K under existing Reg S-K items.
• Voluntary TCFD / IFRS S2: continues as the practical investor-facing framework.

What changes; what doesn’t

The compliance build does not need to be torn down. The Scope 1 and Scope 2 inventory built for the SEC rule meets the SB 253 methodology requirements; the company should migrate the GWP basis from AR5 to AR6 (the operative basis under SB 253, CSRD, and IFRS S2). The internal controls infrastructure built for Article 14 of Reg S-X audited financial-statement disclosure exceeds what SB 253 currently requires (audited financial-statement integration is unique to the SEC rule), but the controls translate cleanly to the limited assurance regime SB 253 will impose from 2027. The governance scaffolding is reusable for SB 253, CSRD, and IFRS S2 oversight. Illustrative Scope 1 = 64,200 t CO₂e; Scope 2 location-based = 142,800 t CO₂e; Scope 2 market-based = 84,600 t CO₂e; Scope 3 (under construction for 2027 SB 253 deadline) = approximately 1.9 million t CO₂e.

The audit-committee conversation

The most consequential output of the May 2026 posture is the audit-committee conversation. The committee needs to understand: (a) the SEC rule’s never-effective status; (b) the live SB 253 obligation with its November 2026 deadline; (c) the methodology migration from AR5 to AR6; (d) the assurance readiness timeline for SB 253 limited assurance in 2027; (e) the EU Omnibus implications for the company’s CSRD scope; (f) the 2010 SEC Commission Guidance disclosure adequacy in the current Form 10-K. None of these conversations requires the SEC rule to be operative; all of them required the same inventory and governance work that the 2024–2025 build produced.

Decision Tree — What Should I Actually Do Now?

The decision tree below answers the practitioner’s actual question: given the SEC rule’s never-effective status and active rescission, what should each archetype of registrant do in 2026? The analysis runs through five common archetypes.

Common Misinterpretations

Seven high-frequency misreadings of the SEC Climate Rule that surface in corporate annual reports, consultancy decks, board materials, and practitioner discussion.

Common Reporting Errors

The Division of Corporation Finance’s comment-letter record on climate-related disclosure under the 2010 Commission Guidance, combined with the FRC’s UK TCFD thematic reviews and the EFRAG’s CSRD implementation feedback, identifies a recurring set of failure modes that are relevant to any U.S. registrant making climate-related disclosure in 2026 under any of the operative frameworks.

1. Boilerplate disclosure with no entity-specific content. Generic climate-risk language that could apply to any company in the industry, with no reference to the registrant’s specific operations, geographies, products, or supply chains. The Division of Corporation Finance has flagged this in comment letters since 2010.
2. Material climate-related risks omitted because they are not financial-statement-impact-quantified. Materiality under Regulation S-K is broader than financial-statement materiality; risks that have material strategic or reputational impact may require disclosure even where the quantitative financial-statement impact is not yet measurable.
3. Targets disclosed without baseline year, methodology, or progress. Net-zero or other climate-related targets disclosed in registration statements, annual reports, or investor materials without the baseline year, target boundary, methodology for measuring progress, or quantitative interim progress reporting. This is one of the most common comment-letter triggers.
4. Inconsistency between Form 10-K climate-related disclosure and voluntary sustainability report disclosure. Where a registrant publishes a voluntary sustainability report or TCFD report that includes climate-related disclosures more extensive than those in the Form 10-K, the Division of Corporation Finance has historically flagged the inconsistency and requested the registrant either expand the 10-K disclosure to match or provide an analysis of why the 10-K disclosure is appropriate notwithstanding the more extensive voluntary disclosure.
5. GHG emissions disclosed without methodology or boundary. Voluntary GHG disclosure in sustainability reports or investor materials without disclosure of the consolidation approach (equity share / financial control / operational control), GWP basis (AR5 / AR6), emission factor source, or Scope 2 method choice (location-based / market-based / dual). Increasingly relevant under SB 253 as that regime’s methodology requirements take effect.
6. Scenario analysis disclosed without quantitative content. Reference to “we use IEA NZE and STEPS scenarios” without disclosure of the assumptions, time horizons, financial or operational impact estimates, or resilience conclusions supported by the analysis. Common across U.S. voluntary TCFD reporting.
7. Carbon offset and REC use in target achievement without transparency. Use of carbon offsets or RECs to claim progress toward climate targets without disclosure of the quantity used, the price paid, the standards under which offsets were certified, or the proportion of the target achievement attributed to offsets vs operational reductions. Likely to be a primary SB 253 enforcement focus given the rule’s GHG Protocol methodology integration.
8. Use of “the SEC climate rule” as a substitute for “the operative climate disclosure framework” in board materials. Board materials that reference compliance with “the SEC climate rule” without specifying which rule, when it would have applied, or what its current status is. Practitioners and counsel should ensure board materials reference the actually-operative frameworks (California SB 253, CSRD ESRS E1, IFRS S2 voluntary alignment, 2010 SEC Commission Guidance) rather than the never-effective Release No. 33-11275.

Implementation Workflow That Survives Whatever Happens to the Rule

For a U.S. public company building or maintaining a climate disclosure infrastructure in 2026, the workflow below produces disclosures that satisfy California SB 253, the 2010 SEC Commission Guidance, voluntary IFRS S2 or TCFD alignment, and (where applicable) CSRD ESRS E1 — and that would have satisfied Release No. 33-11275 if it had ever become effective. The workflow is rule-agnostic because the methodology floor is the same across every operative framework.

1. Determine the obligation set. Work through the decision tree in §30: California SB 253 (> $1bn revenue, California operations); SB 261 (> $500m revenue); CSRD third-country (EU operations meeting Omnibus-revised thresholds); voluntary IFRS S2 / TCFD; 2010 SEC Commission Guidance. Document the in-scope status for each.
2. Confirm the methodology floor. GHG Protocol Corporate Standard for Scope 1 and Scope 2 framework; GHG Protocol Scope 2 Guidance for dual location-based and market-based reporting; GHG Protocol Scope 3 Standard for the 15 Scope 3 categories with materiality assessment; AR6 GWP-100 values; operational control consolidation (or equity share / financial control as appropriate).
3. Confirm the emission factor sources. EPA Emission Factors for U.S. operations; IEA grid emission factors for non-U.S. location-based Scope 2 (see IEA Grid Emission Factors 2026); supplier-specific factors and residual mix factors for market-based Scope 2; published industry factors for Scope 3 categories where supplier-specific data is unavailable.
4. Build the consolidated GHG inventory. A single inventory covering Scope 1, Scope 2 (location-based and market-based where applicable), and material Scope 3 categories. The same inventory feeds SB 253, the 2010 Guidance materiality analysis, voluntary IFRS S2, and CSRD where applicable.
5. Build internal controls over the inventory. Document data collection, methodology application, review, and approval. Treat the GHG inventory as ICFR-relevant even though the never-effective SEC rule’s Article 14 audited financial-statement integration is not operative; SB 253 limited assurance in 2027 will require the same control infrastructure.
6. Build the climate-related risk register. Identify physical and transition risks material to business, strategy, results of operations, or financial condition. Apply the TCFD four-pillar framework (Governance, Strategy, Risk Management, Metrics & Targets) as the structural backbone. The architecture serves the 2010 Guidance materiality analysis, voluntary TCFD / IFRS S2, SB 261 (when enforcement resumes), and CSRD ESRS E1.
7. Draft the Form 10-K disclosure. Materiality-based climate-related disclosure under existing Reg S-K Items 101 (description of business), 103 (legal proceedings), 303 (MD&A), and 503 (risk factors), interpreted through the 2010 Commission Guidance. The Form 10-K disclosure does not need to replicate the rule’s Subpart 1500 structure.
8. Plan SB 253 first reporting. Build to the 10 November 2026 deadline for Scope 1 and Scope 2. Prepare for Scope 3 in 2027. Plan for limited assurance from 2027.
9. Plan CSRD third-country reporting if in scope. Determine scope under the EU Omnibus revisions. If in scope, plan for FY2028 first reporting under ESRS E1 with mandatory double materiality, mandatory Scope 3, and mandatory limited assurance.
10. Set targets under SBTi or equivalent architecture. Document near-term and long-term targets with baseline year, target year, target boundary, methodology for measuring progress, and quantitative interim progress. See SBTi Near-Term Target Calculator.
11. Coordinate Form 10-K, voluntary sustainability report, CDP response, and SB 253 filing. Ensure that the climate-related disclosures in each channel are consistent and that the underlying GHG inventory and methodology is the same across all of them.
12. Monitor rescission process and replacement scenarios. Track the SEC rescission rulemaking timeline; monitor for any future SEC climate-related rulemaking; monitor CARB SB 253 Scope 3 rulemaking and assurance standards; monitor EU Omnibus revisions; monitor IFRS S2 endorsement trajectory in U.S. trading-partner jurisdictions.

Future Evolution

Five trajectories will shape the U.S. climate disclosure landscape over the next several years.

The rescission process. The 4 May 2026 OIRA submission proceeds through executive-branch review and Commission vote on the proposed rescission, Federal Register publication for public comment, Commission vote on final rescission, and Federal Register publication of the final rescission rule. The realistic timeline is 12–24 months absent litigation. Intervenor-state and NGO challenges to the final rescission are likely. The end-state is likely full removal of Release No. 33-11275 from the CFR.

California SB 253 maturation. CARB’s ongoing rulemaking through 2026 will establish the Scope 3 framework, organisational boundaries, GHG accounting methods, and limited assurance standards for 2027 and beyond. The 10 November 2026 first reporting deadline produces the first practitioner-level operational experience with the regime. The litigation challenges to SB 253 will continue through 2026–2027.

CSRD EU Omnibus completion. The European Commission’s Omnibus simplification proposal would narrow CSRD scope substantially (removing approximately 80% of companies from scope), delay reporting requirements for the 2026 and 2027 cohorts by two years, and allow voluntary reporting using simplified standards. The Omnibus directive is moving through the EU legislative process; final adoption and transposition would reshape the CSRD landscape for U.S. companies with EU operations. See CSRD / ESRS E1 reference page.

State-level proliferation. New York, New Jersey, Illinois, Washington, Colorado, and Minnesota have considered climate disclosure bills modelled on California SB 253 / SB 261. The probability of additional state-level mandatory disclosure regimes through 2026–2028 is meaningful. A state-by-state patchwork was one of the policy concerns that motivated the SEC rule; its absence creates the conditions for that patchwork to develop.

IFRS S2 endorsement trajectory. The IFRS Foundation’s ISSB standards continue to be adopted by jurisdictions globally. U.S. registrants with operations in IFRS S2-adopting jurisdictions face climate disclosure obligations through those channels. The voluntary IFRS S2 alignment trajectory in the U.S. private sector is becoming the de facto baseline for investor-facing climate disclosure.

Frequently Asked Questions

Sources and References

Every claim and methodological statement in this article reconciles to the primary sources below. Where the SEC or a federal court has issued a definitive document, the primary source is cited directly; secondary commentary is used only for interpretation of agency intent and litigation strategy.

Primary SEC releases and filings

• SEC, The Enhancement and Standardization of Climate-Related Disclosures for Investors, Release No. 33-11042 (proposing release), 21 March 2022.
• SEC, The Enhancement and Standardization of Climate-Related Disclosures for Investors, Release No. 33-11275 (final adopting release), 6 March 2024. 89 Fed. Reg. 21668 (28 March 2024). 886 pages.
• SEC, Order Granting Voluntary Stay of Effectiveness of Climate-Related Disclosure Rules, 4 April 2024.
• SEC Press Release No. 2025-58, SEC Votes to End Defense of Climate Disclosure Rules, 27 March 2025.
• SEC, Status Report Filed in State of Iowa v. SEC, No. 24-1522, 23 July 2025 (“The Commission does not intend to review or reconsider the Rules at this time”).
• SEC Office of the General Counsel, brief filed in State of Iowa v. SEC, prior to briefing completion in September 2024.
• SEC, Commission Guidance Regarding Disclosure Related to Climate Change, Release No. 33-9106, February 2010. Still in force.
• Commissioner Caroline A. Crenshaw, Statement Regarding Climate-Related Disclosures Rule Litigation: The Commission has Left the Building, 27 March 2025.
• Acting Chair Mark T. Uyeda, statement on the 27 March 2025 Commission vote.
• Commissioner Hester M. Peirce, Green Regs and Spam: Statement on the Enhancement and Standardization of Climate-Related Disclosures for Investors, 6 March 2024.
• SEC submission to OIRA, formal rescission proposal, 4 May 2026.

Eighth Circuit litigation

• State of Iowa, et al. v. U.S. Securities and Exchange Commission, No. 24-1522 (8th Cir.), consolidated litigation.
• Eighth Circuit Order Granting Motion to Hold Cases in Abeyance, 24 April 2025.
• Eighth Circuit Status Update Order, 24 April 2025 (directing SEC to file status report within 90 days).
• Eighth Circuit Order Reaffirming Abeyance, September 2025 (refusing to terminate abeyance over SEC’s July 2025 request).
• U.S. Judicial Panel on Multidistrict Litigation, Order Consolidating Petitions for Review, 21 March 2024.
• U.S. Court of Appeals for the Fifth Circuit, Administrative Stay Order, 15 March 2024.

California SB 253 / SB 261

• California Senate Bill 253 (the Climate Corporate Data Accountability Act), Cal. Health & Safety Code § 38532, as amended by SB 219 (2024).
• California Senate Bill 261 (the Climate-Related Financial Risk Act), Cal. Health & Safety Code § 38533.
• CARB, Initial Implementing Regulations Approving SB 253 and SB 261, adopted 26 February 2026.
• CARB, SB 253 Enforcement Notice, August 2025 (first-year good-faith compliance).
• CARB, SB 261 Enforcement Advisory, 1 December 2025 (confirming voluntary reporting pending Ninth Circuit ruling).
• Chamber of Commerce of the United States v. CARB, U.S. Court of Appeals for the Ninth Circuit, Order Granting Injunction on SB 261, 18 November 2025.

Supreme Court doctrinal decisions

• West Virginia v. Environmental Protection Agency, 597 U.S. 697 (2022) — major-questions doctrine.
• Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024) — end of Chevron deference.

International convergence documents

• Task Force on Climate-related Financial Disclosures, Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures, June 2017.
• Financial Stability Board, statement on TCFD monitoring transfer to IFRS Foundation, October 2023.
• International Sustainability Standards Board, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, June 2023.
• International Sustainability Standards Board, IFRS S2 Climate-related Disclosures, June 2023.
• European Sustainability Reporting Standards, ESRS E1 Climate Change, EFRAG / EU Delegated Act, 2023, as modified by the EU Omnibus simplification proposal.

Methodology and data sources

• WRI & WBCSD, The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, revised edition.
• WRI & WBCSD, GHG Protocol Scope 2 Guidance, January 2015.
• WRI & WBCSD, Corporate Value Chain (Scope 3) Accounting and Reporting Standard, 2011.
• U.S. Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks, annual editions. EPA Emission Factors Hub, current edition.
• International Energy Agency, Global Energy Review 2026 and grid emission factor dataset.
• Intergovernmental Panel on Climate Change, Sixth Assessment Report (AR6) Working Group I, 2021. Table 7.SM.7 GWP-100 values.
• Partnership for Carbon Accounting Financials, The Global GHG Accounting and Reporting Standard for the Financial Industry, Part A (Financed Emissions).

Assurance and audit frameworks

• ISAE 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information.
• ISAE 3410, Assurance Engagements on Greenhouse Gas Statements.
• AICPA AT-C 105 (Concepts Common to All Attestation Engagements); AT-C 205 (Examination Engagements); AT-C 210 (Review Engagements).
• ISO 14064-3, GHG statement validation and verification.

Related GreenCalculus reference pages

• GHG Protocol Corporate Standard
• GHG Protocol Scope 2 Guidance
• GHG Protocol Scope 3 Standard
• ISO 14064-1
• IPCC AR6
• TCFD Recommendations
• IFRS S2 Climate-related Disclosures
• CSRD / ESRS E1
• SBTi Corporate Net-Zero Standard
• GRI Standards (Environmental)
• UK Mandatory Climate Disclosures (TCFD)
• UK DEFRA Emission Factors
• Scope 1 emissions
• Scope 2 emissions
• Scope 3 emissions
• Scope 2 location-based
• Scope 2 market-based
• Global Warming Potential
• CO₂e (carbon dioxide equivalent)
• Energy Attribute Certificates
• Residual mix
• Electricity emission factor
• Methane (CH₄)
• Nitrous oxide (N₂O)
• Scope 2 location-based vs market-based
• Scope 1 Combustion Calculator
• Scope 2 Electricity Calculator
• SBTi Near-Term Target Calculator
• FLAG Emissions Calculator
• IPCC AR6 GWP values
• DEFRA Emission Factors
• IEA Grid Emission Factors 2026
• Scope 2 Electricity Methodology
• Scope 2 Market-Based Methodology
• Natural Gas Combustion Methodology
• Diesel Combustion Methodology
• SBTi Absolute Contraction Approach
• SBTi Readiness Checklist

What changed in this revision

Updated 11 May 2026. Initial publication. Documents the SEC Climate-Related Disclosure Rules (Release No. 33-11275) as adopted on 6 March 2024, the substantive narrowings from the 2022 proposal (Release No. 33-11042) including the elimination of Scope 3 disclosure entirely, the Article 14 of Regulation S-X audited financial-statement disclosure framework, the phased filer schedule for LAFs and AFs, the limited and reasonable assurance trajectory, the GWP basis flexibility (AR5 / AR6), and the Scope 2 method choice. The legal-status timeline is taken from primary sources: Fifth Circuit administrative stay 15 March 2024; Eighth Circuit consolidation 21 March 2024; SEC voluntary stay 4 April 2024; briefing complete September 2024; SEC defence withdrawn 27 March 2025; Eighth Circuit abeyance 24 April 2025; SEC status report and merits-decision request 23 July 2025; Eighth Circuit reaffirmation of abeyance September 2025; SEC formal rescission proposal submitted to OIRA 4 May 2026. Cross-references to California SB 253 / SB 261 (with the 26 February 2026 CARB initial implementing regulations, the 18 November 2025 Ninth Circuit injunction on SB 261, and the 10 November 2026 SB 253 first reporting deadline); CSRD ESRS E1 with the EU Omnibus simplification; IFRS S2 voluntary adoption; the SEC 2010 Commission Guidance still in force; and the GHG Protocol Corporate Standard, Scope 2 Guidance, Scope 3 Standard, IPCC AR6, TCFD Recommendations, GRI Standards (Environmental), UK Mandatory Climate Disclosures, ISO 14064-1, SBTi Corporate Net-Zero Standard, and the Loper Bright / West Virginia v. EPA doctrinal context.