SEC Ends Biden Climate Disclosure Rules

A recent article — the SEC voted on May 29 to rescind its 2024 climate disclosure rule — and handed the regulatory field to California and Brussels. A Nature Communications simulation of the rule's capital-allocation effects frames what's now at stake: SB 253's implementation "comes as the Securities and Exchange Commission has rolled back federal climate disclosure rules, leaving a regulatory vacuum with respect to mandatory emissions disclosures" — a vacuum California is stepping into. The paper's simulations find that shifting investor focus from Scope 1–2 to full-scope emissions reordered sector-peer rankings enough to materially reweight capital allocation among S&P 500 constituents.

The real winners: California, EU regulators, and the ISSB

The intuitive winner from rescission, corporate America, is not the actual winner. Publicly listed US companies with any European footprint, any California nexus, or any institutional shareholder demanding an ISSB-aligned report face effectively the same reporting perimeter they did on May 28, minus one federal enforcer. The SEC's departure removes a US voice from the process of harmonizing those standards, not the standards themselves.

The Federal Register text of the proposing release is candid on this point: the Commission acknowledges that many issuers "already provide climate-related disclosures voluntarily or pursuant to other regulatory regimes," and that the 2024 rule's marginal benefit was therefore uncertain. The unstated corollary, the one Atkins' statement does not address, is that "other regulatory regimes" now means Sacramento and Brussels, not Washington.

The clearest institutional winners:

• The California Air Resources Board, which now controls the definitional questions — what counts as "doing business" in California, how Scope 3 is calculated, what assurance is required — that would have belonged to SEC staff.
• The IFRS Foundation's International Sustainability Standards Board, whose IFRS S2 climate standard has become the de facto global template. A Council on Foreign Relations analysis noted after Loper Bright that SEC rulemaking on climate was among the most legally vulnerable Biden-era measures, per CFR — with the SEC out of the game, ISSB fills the vacuum.
• European regulators, whose CSRD becomes the reference point for global multinationals even after the Omnibus scope cut described by the European Parliament.

The clearest losers are US institutional investors seeking comparable, audited emissions data on a US-uniform basis. The Government Accountability Office's notification of the 2024 rule recorded that the SEC received over 4,500 unique comment letters and 18,000 form letters — a Brookings analysis of that corpus found that firms with strong stock performance and liberal-leaning boards were less opposed to the rule, per Brookings. That constituency — large-cap issuers, index funds, pension plans — is precisely the group now stuck reporting to California and Brussels without a US federal harmonization vehicle.

The legal and political tail

The rescission is not yet final. The 60-day comment period expires in early August 2026; only then can the Commission adopt a final rescission order. A coalition of state attorneys general and investor groups is expected to challenge that order, arguing the SEC has not adequately justified reversing its 2024 cost-benefit analysis under the State Farm arbitrary-and-capricious standard.

The Eighth Circuit's abeyance order in Iowa v. SEC dissolves once rescission is finalized, mooting the underlying challenge. But it leaves open the deeper legal question the 2024 rule was designed to test: whether SEC authority under the Securities Act of 1933 and Exchange Act of 1934 reaches emissions-linked disclosures at all. A 2023 comment letter from 30 securities law scholars, catalogued at SSRN, argued the answer is yes; a competing letter from 22 finance and law professors argued no. That fight will resurface the next time a Democratic SEC chair proposes a climate rule — and the Loper Bright environment will make the second attempt harder than the first.

California's regime is under its own legal cloud. The Chamber of Commerce v. CARB litigation in the Central District of California produced a preliminary injunction limited to SB 261 enforcement, according to court filings referenced in the Nature Communications analysis, while SB 253 implementation continues. SB 219, signed on September 27, 2024, pushed CARB's rulemaking deadline to July 1, 2025 and softened certain fee and reporting mechanics, per the court record.

What to watch

• Early August 2026 — close of the SEC comment period. Watch the volume and composition of letters: a comment record dominated by institutional investors demanding retention will complicate the Commission's State Farm posture.
• Q4 2026 — expected SEC vote on final rescission. Litigation to defend the 2024 rule as a matter of administrative-law procedure will follow within weeks.
• CARB rulemaking, late 2026 — implementing regulations under SB 253 will set the operative US emissions-reporting standard. The Scope 3 methodology CARB adopts will be more consequential for US issuers than anything the SEC does or does not do.
• 2027 EU ESRS revision — the European Commission is committed to reducing the number of ESRS data points; the outcome sets the practical ceiling on global reporting burden.

Diplomat View

The SEC's May 29 rescission is being narrated as deregulation. It is better read as a jurisdictional handover. Chairman Atkins' "materiality as the North Star" framing is a legally defensible retreat to the Commission's pre-2010 posture — but it retreats from a field that other regulators are actively occupying. The forecast: within eighteen months, US-listed multinationals will file the substantive equivalent of the SEC 2024 rule's content — on a CARB or CSRD template, audited to ISSB standards — while the SEC watches from the sidelines. The compliance cost savings the Trump-era Commission is claiming will be smaller than advertised, because California and Brussels have already priced them in. Two things would change this forecast: a successful federal-preemption challenge striking down SB 253, or Republican congressional legislation of the sort AEI's Benjamin Zycher has called for, barring states from mandating emissions disclosure by SEC registrants. Absent either, the operative US climate disclosure regime is now written in Sacramento, not Washington.

The Bottom Line

Killing the SEC's stayed 2024 climate rule was the easy part of the Trump deregulatory agenda: it eliminated a rule no one was following. The consequential fight is the one Atkins has not yet joined: whether Washington will actively preempt California and negotiate with Brussels, or whether US climate disclosure will simply be outsourced to jurisdictions the Commission cannot control. On present trajectory, the answer is outsourcing — which means the beneficiaries of the SEC's retreat are not American issuers, but foreign and state regulators now writing the rules those issuers will follow.