Securities and Exchange Commission

Note: On January 20, 2025, President Trump issued a memorandum instituting a regulatory freeze, preventing agencies from issuing proposals or rules pending review by Trump-appointed agency heads. On January 31, 2025, President Trump issued Executive Order 14192, directing agencies to identify 10 existing regulations to eliminate for each new regulation they promulgate.

Climate-Related Disclosures for Investors

In section 7(a)(1) of the Securities Act (15 U.S.C. 77g(a)(1)), Congress authorized the Securities Exchange Commission to require issuers offering and selling securities in the U.S. public capital markets to include information specified in Schedule A to that Act—such as the general character of the issuer's business, the remuneration paid to its officers and directors, details of its material contracts, and certain financial information—, as well as “such other information . . . as the Commission may by rules or regulations require as being necessary or appropriate in the public interest or for the protection of investors” in publicly filed registration states. (15 U.S.C. 77j) In addition, under sections 12(b) and (g) of the Exchange Act (15 U.S.C. 78l), issuers of securities traded on a national securities exchange or that otherwise have total assets and shareholders of record that exceed certain thresholds must register those securities with the Commission by filing a registration statement. The registration statement must contain “[s]uch information, in such detail, as to the issuer” regarding, among other things, “the organization, financial structure and nature of the [issuer's] business” as the Commission by rule or regulation determines to be in the public interest or for the protection of investors.  These same issuers must also provide, as the Commission may prescribe “as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security,” (1) “such information and documents . . . as the Commission shall require to keep reasonably current the information and documents required to be included in or filed with [a] . . . registration statement,” and (2) such annual and quarterly reports as the Commission may prescribe. (15 U.S.C. 78m(a)).


Under this authority, the SEC adopted “The Enhancement and Standardization of Climate-Related Disclosures for Investors Rule” to “respond to investors’ demand for more consistent, comparable, and reliable information about the financial effects of climate-related risks on a registrant’s operations and how it manages those risks while balancing concerns about mitigating the associated costs of the rules.” (89 Fed. Reg. 21668, Mar. 28, 2024)

Rule Stayed

On April 12, 2024, the SEC voluntarily stayed the "Enhancement and Standardization of Climate-Related Disclosures for Investors Rule" in response to litigation consolidated in the 8th Circuit.  (89 Fed. Reg. 25804, Apr. 12, 2024). Pursuant to section 25(c)(2) of the Exchange Act  and section 705 of the Administrative Procedure Act, the SEC has discretion to stay its rules pending judicial review if it finds that “justice so requires.” (See Iowa v. SEC in “Litigation” below)

Biden Administration (2021-2025)

Climate Disclosure Rule Stayed

On April 12, 2024, the SEC voluntarily stayed the "Enhancement and Standardization of Climate-Related Disclosures for Investors Rule" in response to litigation consolidated in the 8th Circuit.  (89 Fed. Reg. 25804, Apr. 12, 2024). Pursuant to section 25(c)(2) of the Exchange Act  and section 705 of the Administrative Procedure Act, the SEC has discretion to stay its rules pending judicial review if it finds that “justice so requires.” (See Iowa v. SEC in “Litigation” below)

Climate Disclosure Rule

On March 28, 2024 the SEC adopted the Enhancement and Standardization of Climate-Related Disclosures for Investors Rule. (89 Fed. Reg. 21668, Mar. 28, 2024). The final rules differed significantly from the proposed rules. Two of the most notable changes were the addition of materiality qualifiers throughout the rule, and the removal of Scope 3 greenhouse gas  emissions reporting requirements.

The final rule requires a registrant to disclose:

  • Climate-related risks that have had or are reasonably likely to have a material impact on the registrant’s business strategy, results of operations, or financial condition;
  • The actual and potential material impacts of any identified climate-related risks on the registrant’s strategy, business model, and outlook;
  • If, as part of its strategy, a registrant has undertaken activities to mitigate or adapt to a material climate-related risk, a quantitative and qualitative description of material expenditures incurred and material impacts on financial estimates and assumptions that directly result from such mitigation or adaptation activities;
  • Specified disclosures regarding a registrant’s activities, if any, to mitigate or adapt to a material climate-related risk including the use, if any, of transition plans, scenario analysis, or internal carbon prices;
  • Any oversight by the board of directors of climate-related risks and any role by management in assessing and managing the registrant’s material climate-related risks;
  • Any processes the registrant has for identifying, assessing, and managing material climate-related risks and, if the registrant is managing those risks, whether and how any such processes are integrated into the registrant’s overall risk management system or processes;
  • Information about a registrant’s climate-related targets or goals, if any, that have materially affected or are reasonably likely to materially affect the registrant’s business, results of operations, or financial condition. Disclosures would include material expenditures and material impacts on financial estimates and assumptions as a direct result of the target or goal or actions taken to make progress toward meeting such target or goal;
  • For large accelerated filers (LAFs) and accelerated filers (AFs) that are not otherwise exempted, information about material Scope 1 emissions and/or Scope 2 emissions;
  • For those required to disclose Scope 1 and/or Scope 2 emissions, an assurance report at the limited assurance level, which, for an LAF, following an additional transition period, will be at the reasonable assurance level;
  • The capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise, subject to applicable one percent and de minimis disclosure thresholds, disclosed in a note to the financial statements;
  • The capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals, disclosed in a note to the financial statements; and
  • If the estimates and assumptions a registrant uses to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans, a qualitative description of how the development of such estimates and assumptions was impacted, disclosed in a note to the financial statements.

On March 21, 2022, the Securities and Exchange Commission (SEC) proposed a rule  to require registrations to provide certain climate-related information in their registration statements and annual reports. Under the proposed rule, registrants would be required to disclose climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition. Registrants would also have to disclose their greenhouse gas emissions, along with certain climate-related financial metrics. Registrants’ greenhouse gas emissions disclosures would include direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions, along with greenhouse gas emissions generated by suppliers and partners (Scope 3), when those emissions are material or included in a company’s emissions targets.

 

First Trump Administration (2017-2021)

N/A

Obama Administration (2009-2017)

Guidance Regarding Disclosure Related to Climate Change

In February 2010, the SEC published an interpretive release to provide guidance to public companies on existing disclosure requirements as they apply to climate change matters.

Litigation

Challenge to Climate Disclosure Rule - Iowa v. SEC

After the Climate Rule was announced in March 2024, states, industry groups, special interest groups and climate advocacy groups filed petitions for review of the final rule, which were consolidated in 8th Circuit. The two climate advocacy groups dropped their petitions, leaving 9 consolidated petitions in the 8th Circuit. The primary claims levied against the climate rule are that it exceeds the SEC’s statutory authority, is unconstitutional on First Amendment grounds, is arbitrary and capricious under the Administrative Procedure Act, runs afoul of the Major Questions Doctrine, and violates traditional notions of materiality. 

As of January 20, 2025, this litigation is ongoing. (Iowa v. SEC) 

Investment Company Names

The Investment Company Act regulates the organization of companies, including mutual funds, that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public. (15 U.S.C. 80a-1 et seq.) The Act requires these companies to disclose their financial condition and investment policies to investors when stock is initially sold and, subsequently, on a regular basis. The focus of the Act is on disclosure to the investing public of information about the fund and its investment objectives, as well as on investment company structure and operations. The Act does not permit the SEC to directly supervise the investment decisions or activities of regulated companies or judge the merits of their investments. 

Pursuant to the Investment Company Act, in 2001, the SEC adopted the Names Rule which prohibits a registered investment company from adopting as part of its name or title any words that are materially deceptive or misleading. The Names Rule considers certain types of fund names to be materially deceptive or misleading unless certain conditions are met, including when a fund’s name suggests a focus on a particular type of investment, or in investments in a particular industry or geographic focus. The SEC amended the rule in 2023.

On March 14, 2025, SEC announced an extension of the effective date of the agency’s “Names Rule.” That rule, adopted September 20, 2023, requires investment funds with names that suggest their objectives—like “ESG”—to actually align their portfolios with those objectives. Under this extension, funds with more than $1 billion in assets have an additional six months to comply; other funds have an additional year to come into compliance.  

Second Trump Administration (2025-2029)

On March 14, 2025, SEC announced an extension of the effective date of the agency’s “Names Rule.” Under this extension, funds with more than $1 billion in assets have an additional six months to comply; other funds have an additional year to come into compliance.  

Biden Administration (2021-2025)

On September 20, 2023, the SEC finalized updates to the Names Rule to prevent greenwashing and address ESG factors (88 Fed. Reg. 70436, Oct. 11, 2023), which were first proposed in June of 2022 (87 Fed. Reg. 36594, June 16, 2022). The amendments clarify and expand requirements for certain funds  to invest at least 80% of their assets in accordance with the investment focus suggested by the fund’s name. Specifically, the amendments apply the 80% investment requirement to any fund with a name that includes terms suggesting that the fund focuses on investment with particular characteristics. This includes, in addition to fund names that imply investments in a specific industry, country, or geographic region, fund names with terms such as “growth” or “value,” and terms indicating that the fund’s investment decisions incorporate one or more ESG factors. “ESG” terms include “socially responsible,” “sustainable,” and “green,” if they describe a focus that investors may consider relevant when investing. Fund groups with net assets exceeding $1 billion have 2 years to comply with the amendments and those with assets under $1 billion have 30 months. 

Enhanced ESG Investment Practice Disclosures

Congress has broadly authorized the SEC to regulate the activity of participants, issuers, and intermediaries in a variety of capital markets. As part of this authorization, SEC is empowered to require certain market participants, issuers of securities, or intermediaries to disclose information that may be material to the decisions of investors, or necessary to make disclosed information not materially misleading. This authority is contained in the Securities Act (15 U.S.C. 77a et seq.), the Exchange Act (15 U.S.C. 78a et seq.), the Investment Company Act (15 U.S.C. 80a et seq.), and the Advisers Act, (15 U.S.C. 80b et seq.). 

Under this authority, the SEC proposed to amend rules and forms under both the Investment Advisers Act of 1940 (“Advisers Act”) and the Investment Company Act of 1940 (“Investment Company Act”) to require registered investment advisers, certain advisers that are exempt from registration, registered investment companies, and business development companies, to provide additional information regarding their environmental, social, and governance (“ESG”) investment practices. 

As of January 20, 2025, the SEC had not finalized its June 17, 2022, proposal, which would amend rules and forms to enhance disclosure requirements for ESG (environmental, social, and governance) investment practices. (87 Fed. Reg. 36654, June 17, 2022).

Biden Administration (2021-2025)

Proposed Rule on Disclosing ESG Investment Practices

On June 17, 2022, the SEC proposed amending rules and forms to enhance disclosure requirements for ESG (environmental, social, and governance) investment practices. (87 Fed. Reg. 36654, June 17, 2022). The proposed rules would apply to certain registered investment advisers, advisers exempt from registration, registered investment companies, and business development companies.

The proposal would categorize various ESG strategies and require funds and advisors to provide more specific disclosures. For funds focused on the consideration of environmental factors, the proposal would require the disclosure of the greenhouse gas emissions associated with portfolio investments. Furthermore, the proposal would require funds claiming specific ESG impacts to describe the specific impacts they seek to achieve and summarize their progress in achieving them.

Climate Change Task Force

Task Force Disbanded

In September 2024, the SEC officially disbanded its Climate and ESG Task Force after winding it down over a period of several months. (Reported first by Bloomberg). A spokesperson for the SEC indicated that claimed “The strategy has been effective, and the expertise developed by the task force now resides across the Division.” The last time the agency linked a case to the task force was 2023. 

Biden Administration (2021-2025) 

Task Force Disbanded

In September 2024, the SEC officially disbanded its Climate and ESG Task Force after winding it down over a period of several months. (Reported first by Bloomberg). A spokesperson for the SEC indicated that claimed “The strategy has been effective, and the expertise developed by the task force now resides across the Division.” The last time the agency linked a case to the task force was 2023. 

Taskforce Announced

On March 4, 2021, the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement. The Climate and ESG Task Force was tasked with developing initiatives to proactively identify ESG-related misconduct. 

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