In March 2024, the SEC adopted its most ambitious climate reporting mandate in the agency’s history. Release No. 33-11275 required public companies to disclose physical climate risks, greenhouse gas emissions, and severe weather losses in their SEC filings. Within weeks, the SEC climate disclosure rule was stayed. A year later, the agency withdrew its defense entirely. As of April 2026, the rule sits in legal limbo, never enforced and with no clear path forward.
This guide breaks down what the SEC climate disclosure rule actually requires, where the legal battle stands today, and what public companies should be doing right now given that the SEC’s older 2010 climate guidance remains fully in effect.
SEC Climate Disclosure Rule Status: April 2026 Update
As of April 2026, the SEC climate disclosure rule remains stayed and unenforced. The SEC voluntarily paused the rule on April 4, 2024 within weeks of adoption, then withdrew its legal defense on March 27, 2025 under the Trump administration. In September 2025, the U.S. Court of Appeals for the Eighth Circuit ordered the case (Iowa v. SEC, No. 24-1522) held in continued abeyance until the SEC either rescinds the rule via notice-and-comment rulemaking or renews its defense. No compliance deadlines have ever taken effect. The 2010 SEC climate guidance — which has required material climate risk disclosure for over 15 years — remains fully in force.
What Is the SEC Climate Disclosure Rule?
The SEC climate disclosure rule, formally titled “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” was adopted on March 6, 2024 in a 3-2 vote under then-Chair Gary Gensler. The rule aimed to give investors standardized, comparable data on how climate-related risks affect public companies.
The rule applies to all SEC registrants (publicly traded companies), with requirements phased in by filer type. Large accelerated filers face the earliest deadlines, while smaller reporting companies and emerging growth companies receive exemptions from the most demanding provisions.
At its core, the SEC climate rule established three categories of mandatory disclosure: climate-related financial risks (governance, strategy, and risk management), material Scope 1 and Scope 2 greenhouse gas emissions, and financial statement notes for severe weather impacts that cross specific dollar thresholds.
Key Requirements of the SEC Climate Rule
The final rule spans six disclosure areas, each tied to a specific section of SEC regulations. Here is a summary of what each requires.
| Disclosure Area | SEC Reference | What’s Required |
|---|---|---|
| Climate risk governance | S-K Item 1501 | Board oversight roles, management responsibilities, reporting structures |
| Strategy and business impact | S-K Item 1502 | Material risks, timeframes, geographic locations of affected properties, transition plans |
| Risk management processes | S-K Item 1503 | How the company identifies, assesses, and integrates climate risks into enterprise risk management |
| GHG emissions | S-K Item 1505 | Material Scope 1 and 2 only (Scope 3 eliminated). Large accelerated and accelerated filers only |
| Financial statement impacts | S-X Article 14 | Footnote disclosures for severe weather losses exceeding 1% thresholds |
| Assurance | S-K Item 1506 | Phased limited then reasonable assurance on GHG emissions data |
Physical Risk Disclosure Under S-K Item 1502
The SEC climate disclosure rule splits physical risks into two categories. Acute risks are event-driven: hurricanes, floods, tornadoes, and wildfires. Chronic risks are longer-term shifts: sustained heat waves, rising sea levels, and extended drought periods.
Companies must identify the geographic locations of properties, processes, or operations exposed to these risks. They must classify each risk as acute or chronic and describe the nature of properties at risk.
One important distinction: the rule does not require companies to prove that a severe weather event was caused by climate change. The disclosure obligation kicks in when climate change qualifies as “a significant contributing factor” to the event’s severity. This lower bar means more events could fall within the rule’s scope.
The 1% Financial Threshold Under S-X Article 14
Article 14 of Regulation S-X introduces the most specific financial test in US climate regulation. When severe weather losses cross these thresholds, companies must include footnote disclosures in their audited financial statements.
| Type of Impact | Percentage Threshold | Minimum Dollar Amount |
|---|---|---|
| Expensed losses from severe weather | 1% or more of pre-tax income | $100,000 |
| Capitalized costs from severe weather | 1% or more of stockholders’ equity | $500,000 |
| Carbon offset and REC costs | Material component of climate targets | N/A |
Severe weather events covered by Article 14 explicitly include hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise. These disclosures are subject to the same audit requirements and internal controls over financial reporting (ICFR) as any other financial statement item.
For companies with large property portfolios, the 1% threshold creates a practical question: which locations face flood, wildfire, or storm damage severe enough to cross that line? Answering this requires location-level physical risk data, not just portfolio averages.
What the Final Rule Dropped from the Proposal
The final SEC climate rule adopted in March 2024 was significantly narrower than the version proposed in March 2022. The SEC pulled back on several requirements after receiving over 24,000 comment letters.
| Element | Proposed Rule (2022) | Final Rule (2024) |
|---|---|---|
| Scope 3 emissions | Required for all filers | Eliminated entirely |
| Materiality qualifier | Limited application | Applied throughout all requirements |
| Board climate expertise | Mandatory disclosure | Removed from final rule |
| Financial statement impacts | Line-item disclosure required | Replaced with 1% threshold footnotes |
| SRC/EGC GHG obligations | Included | Fully exempt |
| Phase-in timeline | Shorter compliance window | Extended by 2 to 6 years |
The removal of Scope 3 emissions was the biggest change. The proposed rule would have required companies to report emissions from their entire value chain, including suppliers and customers. The final rule dropped this provision completely, limiting GHG reporting to a company’s own direct operations (Scope 1) and purchased energy (Scope 2).
Implementation Timeline and Filer Phase-In
The SEC designed a multi-year phase-in schedule that gives larger filers the earliest deadlines and exempts smaller companies from the most burdensome requirements. The table below shows when each category of disclosure would begin, assuming the rule takes effect.
| Filer Type | Primary Disclosures | GHG Emissions | Limited Assurance | Reasonable Assurance |
|---|---|---|---|---|
| Large Accelerated Filers | FY 2025 | FY 2026 | FY 2029 | FY 2033 |
| Accelerated Filers | FY 2026 | FY 2028 | FY 2031 | N/A |
| SRCs, EGCs, Non-Accelerated | FY 2027 | Exempt | Exempt | Exempt |
These dates have never gone into effect. The rule was stayed before the first compliance deadline arrived. If the SEC were to lift the stay or a court were to reinstate the rule, new compliance timelines would likely need to be established.
The safe harbor provision (S-K Item 1507) expanded PSLRA protections to cover transition plans, scenario analysis, internal carbon pricing, and climate targets. This protection applies even to IPO registrants and SPACs, which are normally excluded from PSLRA safe harbor. Scope 1 and 2 emissions disclosures, however, are not covered by the safe harbor.
SEC Climate Rule Legal History: Full Timeline (2024–2025)
The SEC climate disclosure rule has traveled a turbulent legal path since its adoption. Here is a month-by-month timeline of how the rule went from finalized regulation to indefinite limbo.
March 6, 2024: The SEC adopted the final rule in a 3-2 vote under Chair Gary Gensler. The two Republican commissioners dissented.
April 4, 2024: Facing immediate legal challenges from multiple states and industry groups, the SEC voluntarily stayed the rule pending judicial review.
Mid-2024: Legal challenges were consolidated in the U.S. Court of Appeals for the Eighth Circuit under Iowa v. SEC, No. 24-1522.
March 27, 2025: Under the new Trump administration, the SEC voted to withdraw its defense of the rule. Commissioner Caroline Crenshaw was the sole dissenter, calling the withdrawal “an unprecedented abdication of the Commission’s regulatory responsibilities.”
April 2025: A coalition of 18 states plus the District of Columbia intervened to defend the rule. The Eighth Circuit held proceedings in abeyance at the intervenors’ request.
July 2025: The SEC filed a status report requesting the court proceed on the merits, but declined to state whether it would enforce the rule even if it survived judicial review.
September 2025: The Eighth Circuit rejected the SEC’s approach and ordered continued abeyance “until such time as the Securities and Exchange Commission reconsiders the challenged Final Rules by notice-and-comment rulemaking or renews its defense.”
As of April 2026, the rule remains on the books but unenforceable. The SEC must either formally rescind it through notice-and-comment rulemaking or resume defending it in court. Under current leadership, neither action appears likely in the near term.
The 2010 SEC Climate Guidance Still Applies
While the 2024 rule remains in limbo, the SEC’s 2010 interpretive guidance (Release No. 33-9106) is still fully in effect. This guidance, issued under the Obama administration, requires public companies to disclose material climate-related risks under existing Regulation S-K and S-X.
The 2010 guidance covers four areas where climate change may trigger disclosure obligations: the impact of climate-related legislation and regulation, the effects of international climate accords on business operations, indirect consequences of regulatory trends or business shifts, and physical impacts of climate change on operations and assets.
Companies sometimes assume the stayed 2024 rule means they have no federal climate disclosure obligations. That is incorrect. The 2010 guidance creates a lower bar with less specificity, but the obligation to disclose material climate risks has existed for over 15 years.
SEC Climate Rule vs California Climate Disclosure Laws
While the federal SEC climate disclosure rule remains frozen, state-level action is accelerating. California passed two climate disclosure laws in 2023, and New York followed with its own legislation in February 2026. For companies operating across state lines, the patchwork of requirements is becoming more complex than any single federal rule.
The table below compares the SEC rule against California SB 253 and SB 261, the two most significant state-level climate disclosure mandates.
| Feature | SEC Rule (2024) | CA SB 253 | CA SB 261 |
|---|---|---|---|
| Applies to | Public companies only | Public and private (>$1B CA revenue) | Public and private (>$500M CA revenue) |
| Scope 1 and 2 | If material (LAFs/AFs only) | All covered entities | N/A (risk-focused) |
| Scope 3 | Eliminated | Required (starting 2027) | N/A |
| Physical risk | Financial statement footnotes | N/A | TCFD-aligned risk reports |
| Assurance | Limited, then reasonable (phased) | Limited, then reasonable (phased) | None required |
| Current status | Stayed, undefended | In effect, first deadline Aug 2026 | Enforcement paused (injunction) |
The most striking difference is scope. The SEC rule only reaches public companies. California SB 253 applies to any entity, public or private, that does over $1 billion in annual revenue in California. For large private companies, California’s law may be the first time they face mandatory emissions reporting.
On physical risk disclosure specifically, the SEC rule and California SB 261 take different approaches. The SEC requires financial statement footnotes when severe weather losses cross the 1% threshold. SB 261 requires a separate TCFD-aligned risk report covering governance, strategy, risk management, and metrics. The SEC’s approach is narrower but carries the weight of audited financial statements; California’s is broader but less tied to financial materiality.
What Companies Should Do Now
The stayed SEC climate rule does not mean companies can ignore federal climate disclosure. Between the 2010 SEC guidance, active state laws, and international frameworks, the disclosure landscape for US public companies is fragmented but far from empty.
Four obligations apply today:
1. The 2010 SEC guidance remains binding. Public companies must disclose material climate risks under existing Regulation S-K and S-X. The 2024 rule added specificity and thresholds, but the underlying obligation predates it by 14 years.
2. California SB 253 has its first compliance deadline in 2026. Companies earning over $1 billion in California must begin reporting Scope 1 and 2 emissions. This applies regardless of whether the company is publicly traded.
3. International frameworks are converging. Companies with European operations face IFRS S2 adoption in multiple jurisdictions. The UK, Australia, Singapore, and others are implementing ISSB-based standards that require physical climate risk disclosure with scenario analysis.
4. Investor expectations are rising independently of regulation. CDP, proxy advisory firms, and institutional investors increasingly expect climate risk data in annual reports, whether mandated or not.
For the 1% materiality threshold under Article 14, forward-looking climate risk data helps pre-screen whether physical climate impacts could trigger disclosure obligations. Platforms like Continuuiti provide scenario-adjusted flood damage estimates that enable this threshold assessment across a company’s property portfolio.
Practical steps for 2026:
- Map physical climate risks across all material property locations, identifying which face acute hazards (flood, wildfire, hurricane) and chronic exposures (heat, drought, sea level rise)
- Estimate potential severe weather losses against the 1% of pre-tax income threshold to identify locations that could trigger financial statement disclosure
- Document your climate risk identification and assessment processes, which both the 2010 guidance and the 2024 rule require
- Prepare governance documentation showing board-level climate oversight, even if only to satisfy the 2010 guidance’s materiality framework
Conclusion
The SEC climate disclosure rule formalized the most detailed federal climate reporting requirements ever proposed for US public companies. Its 1% financial threshold, physical risk mapping obligations, and GHG reporting structure set a benchmark that continues to influence how sustainability teams approach SEC filings. The rule’s legal future remains uncertain, but the disclosure direction it codified is already embedded in state laws, international standards, and investor expectations. Companies that build physical climate risk assessment capabilities now are preparing for requirements that already exist under the 2010 SEC guidance and are only expanding under state and international mandates.
Frequently Asked Questions
Is the SEC climate disclosure rule in effect?
No. The SEC adopted the rule in March 2024 but voluntarily stayed it in April 2024 pending judicial review. In March 2025, the SEC withdrew its defense of the rule. The case is held in abeyance in the U.S. Court of Appeals for the Eighth Circuit. The rule has never been enforced and its future remains uncertain.
What does the SEC climate disclosure rule require?
The rule requires public companies to disclose material climate-related risks, governance structures, strategy impacts, and risk management processes. Large accelerated filers and accelerated filers must also report material Scope 1 and Scope 2 GHG emissions. Financial statement footnotes are required when severe weather losses exceed 1% of pre-tax income or 1% of stockholders’ equity.
Does the SEC climate rule require Scope 3 emissions reporting?
No. The final rule eliminated Scope 3 emissions reporting entirely. The proposed rule in 2022 included Scope 3 requirements, but the SEC removed them in the final version adopted in March 2024. Only material Scope 1 and Scope 2 emissions are required, and only for large accelerated filers and accelerated filers.
What is the 1% threshold in the SEC climate rule?
Under Regulation S-X Article 14, companies must disclose severe weather-related financial impacts in footnotes to their financial statements when those impacts equal or exceed 1% of pre-tax income (or $100,000, whichever is greater) for expensed losses, or 1% of stockholders’ equity (or $500,000, whichever is greater) for capitalized costs.
How does the SEC climate rule differ from California’s climate disclosure laws?
The SEC rule applies only to public companies and is currently stayed. California SB 253 applies to both public and private companies with over $1 billion in annual California revenue, requires Scope 3 emissions reporting starting in 2027, and is actively in effect with an August 2026 compliance deadline. California SB 261 requires TCFD-aligned physical risk reports from companies with over $500 million in California revenue, though its enforcement is currently paused by injunction.
Do companies still need to disclose climate risks to the SEC?
Yes. The SEC’s 2010 interpretive guidance (Release No. 33-9106) remains in full effect and requires public companies to disclose material climate risks under existing Regulation S-K and S-X. This obligation exists regardless of the stayed 2024 rule and covers the impact of climate legislation, international accords, business trend consequences, and physical impacts of climate change.
