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 paused. A year later, the agency stopped defending it in court. In May 2026, the SEC proposed to repeal it. The comment period closed on August 3, 2026, and as of October 2026 the Commission has not voted on a final repeal. The rule has never taken effect.
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 still applies.
SEC Climate Disclosure Rule Status (2026)
As of October 2026, the SEC climate disclosure rule has never taken effect. The SEC paused it in April 2024. It stopped defending the rule in court in March 2025. On May 29, 2026, the SEC proposed to repeal it. Public comments closed on August 3, 2026. The SEC has not yet voted on a final repeal. The court case, Iowa v. SEC, is on hold. On May 21, 2026, the court refused to restart it. The SEC’s next report to the court is due December 31, 2026. The SEC’s 2010 climate guidance still applies.
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 would apply to all SEC registrants (publicly traded companies), with requirements phased in by filer type. Large accelerated filers would 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 show that climate change caused a severe weather event. A cost or loss counts when the severe weather event was a significant contributing factor in causing it. That test can bring more events into 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 narrowed several requirements after receiving more than 4,500 unique comment letters and more than 18,000 form letters.
| Element | Proposed Rule (2022) | Final Rule (2024) |
|---|---|---|
| Scope 3 emissions | Required for all filers | Eliminated entirely |
| Materiality qualifier | Limited application | Added to many 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).
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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) extended the statutory safe harbors for forward-looking statements to disclosures on transition plans, scenario analysis, internal carbon pricing, and climate targets. It also reached settings those safe harbors normally exclude, such as IPOs and SPAC offerings. Scope 1 and 2 emissions disclosures were not covered.
SEC Climate Rule Legal History: Full Timeline (2024 to 2026)
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 proposed repeal.
March 6, 2024: The SEC adopted the final rule in a 3-2 vote under Chair Gary Gensler. The two Republican commissioners dissented.
March 21, 2024: Legal challenges were consolidated in the U.S. Court of Appeals for the Eighth Circuit under Iowa v. SEC, No. 24-1522.
April 4, 2024: Facing immediate legal challenges from multiple states and industry groups, the SEC voluntarily stayed the rule pending judicial review.
March 27, 2025: Under the new Trump administration, the SEC voted to withdraw its defense of the rule. Commissioner Caroline Crenshaw objected in a statement titled “The Commission has Left the Building.”
April 24, 2025: The Eighth Circuit put the case on hold to give the SEC time to decide whether it would review or reconsider the rule.
July 23, 2025: The SEC told the court it did not plan to reconsider the rule at that time and asked the court to decide the case.
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.”
Early May 2026: The SEC sent a proposed rule titled “Rescission of Climate-Related Disclosure Rules” (RIN 3235-AN76) to the White House Office of Information and Regulatory Affairs for review.
May 7, 2026: In a letter to the Eighth Circuit, the SEC confirmed it does not intend to renew its defense of the rule and that it would reconsider the rule through notice-and-comment rulemaking.
May 8, 2026: The State of Iowa and the other petitioners filed a motion asking the court to lift the abeyance and vacate the rule outright, citing a February 2026 Fifth Circuit decision (Airlines for America v. Department of Transportation) holding that a court must vacate a rule once the agency concedes it violated federal rulemaking law. The SEC consented. Eighteen states and the District of Columbia, which intervened to defend the rule, opposed.
May 21, 2026: The Eighth Circuit denied the motion to lift the hold and asked the SEC for a status report by August 31, 2026.
May 29, 2026: The SEC formally proposed repealing the rule (Release No. 33-11421). The proposal was published in the Federal Register on June 3, 2026.
August 3, 2026: The public comment period closed.
August 31, 2026: The SEC told the court that staff are reviewing the comments and preparing recommendations for a final rule.
October 5, 2026: The court accepted that report and set the next one for December 31, 2026.
As of October 2026, the rule remains on the books and has never taken effect. The SEC has proposed to repeal it, and the court case stays on hold while that process runs. A final repeal needs a Commission vote, and the SEC has not published a target date for that vote. The SEC has told the court it will not renew its defense. Its repeal proposal says the rule exceeds the SEC’s legal authority.
The 2010 SEC Climate Guidance Still Applies
While the 2024 rule remains in limbo, the SEC’s 2010 interpretive guidance (Release No. 33-9106) stays in place. It explains how existing Regulation S-K and S-X rules can require public companies to disclose material climate-related risks. The SEC’s 2026 repeal proposal leaves this guidance in place and asks whether it should be updated.
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. Existing SEC rules have required disclosure of material climate risks for years, and the 2010 guidance explains how. Its bar is lower and less specific than the 2024 rule.
SEC Climate Rule vs California Climate Disclosure Laws
While the federal SEC climate disclosure rule remains frozen, state-level action continues. California passed two climate disclosure laws in 2023. Other states, including New York, have considered similar bills. 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 companies with more than $1B in total revenue that do business in CA | Public and private companies with more than $500M in total revenue that do business in CA |
| 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 | Strategy disclosure (Item 1502) plus financial statement footnotes (1% threshold) | N/A | TCFD-aligned risk reports |
| Assurance | Limited, then reasonable (phased) | Limited, then reasonable (phased) | None required |
| Current status | Stayed; repeal proposed May 2026 | In effect; CARB set first report for Nov 10, 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, with more than $1 billion in total annual revenue that does business 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.
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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. Existing SEC rules still apply. The 2010 guidance explains how current Regulation S-K and S-X items can require disclosure of material climate risks. The SEC’s 2026 repeal proposal leaves that guidance in place and asks whether it should be updated.
2. California SB 253’s first report is due in 2026. It covers companies with more than $1 billion in total annual revenue that do business in California, public or private. CARB has set November 10, 2026 as the deadline for Scope 1 and 2 emissions.
3. International frameworks are converging. Companies with operations outside the US should check local rules, as several jurisdictions are adopting standards based on the ISSB’s IFRS S2.
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 the 2024 rule would have required and investors increasingly expect
- 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 current SEC rules, as the 2010 guidance explains, 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 and paused it a month later. It has never taken effect. In May 2026, the SEC proposed to repeal it. Comments closed on August 3, 2026. As of October 2026, the SEC has not voted on a final repeal. The related court case is on hold.
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 has never taken effect. California SB 253 covers public and private companies with more than $1 billion in total annual revenue that do business in California. CARB has set November 10, 2026 as its first Scope 1 and 2 deadline, and Scope 3 reporting starts in 2027. California SB 261 asks companies with more than $500 million in total revenue to report on climate-related financial risk, covering physical and transition risks. Its enforcement is paused by an injunction.
Do companies still need to disclose climate risks to the SEC?
Yes. Existing SEC rules require public companies to disclose material risks, including climate risks. The SEC’s 2010 interpretive guidance (Release No. 33-9106) explains how those rules apply to climate. It stays in place regardless of the stayed 2024 rule. It covers climate laws, international accords, indirect business effects, and physical impacts of climate change.
