SEC’s proposed rescission of climate disclosure rule marks disappointing turn for market transparency and carbon offsets
WASHINGTON – Today, the U.S. Securities and Exchange Commission (SEC) proposed to rescind its climate risk disclosure rule, which would require publicly traded U.S. companies to report how they assess and manage climate-related financial risk. The proposal follows the Commission’s earlier decision to abandon its defense of the rule in court and marks a further retreat from the SEC’s responsibility to ensure fair, orderly, and transparent markets.
“The SEC’s proposal to rescind its climate disclosure rule should raise serious concerns for investors about the future of market transparency in the United States,” said Frank Sturges, Senior Attorney at Clean Air Task Force (CATF). “Information about climate-related risks, including the quality and integrity of carbon offset claims, falls squarely within that mandate. Throwing out the rule will move markets in the wrong direction and leave investors without the information they need to accurately assess reputational, regulatory, and financial risks related to climate.”
When the rule was first proposed, CATF highlighted in its comments that low-quality carbon offsets are one example of how gaps in public disclosure can harm both investors and consumers alike. The voluntary market for carbon credits that are used as offsets is unregulated and opaque, but it is estimated that over $1.5 billion will be spent on carbon credits in 2026. CATF’s analyses of both forest carbon and biomass protocols show that a large share of these credits are based on protocols that don’t guarantee high-quality credits. Climate disclosures would support greater transparency into when and how public companies rely on these carbon credits.
“The SEC’s mission is to protect investors and the public by ensuring they have access to material information,” said Kathy Fallon, Director, Land Systems at CATF. “While imperfect, the rule was an important step toward giving investors consistent information about financially material climate risks, including the use of carbon offsets. “The Commission should withdraw this proposal and focus instead on implementing disclosure requirements that give both investors and the public the transparency they need.”
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About Clean Air Task Force
Clean Air Task Force (CATF) is a global nonprofit organization working to safeguard against the worst impacts of climate change by catalyzing the rapid development and deployment of low-carbon energy and other climate-protecting technologies. With 30 years of internationally recognized expertise on climate policy and a fierce commitment to exploring all potential solutions, CATF is a pragmatic, non-ideological advocacy group with the bold ideas needed to address climate change. CATF has offices in Boston, Washington D.C., and Brussels, with staff working virtually around the world. Visit catf.us and follow @cleanaircatf.
