Climate Change: Statement on Proposed Rescission of Climate-Related Disclosure Rules

The Commission has struggled with the climate disclosure proposal for years. Today we are proposing to rescind the rule that the Commission adopted in 2024. I support the rescission proposal and look forward to hearing feedback from the public.

I understand why some people strongly support a climate disclosure rule from the SEC. Many people believe that climate change is an existential threat that justifies commandeering any tool to address the problem. Among the tools they eye is the corporate disclosure framework. Climate disclosure advocates point to other jurisdictions that have turned to their securities disclosure regimes for information about greenhouse gas emissions and other climate-related issues. They have watched as those coopted disclosure regimes have reshaped not just what companies disclose, but the products they make and the way they make them. Designing securities disclosure to be a lever of change, however, exceeds the authority Congress gave to the SEC. Congress directed us to establish a disclosure regime that helps investors understand the company's fundamental business and financial characteristics. As I have explained elsewhere, the target audience of our disclosures is investors as a class.[1] Investors as individuals are not a uniform group, but as a class they share a common interest in financial returns. That defining characteristic of investors must focus our mandated disclosures.

While Congress has told us to consider whether additional disclosure is necessary or appropriate in the public interest the Supreme Court has clarified that we must view "public interest" through the lens of our mission. Unless Congress explicitly has directed otherwise, we do not have the authority to craft boundless disclosure rules to respond to stakeholder demands, investors' idiosyncratic interests, or our own curiosity. When we proposed and adopted the climate rule, I was concerned that we were exceeding our statutory authority by crafting a highly prescriptive and expansive set of disclosures designed for a purpose other than informing investors. Today's proposal sets forth these concerns and affords the public the opportunity to weigh in.

Adhering to a merit-neutral, materiality-centric disclosure framework is not only consistent with the SEC's statutory authority, but also good for the health of our capital markets. An effective disclosure framework helps capital flow to its highest and best use. When money gets to the people who can put it to productive use, society benefits. Allocating capital into the right hands means more cures for disease, greener energy, technologies that make our lives easier and more enjoyable, cleaner water and air, better infrastructure, healthier and more abundant food, and educational tools that empower our children to become the next generation of problem-solvers. This proposal, if adopted, is a step toward restoring our disclosure framework to its intended purpose and thus to helping our capital markets better serve society.