SEC Climate Disclosure Rule Guide

Status, September 2026: The SEC's climate disclosure rules never took effect. The SEC stayed them in April 2024, voted in March 2025 to stop defending them in court, and in 2026 proposed rescinding them entirely (comments closed August 3, 2026). The Eighth Circuit is holding the litigation in abeyance. The rest of this page describes the rules as adopted. Source: SEC.

Overview

The U.S. Securities and Exchange Commission (SEC) adopted its final climate-related disclosure rules on March 6, 2024. The rules amend Regulation S-K and Regulation S-X to require registrants to disclose material climate-related risks, governance processes, risk management activities, GHG emissions, and the financial statement effects of severe weather events and other natural conditions.

The final rules were significantly scaled back from the March 2022 proposal. Most notably, the SEC removed the mandatory Scope 3 emissions disclosure requirement and narrowed the Scope 1 and 2 reporting obligations to large accelerated filers (LAFs) and accelerated filers (AFs), and only when those emissions are material. The rules also incorporated a phased timeline and limited assurance requirements.

The rules have faced legal challenges. In April 2024, the SEC voluntarily stayed the rules pending judicial review by the Eighth Circuit Court of Appeals. In March 2025 the SEC voted to stop defending the rules, and in September 2025 the Eighth Circuit put the case on hold until the SEC either reconsiders the rules or resumes its defense. In May 2026 the SEC proposed rescinding the rules entirely. Registrants still have to disclose material climate-related matters under existing SEC rules, as the SEC's 2010 climate guidance explains, and many large companies face other mandates, such as California's SB 253 and EU and ISSB-based rules.

Who Does It Apply To?

The rules apply to SEC registrants—domestic issuers and foreign private issuers that file annual reports with the SEC. The requirements are phased by filer category:

Large Accelerated Filers (LAFs): Public float ≥ $700 million. Subject to the most comprehensive requirements including disclosure of material Scope 1 and 2 emissions with third-party assurance.

Accelerated Filers (AFs): Public float $75M–$700M. Required to disclose Scope 1 and 2 emissions only if material, with limited assurance.

Non-Accelerated Filers, Smaller Reporting Companies (SRCs), and Emerging Growth Companies (EGCs): Subject to qualitative disclosure requirements (governance, strategy, risk management) but exempt from quantitative GHG emissions disclosure.

Foreign Private Issuers (FPIs): Subject to the same requirements as domestic registrants in their applicable filer category.

Key Requirements

1. Governance Disclosures (Reg S-K) Describe the board's oversight of climate-related risks, including identification of responsible board members or committees, their expertise, and how frequently they are informed. Describe management's role in assessing and managing material climate-related risks.

2. Strategy and Risk Management (Reg S-K) Describe material climate-related risks, categorized as physical or transition risks, and the time horizons over which they may manifest. Disclose the actual and potential material impacts on strategy, business model, and outlook. If the registrant uses scenario analysis, describe the scenarios, assumptions, and financial impacts. Disclose any transition plans and how they are managed.

3. GHG Emissions (Reg S-K) LAFs and AFs must disclose Scope 1 and Scope 2 GHG emissions if those emissions are material. Emissions must be expressed in absolute terms (metric tons CO₂e) and disaggregated by constituent greenhouse gas if individually material. Scope 3 reporting is not required. Emissions data must be reported for the fiscal year covered by the filing.

4. Attestation (Assurance) LAFs must obtain limited assurance over Scope 1 and 2 emissions, transitioning to reasonable assurance in later years. AFs are required to obtain limited assurance. Attestation providers must meet independence, competence, and oversight requirements specified in the rules. The attestation report must be filed with the SEC.

5. Financial Statement Disclosures (Reg S-X) In a note to the audited financial statements, registrants must disclose the financial statement effects of severe weather events and other natural conditions if costs expensed and losses reach 1% of pre-tax income or loss, or capitalized costs and charges reach 1% of stockholders' equity, subject to de minimis floors of $100,000 and $500,000. This includes costs and losses, capitalized costs, charges, and recoveries. Registrants must also disclose costs related to carbon offsets and renewable energy certificates (RECs) if they are a material part of the plan to meet a disclosed climate target.

6. Targets and Goals If a registrant has set climate-related targets or goals that have materially affected or are reasonably likely to materially affect its business, results of operations, or financial condition, it must disclose those targets, progress toward them, and how they are being achieved. This includes the use of offsets and RECs.

Timeline & Milestones

*Compliance dates in the rules as adopted. The rules never took effect and the SEC has proposed rescinding them, so none of these dates applies.

Step-by-Step Compliance Roadmap

No company has to comply with the SEC rules, and the SEC has proposed rescinding them. The steps below describe what compliance would have involved. Much of the same work still serves existing SEC disclosure of material climate risks, California's SB 253 and international frameworks.

Step 1: Determine Filer Category and Scope

Confirm your SEC filer category and identify which requirements apply. Map the phased compliance timeline to your fiscal year. Determine whether any subsidiaries or acquired entities create additional reporting complexity. The same scoping now matters for the rules that do apply, such as California's SB 253 and EU or ISSB-based requirements.

Step 2: Materiality Assessment for Climate Risks

Conduct a rigorous materiality assessment of climate-related risks using the SEC's established materiality standard (information a reasonable investor would consider important). This assessment should cover physical risks (acute and chronic) and transition risks (regulatory, market, technology, reputation). Document your methodology—the SEC expects the same analytical rigor applied to other material risk assessments.

Step 3: Build Emissions Measurement Capabilities

Establish or enhance GHG emissions inventory processes for Scope 1 and 2 in accordance with the GHG Protocol or a comparable methodology. Define organizational and operational boundaries. Implement data collection systems, calculation methodologies, and quality controls. California's SB 253 now requires Scope 1 and 2 reporting from public and private companies with more than $1 billion in revenue that do business in the state.

Step 4: Prepare Disclosures

Draft governance, strategy, and risk management disclosures for Reg S-K filings. Prepare the Reg S-X financial statement note, including tracking systems for severe weather event costs. Quantify GHG emissions for the reporting period. Ensure consistency between climate disclosures and other sections of the annual report. Review with legal counsel for liability considerations.

Step 5: Engage Attestation Providers

Select an attestation provider that meets the SEC's independence and competence requirements. Engage them early to align on scope, methodology, and timeline. Build internal controls and documentation with attestation requirements in mind. California's SB 253 requires limited assurance of Scope 1 and 2 emissions, rising to reasonable assurance in 2030.

Common Pitfalls

Treating the SEC's retreat as the end of climate disclosure. The SEC rules never took effect and the SEC has proposed rescinding them, but other mandates do apply: California's SB 253 requires first Scope 1 and 2 reports by November 10, 2026, EU and ISSB-based rules reach many U.S. multinationals, and existing SEC rules still require disclosure of material climate risks. Companies that dropped their preparation work may face compressed timelines under these rules.

Applying ESG materiality rather than SEC materiality. The SEC climate rules use the traditional securities law materiality standard—what a reasonable investor would find important in making investment decisions. This is distinct from impact materiality or double materiality concepts used in other frameworks. Applying the wrong materiality lens leads to either over-disclosure or under-disclosure.

Underestimating Reg S-X requirements. The financial statement note on severe weather event effects is audited, meaning it falls under existing financial audit requirements. Companies without systems to track and aggregate climate-related costs across operations would have found this requirement particularly challenging.

Inconsistent disclosures across filings. The SEC will compare climate disclosures in the annual report with statements in earnings calls, investor presentations, and sustainability reports. Inconsistencies create enforcement risk. Ensure a consistent narrative across all communications channels.

How Council Fire Can Help

Council Fire helps SEC registrants navigate the intersection of regulatory compliance and genuine climate strategy. We understand that climate disclosure is not merely a legal requirement but an opportunity to communicate a credible climate narrative to investors and stakeholders.

Our climate risk assessment capabilities directly support the materiality assessment and scenario analysis at the heart of the SEC rules. We help clients identify physical and transition risks with analytical rigor, translating climate science into the financial language the SEC requires.

For companies developing or refining climate targets and transition plans, Council Fire ensures these strategies are both scientifically defensible and strategically coherent—critical when targets appear in SEC filings and become subject to securities law liability standards.

Council Fire's communication expertise helps clients craft disclosure language that is accurate, compliant, and compelling—avoiding the twin pitfalls of vague boilerplate and overcommitment.

Frequently Asked Questions

Are Scope 3 emissions required under the SEC rules?

No. The final rules removed the proposed Scope 3 disclosure requirement. Companies are not required to disclose Scope 3 emissions under the SEC climate rules. However, if a registrant has set a climate-related target that includes Scope 3 emissions, and that target is material to the business, the registrant must disclose relevant information about the target, which may indirectly involve Scope 3 data.

How does the SEC rule interact with California's SB 253 and SB 261?

California's SB 253 (Climate Corporate Data Accountability Act) requires companies with over $1 billion in annual revenue doing business in California to report Scope 1, 2, and 3 emissions. The first Scope 1 and 2 reports are due November 10, 2026, and Scope 3 reporting starts in 2027. SB 261 requires companies with over $500 million in revenue to report on climate-related financial risks, but it is on hold: the Ninth Circuit barred enforcement in November 2025 while an appeal proceeds, and CARB will set a new deadline afterward. These state laws operate independently of the SEC rules and apply to both public and private companies meeting the thresholds. Because the SEC rules never took effect, there is no SEC overlap to plan for.

What attestation standard applies to GHG emissions assurance?

The SEC rules do not prescribe a specific attestation standard. As adopted, they require standards that are publicly available at no cost or widely used for GHG emissions assurance, and that were set by a body following due process, including public comment. The SEC said the PCAOB, AICPA and IAASB attestation standards and ISO 14064-3 would qualify. The attestation provider must be independent and the attestation report must be filed with the SEC.

Can we use carbon offsets to reduce disclosed emissions?

No. Under the rules as adopted, GHG emissions must be reported gross of any purchased or generated offsets. If offsets or RECs are a material part of your plan to meet a disclosed climate target, you must separately disclose the amount, nature and source, underlying projects, any registry or other authentication, and cost of those instruments. The SEC's approach is clear: investors need to see both the gross emissions and the offset strategy.