SEC Reverses Climate Rule—But Businesses Still Push Forward

On March 27, 2025, the U.S. Securities and Exchange Commission (SEC) announced a pivotal reversal—it will no longer defend its 2024 climate disclosure rule in court. Once seen as a milestone aligning U.S. financial regulation with global climate transparency efforts, the rule is now in limbo.

And yet, businesses are not retreating.

This regulatory rollback may have halted mandatory reporting for now, but a growing number of companies are moving forward voluntarily. Why? Because climate-related financial risks are not just theoretical—they’re operational, reputational, and existential. Today’s leaders know that ESG disclosure isn’t just about compliance. It’s about competitive advantage.

What the SEC Climate Rule Was Really About

The journey to this rule began long before 2024. Over a decade, the SEC issued guidance encouraging companies to consider and disclose climate-related risks. This culminated in a formal rule introduced in March 2024, which required:

• Reporting of Scope 1 and Scope 2 greenhouse gas (GHG) emissions (if material)
• Disclosure of climate-related risks and their business impact
• Information on governance and oversight of climate strategies and goals

While the rule stopped short of including Scope 3 emissions (those across the value chain), it marked a leap toward alignment with frameworks like the TCFD and the EU’s CSRD.

But the political and legal climate changed just as quickly as the Earth’s atmosphere.

Why the SEC Stepped Back

Legal pressure and political change played key roles. In April 2024, a coalition of states and trade groups challenged the rule (Iowa et al. v. SEC), prompting a voluntary pause. The 2025 change in administration—marked by President Trump’s return and the appointment of Mark Uyeda as SEC Chair—signaled a new deregulatory direction.

Three factors drove the reversal:

• Legal risk: Ongoing lawsuits risked further reputational damage and enforcement paralysis.
• Cost and complexity: Critics argued that small- and mid-sized businesses lacked resources for compliance.
• Political ideology: Deregulation became a priority, with climate regulation framed as federal overreach.

However, a void in regulation does not mean a void in responsibility—or expectation.

Why Businesses Are Still Reporting

Despite the SEC’s retreat, the corporate world is not standing still. In fact, leading companies are doubling down on voluntary sustainability reporting.

Why?

1. Customer Expectations Are Rising

More than ever, consumers are aligning their purchasing power with their values. Transparent climate action is becoming a brand differentiator. Companies that communicate clearly about sustainability are more trusted—and more competitive.

2. Strategic Risk Management

Climate risks are business risks. According to a recent global survey, 89% of executives now view sustainability as core to their corporate climate strategy. From supply chain disruptions to regulatory exposure, climate scenarios affect profitability.

3. Investor Pressure Isn’t Easing

The investment community is not waiting for regulators. Financial institutions and asset managers with net-zero commitments demand disclosure. ESG reporting is now tied to performance-linked financing, green bonds, and shareholder trust.

4. Supply Chain Mandates

It’s not only about being a sustainable business—it’s about being a sustainable supplier. Multinationals require GHG emissions data and risk disclosures from vendors. Without transparency, smaller firms risk being cut out of global supply chains.

5. Talent Wants Purpose

Today’s workforce is mission-driven. Sustainability credentials are a key factor for Gen Z and millennial talent. Companies that lead on climate attract and retain the best people.

6. Global Regulation Still Applies

Even if U.S. requirements soften, international obligations remain firm. The EU CSRD, the UK’s disclosure regime, and other global standards continue to evolve. Companies operating across borders can’t afford to ignore them.

The Business Case for Voluntary Climate Reporting

At APLANET, we work with organisations that understand: ESG data is not just a compliance requirement—it’s a strategic asset.

By choosing to disclose climate-related financial risks now, businesses are:

Building Brand Trust

Trust drives loyalty. And loyalty builds revenue. ESG transparency shows accountability, alignment with stakeholder values, and long-term thinking.

Attracting Capital

Sustainable finance is no longer niche. Investors screen for ESG performance. Disclosure boosts credibility, reduces cost of capital, and opens access to impact investors and institutional funds.

Preparing for Market Shocks

Voluntary disclosure often includes scenario analysis, resilience planning, and risk mitigation strategies. These aren’t just documents—they’re business continuity tools.

Securing First-Mover Advantage

In markets where ESG disclosure is becoming the norm, leaders that act early reap the rewards. They are already prepared for the next wave of regulation and already capturing the loyalty of sustainability-conscious customers.

Stay Ahead of the Curve

The SEC climate disclosure rule may be paused, but the climate itself isn’t waiting—and neither is the market. This moment offers a clear choice: follow the bare minimum, or lead with purpose. Companies that voluntarily report today signal resilience, leadership, and trust. They don’t just react to change—they shape it.

At APLANET, we empower those leaders. With the right technology, you can collect, analyse, and act on ESG data to drive business growth and sustainable transformation.

Because sustainability is not a trend. It’s the future of competitive business.

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