SEC Climate Rule in 2025: Where It Stands and What Public Companies Should Disclose Anyway
- Gasilov Group Editorial Team
- Aug 13
- 7 min read
Over 35 jurisdictions have already aligned with ISSB standards — even as the SEC rule stalls.
Investor expectations for climate-related disclosure continue to rise — even as the federal rule itself remains in limbo. The Securities and Exchange Commission (SEC) adopted its climate disclosure rules in March 2024, a move seen as a watershed for integrating climate risk into mainstream financial reporting. On April 4, 2024, the SEC issued an order staying (i.e., suspending) the effectiveness of its newly adopted climate-related disclosure rules, pending completion of judicial review in the U.S. Court of Appeals for the Eighth Circuit.
The legal backdrop became even murkier in March 2025, when several outlets, including The Wall Street Journal, reported that the Commission had voted to end its defense of the rules. On July 23, 2025, Commissioner Caroline Crenshaw noted that the Eighth Circuit had directed the Commission to provide a litigation status update.
The takeaway for executives is clear: while the federal timeline remains uncertain, market and stakeholder pressure to disclose climate risks has not slowed — and may be accelerating.
State and Global Momentum That Still Shapes the Market
California’s Disclosure Mandates
For companies operating in California, federal delays offer little reprieve. The state is moving ahead with SB 253, under development by the California Air Resources Board (CARB). Once implemented, it will require annual Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) disclosures from companies with at least $1 billion in revenue that do business in the state.
This is more than a compliance checklist: it’s a catalyst for investors, analysts, and customers to evaluate operational credibility and climate strategy, especially for consumer-facing brands.
The EU and ISSB Convergence
Similarly, companies with EU listings or significant sales into the region must contend with the Corporate Sustainability Reporting Directive (CSRD). In July 2025, the European Commission adopted a “quick fix” to the first set of European Sustainability Reporting Standards (ESRS) and launched further consultations.
As of June 2025, the IFRS Foundation reported that 36 jurisdictions—including Canada, the UK, and Australia—have adopted or are taking concrete steps to align their sustainability disclosure frameworks with ISSB standards. This growing alignment signals a path toward global harmonization, suggesting that companies that prepare early could benefit from smoother compliance transitions.
Six Strategic Priorities for Today’s Disclosures
In the absence of a definitive SEC enforcement date, companies should still act on the following priorities to meet investor demands and prepare for emerging mandates.
Anchor Climate Disclosures in Material Risk and Governance
Strong disclosures begin with explaining how climate considerations fit into corporate governance and risk management. This includes detailing:
Board and management oversight structures.
Links between climate strategy and overall business strategy.
The financial statement impacts of climate risks.
Connecting climate information to existing Regulation S-K topics — such as risk factors, MD&A, and the business overview — helps ensure disclosures are “decision-useful” rather than aspirational.
Programs often falter when governance text is unsupported by operational rigor. Credible reporting requires a defined cadence of board updates, clear ownership of metrics, and a disclosure committee applying the same review standards to climate data as to financial MD&A.
Deliver Auditable Scope 1 and Scope 2 Inventories
Even with the SEC rule paused, institutional investors expect reliable, comparable Scope 1 and Scope 2 inventories — often with third-party assurance. Companies should:
Establish a defensible base year.
Document organizational and operational boundaries.
Implement internal controls modeled on Sarbanes-Oxley–style testing.
A focused checklist for assurance readiness:
Confirm inventory boundaries and emission factors in an auditable methods note.
Map data owners, systems, and evidence for each meter, site, and tariff.
Pilot limited assurance on a subset of sites to test processes before full rollout.
This work not only builds investor confidence but also positions companies to respond quickly to evolving mandates.
3. Treat Scope 3 as a Managed Risk — Not a Reporting Afterthought
Scope 3 emissions remain the most complex and, for many sectors, the most material category. Two developments make them unavoidable:
California’s SB 253 explicitly requires full value-chain disclosure.
The EU CSRD mandates detailed Scope 3 reporting for applicable companies.
Practical steps include screening categories to identify major emissions drivers, publishing methods choices, and setting a roadmap to improve data quality. Supplier programs with clear incentives, standardized templates, and category-specific guidance consistently outperform generic requests.
How Leading Companies Are Setting the Pace
Real-world disclosures illustrate what practical, credible climate reporting looks like — and why it matters.
Walmart announced in February 2024 that suppliers had already achieved its “Project Gigaton” target — avoiding one gigaton of emissions — more than six years ahead of the 2030 goal. This milestone underscores the strategic and competitive value of structured supplier engagement in managing Scope 3 emissions.
Microsoft’s 2024 Environmental Sustainability Report revealed that while Scope 1 and Scope 2 emissions fell by 6.3% compared to 2020 levels, Scope 3 emissions rose by 30.9%. This level of transparency highlights the importance of realistic, long-term strategies across supplier and product value chains to manage those challenging indirect emissions.
Apple reported in April 2025 that supplier renewable energy initiatives avoided 21.8 million metric tons of GHG emissions in 2024. This demonstrates the direct link between procurement programs and credible Scope 3 reductions.
The lesson for executives is simple: investors reward disclosures that combine robust governance, assured Scope 1 and Scope 2 data, and proactive Scope 3 engagement, regardless of the SEC’s enforcement timetable.
4. Advance Scenario Analysis and Climate Risk Quantification
Even without an immediate SEC mandate for scenario analysis, leading companies are moving forward. Investors, credit rating agencies, and insurers increasingly use scenario planning to assess resilience against both physical risks (such as extreme weather events) and transition risks (like policy changes and technology shifts).
The Task Force on Climate-related Financial Disclosures (TCFD) framework remains the most widely adopted structure for these assessments. For example, BlackRock’s 2024 Annual Stewardship Report describes how it evaluates portfolio companies across multiple material risk dimensions—such as climate and natural capital, strategy and financial resilience, and company impacts on people—and how these inform its engagement and voting decisions.
When designed with transparent methodologies and credible assumptions, scenario analysis becomes more than a compliance tool. It strengthens investor relations by demonstrating foresight and risk preparedness.
5. Link Climate Metrics to Financial Performance
Climate disclosures that stand apart from financial results often fail to inspire investor confidence. Integrating climate metrics into the financial narrative demonstrates that sustainability is part of the business model, not a side initiative.
For instance, Unilever’s 2024 Climate Transition Action Plan links capital expenditures to emissions-reduction goals and explains how internal carbon pricing is integrated into project approval processes. This level of integration signals that climate action is directly embedded in capital allocation decisions, supporting revenue resilience and long-term profitability.
6. Prepare for Voluntary Alignment with ISSB and Jurisdictional Requirements
The global momentum toward ISSB-aligned climate standards is unmistakable. As the IFRS Foundation’s June 2025 update confirmed, over 30 jurisdictions — including major capital markets like Canada, the UK, and Australia — have either adopted or integrated ISSB standards into local regulations.
For multinationals, voluntary alignment now reduces the compliance gap later and delivers the cross-border comparability investors demand. Early movers will also find it easier to harmonize data systems, controls, and narrative consistency across jurisdictions.
Turning Compliance Into Competitive Advantage
Treating disclosure purely as a regulatory requirement can cause companies to miss strategic opportunities — from enhancing market perception to influencing policy. A more effective approach is to frame disclosures as part of a broader ESG narrative that communicates:
Resilience in the face of climate-related risks.
Differentiation through innovation and operational excellence.
Leadership in shaping industry standards and expectations.
This requires embedding sustainability targets into business strategy, engaging cross-functional teams from the start, and crafting disclosures that are forward-looking, not just backward-looking.
The Scope 3 Challenge as a Long-Term Differentiator
For many sectors, Scope 3 emissions comprise the majority of the carbon footprint. Managing them effectively demands deep collaboration with suppliers, distributors, and customers.
In its 2024 Creating Shared Value and Sustainability Report, Nestlé described its work with farmers to adopt regenerative agriculture practices, helping reduce upstream emissions and enhance supply chain resilience. This demonstrates how regenerative farming underpins both environmental and operational benefits.
This shows that Scope 3 efforts can yield both environmental and operational benefits, especially when embedded into procurement and supplier engagement strategies.
Closing Insight
The SEC’s climate disclosure rule may be stalled, but the forces shaping corporate climate reporting are still moving — often faster at the state and global level than in Washington. The most strategic companies are:
Aligning with state requirements and global standards.
Building governance structures and internal controls that can withstand assurance.
Using disclosures not just for compliance, but to reinforce market leadership and resilience.
For boards and executives, the question is no longer whether to disclose, but how to disclose in a way that strengthens both compliance readiness and business value.
If your team needs to refine its disclosure framework, benchmark against industry leaders, or integrate climate metrics into your investor narrative, we can help.
Contact us to explore tailored strategies that position your company for credibility, resilience, and growth in the evolving ESG landscape.
Written by: Gasilov Group Editorial Team
Reviewed by: Rafael Rzayev, Partner – ESG Policy & Economic Sustainability
Frequently Asked Questions (FAQ): SEC Climate Disclosure Rule
What is the current status of the SEC climate disclosure rule in 2025?
The SEC adopted its climate disclosure rule in March 2024 but stayed implementation in April 2024 pending legal challenges. In March 2025, the Commission voted to stop defending the rule, and the Eighth Circuit has requested a status update. As of August 2025, there is no federal enforcement timeline in place.
Which state-level rules have the biggest impact without SEC enforcement?
California’s SB 253 and SB 261 are the most impactful for large companies doing business in the state. These laws require annual Scope 1, Scope 2, and Scope 3 GHG disclosures, as well as climate risk reporting, for companies with more than $1 billion in revenue. The California Air Resources Board is currently developing the implementing regulations.
How does the EU CSRD affect U.S.-listed companies?
The EU CSRD applies to certain non-EU companies with significant EU operations, based on revenue or subsidiary thresholds. It mandates comprehensive sustainability reporting — including detailed Scope 3 disclosures — on phased timelines. Many U.S. multinationals fall under its scope due to their European market presence.
Why should companies prioritize Scope 3 emissions if they’re not federally required?
Investor expectations, state laws such as California’s SB 253, and international frameworks like the CSRD all demand Scope 3 transparency. Beyond compliance, effective Scope 3 management can enhance supply chain resilience, uncover cost-saving opportunities, and improve brand value.
What steps should companies take now to prepare for climate data assurance?
Key steps include establishing robust internal controls over emissions data, clearly defining boundaries and calculation methodologies, and piloting assurance on a subset of sites or categories. Integrating climate data governance into existing financial reporting processes will make full assurance smoother and more credible when it becomes mandatory.