Authors: Nitya Aggarwal

Scrapping SEC Climate Rule Unlikely to Undermine Climate Disclosure for U.S. Companies

The scrapping of the U.S. Securities and Exchange Commission (SEC) climate disclosure rule is unlikely to materially affect the landscape of corporate climate-disclosure reporting practices.

On March 6, 2024, the SEC adopted a final rule that would have required publicly traded companies to disclose climate-related risks, greenhouse gas emissions, and financial impacts associated with severe weather events. Initially scheduled to go into effect in 2026, the rule will no longer be implemented after the SEC voted to end its defense.

Yet, global momentum for emissions reporting means most companies that would have fallen under jurisdiction of the SEC rule already do so or are likely to do so in the future.  Investor expectations, international and overseas national regulatory regimes, and state-level laws are requiring U.S. companies to provide climate-related disclosures to avoid penalties and to retain market competitiveness. In particular, the food and beverage industry will likely remain a consistent leader in transparency on climate-related risks.

A significant portion of large companies, especially those with international operations, already disclose climate-related information and the number of corporations disclosing their climate emissions has been increasing year-over-year. This trend will likely continue due to legal requirements, investor pressure, and sustainability commitments. In this broader context, the SEC’s rule represented an effort to standardize practices already underway, rather than initiate new reporting behavior.

How U.S. Companies Will Respond to The Global Climate Disclosure Landscape

Companies’ expected response to the SEC’s climate disclosure rule being discarded can be understood based on two key factors:

1. Market scope: Are the company’s operations primarily domestic or international?
2. Commitment to sustainability: Is the company actively committed to reducing its climate impact and reporting on its progress?

Climate disclosure regulations have expanded significantly in recent years, and many jurisdictions have already implemented—or are in the process of implementing—mandatory frameworks. The European Union’s (CSRD) is among the most far-reaching, applying to more than 50,000 companies globally, including non-EU entities with substantial business in the region. Other countries, such as Australia and Singapore, are also introducing mandatory disclosure requirements.

Companies with international operations, regardless of their commitment to sustainability, are therefore expected to make climate disclosures despite the SEC rule being discarded. See Orbitas’ global climate disclosure regulations map for a comprehensive overview of policies in effect, in development, or under consideration worldwide.

For U.S. companies that do not operate internationally, however, the choice to disclose their climate emissions will depend on their commitment, or lack thereof, to sustainability and climate action. Domestic companies that are not interested in sustainability are likely not currently making climate disclosures and would not be legally required to do so on a federal level without the SEC’s climate disclosure rule. However, other factors within the investor and regulatory spaces, which are outlined in the next section, may incentivize a change in behavior regardless.

Motivations Behind Continued Climate Disclosure

Investor Expectations for Climate Disclosure

Investors increasingly recognize climate change as a material financial risk. Climate disclosures help investors understand and assess their exposure to physical and transitional risks, support long-term financial planning, and inform capital allocation. In response to this pressure from investors, many large corporations have set ambitious. emissions reduction targets, participate in voluntary initiatives such as the CDP, and have included environmental responsibility into their business models. As of 2023, 86 percent of S&P 500 companies disclosed climate-related data through CDP, demonstrating that climate transparency has become standard practice in financial markets.

International Climate Disclosure Regulations

Multinational corporations, particularly those with operations in Europe, are already subject to climate disclosure mandates under the CSRD. This regulation remains expansive, and its requirements are binding for large international firms.

Going into the 2025 fiscal year, Australia and Singapore will also require mandatory disclosures, as will Brazil in 2026 and China in 2027. Failure to comply with international norms not only carries legal risk, but would also limit market access and erode investor confidence.

U.S. Subnational Legislative Activity for Climate Disclosure

At the state level, the regulatory environment in the United States is evolving. California will require companies with annual revenues over $1 billion to report emissions across Scopes 1, 2, and 3. Similar initiatives are under consideration in New York, Illinois, Wisconsin, New Jersey and Washington, suggesting that U.S. companies will continue to face pressure to disclose, even in the absence of federal action. These state level regulations are receiving pushback from some in the business sector and the Federal administration, but if they’re allowed to move forward, companies across the U.S. large enough to be included in these bills will almost certainly need to disclose their climate emissions.

These pressures on companies to make climate disclosures, even in the absence of a formal legal requirement for U.S.-based companies, have led to increasingly more companies making climate commitments, as reported by PwC’s 2025 State of Decarbonization report. More than 4,000 companies made climate disclosures through CDP in 2024, which is a nine-fold increase over the last five years, and 37 percent of companies are increasing their ambitions.

Climate Disclosure For the Food and Beverage Sector Is Growing

The food and beverage industry faces particularly acute climate risks due to its dependence on agricultural inputs, water use, and global supply chains. As a result, many leading companies in the sector have already integrated climate disclosure into their business practices through CDP and other frameworks.

Of the 50 largest public companies in the food and agriculture sector in North America, 30 disclose agricultural emissions within their scope 3 reporting, while 22 include emissions from land use change. These disclosures cover significant sources of emissions for the sector including deforestation emissions, providing critical information on risks for investors. Leading companies amongst this group are setting “detailed, quantified emissions reduction strategies that outline systematic approaches to meeting their goals.”

This trend underscores a broader reality: Even without a federal mandate, food and beverage companies recognize that climate risk is a business and investor risk. Ongoing disclosure efforts are driven not only by regulatory pressure, but also by the need to manage supply chain volatility, protect brand value, and meet stakeholder expectations.

The SEC rule would have created consistency for U.S.-listed firms in how they should disclose their emissions within the U.S. Despite the loss of the rule, the underlying motivations behind climate transparency—investor demand, international obligations, and increasing climate risk—have not changed.

For the food and beverage sector in particular, where physical climate risk is immediate and pervasive, climate disclosure is not merely a regulatory compliance issue. Identifying the source of emissions within a business’ value chain is a crucial element of developing smarter business strategies to reduce risks and find new opportunities amidst the age of Climate Transitions. As such, disclosure practices are expected to continue advancing, with or without U.S. federal regulation, as companies, investors and regulators adapt to a changing climate and shifting market expectations.