The Nickel Report

As of early 2025, the landscape of climate disclosure requirements in the United States is shifting. Unsurprisingly, the Trump Administration has signaled its intent to roll back the controversial federal climate disclosure rule promulgated by the Securities and Exchange Commission (“SEC” or “Commission”) last year. Meanwhile, implementation of California’s suite of climate disclosure laws is moving forward, and at least two other states are considering copy-cat legislation. As companies operating in the United States continue to prepare for compliance at the state level, they should consider these developments alongside potential changes to international and voluntary reporting standards and should work to implement corporate processes that ensure consistency and accuracy in reporting across all relevant frameworks.

SEC Climate Rule

In March 2024, the SEC narrowly adopted rules it stated would standardize climate-related disclosures by public companies and public offerings. The rules were promptly challenged by multiple stakeholders, on grounds that the SEC had exceeded its statutory authority, had acted arbitrarily and capriciously and without substantial evidence, and had failed to account for the vast costs of the rule.  In response to motions by industry plaintiffs, the U.S. Court of Appeals for the Fifth Circuit initially stayed the SEC’s rules.  The cases were eventually consolidated before the U.S. Court of Appeals for the Eighth Circuit. Not long afterwards, on April 4, 2024, the SEC stayed implementation of the regulations pending judicial review of the legal challenges meaning that the prior Fifth Circuit judicial stay did not need to be relitigated before the Eighth Circuit.

On February 11, 2025, Acting SEC Chair Mark Uyeda issued a statement announcing that he had directed SEC staff to request that the court not schedule the case for oral argument in order to allow time for the Commission to determine next steps in light of certain changes. Specifically, Acting Chair Uyeda cited as changes (1) his views that “[t]he Rule is deeply flawed and could inflict significant harm on the capital markets and the economy” and was promulgated without statutory authority; (2) the recent change in the composition of the Commission; and (3) President Trump’s recent memorandum regarding a regulatory freeze.

While next steps on the part of the Eighth Circuit and the SEC are yet to be seen, the SEC will likely seek to rescind or substantially revise the 2024 rule, potentially through a new notice-and-comment rulemaking process.

California Climate Disclosure Laws

Meanwhile, implementation of California’s climate disclosure laws is moving forward. In October 2023, California Governor Gavin Newsom signed into law three different bills: (1) SB 253, requiring disclosure of greenhouse gas emissions for companies with at least a billion dollars in revenue that are doing business in California; (2) SB 261, requiring climate-related risk disclosures for companies with at least $500 million in revenue that are doing business in California; and (3) AB 1305, requiring annual substantiation of offset sales and purchases, as well as net zero and emission reduction claims, for companies operating and making claims in California. Unlike the SEC rule, all of these laws apply regardless of whether a company is public or privately held.

In September 2024, Governor Newsom signed into law a set of amendments to SB 253 that, among other things, delayed the rulemaking deadline set for the California Air Resources Board until July 1, 2025. The amendments did not, however, delay compliance dates for covered entities. This means that covered entities must continue to plan for the first round of reporting on Scope 1 and Scope 2 emissions in 2026, with reference to FY 2025 data, even though a host of questions remain about the scope and mechanics of required reporting. In recognition of this uncertainty, on December 5, 2024, CARB issued an Enforcement Notice indicating that it would not pursue enforcement against entities working in “good faith” toward compliance, and that, for the first reporting year, it would be sufficient to rely on data already in a reporting entity’s possession as of the date of the notice. Not long after, CARB announced a public comment period to seek input from stakeholders on a range of implementation-related issues, including how CARB should define “doing business in California” for purposes of defining the universe of entities subject to compliance obligations under SB 253 and SB 261.

While the California statutes have been challenged by trade associations in court, the courts have not provided relief to date.  On February 3, 2025, the U.S. District Court for the Central District of California substantially narrowed an ongoing judicial challenge to SB 253 and SB 261 by the U.S. Chamber of Commerce, California Chamber of Commerce, and other industry stakeholders. The court dismissed plaintiffs’ claims that these laws violate the Supremacy Clause of the U.S. Constitution and constitute extraterritorial regulation in violation of the Dormant Commerce Clause. The court has preserved, for now, a claim that these laws compel speech in violation of the First Amendment.

Pending Legislation in Other States

During the past several legislative sessions, New York has considered climate disclosure bills similar to California’s SB 253 and SB 261. In January 2025, these bills were once again introduced in the New York Senate as S3456 (Climate Corporate Data Accountability Act) and S3697 (Report of Climate-Related Financial Risk). While similar to California’s SB 253, New York’s S3456 is more explicit on some points—for example, by specifying that the law’s applicability be determined with reference to consolidated revenue, including revenues received by all of the business’s subsidiaries.

Illinois and Washington legislatures also considered similar legislation in 2024 and may seek to introduce it in 2025.

Changes to International and Voluntary Frameworks

Companies that operate in the European Union (“EU”) have been preparing in earnest for compliance with the Corporate Sustainability Reporting Directive (“CSRD”) for well over a year. Nonetheless, the European Parliament is reportedly considering omnibus legislation that would potentially reduce the scope of CSRD applicability and reporting, as well as make changes to other EU sustainability laws. These changes could be relevant not only to companies with direct reporting obligations under these laws, but also to companies that report under voluntary standards, such as CDP, that have sought to align with the CSRD.

What’s Next?

Companies doing business in the United States should continue to monitor this shifting landscape at the U.S. state and international levels. As changes occur, it will be critical to reevaluate data collection and reporting processes to ensure consistency and compliance with all relevant frameworks. The Hunton team is closely following these developments and assisting clients with maintaining and updating compliance plans.