SEC Abandons Climate Rule as the EU Hits Pause

What’s in this week’s newsletter:

• The SEC voted to stop defending its climate disclosure rule - effectively killing it.

• Europe “stops the clock” for compliance with its reporting and due diligence directives. 

• EU sustainability standards are mandated for streamlining by October 2025. 

• Global leaders warn the EU against weakening its green agenda amid global instability.

• US firms caught in the middle as a bill takes aim at Europe's due diligence law 

• Judge rules against the US EPA clawing back $20B in climate funds amidst more cuts.

• Fossil fuel pressure group pauses protests after the UK ends new oil and gas licenses.

• Al Gore urges global grassroots action to keep climate goals alive amid U.S. setbacks.

A few weeks back, we reported that the SEC would abandon the defense of their climate disclosure, effectively killing the policy. In a 3-2 vote along party lines last week, the Commissioners made it official.

Acting SEC Chairman Mark Uyeda said, “The goal is to cease the Commission’s involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules.”

This ends a saga that began in March 2022 when the SEC proposed that large publicly traded companies disclose their climate emissions and the financial risks of climate change. More than 24,000 comments and two years later, the SEC issued its final rule in March 2024. Within days, there were multiple lawsuits against the rule, which were then consolidated into one case. Sensing the changing tide, the SEC stayed (paused) the rule until the litigation was settled. Now, they have effectively killed the policy.  

There is a throughline from the latest saga to fifteen years ago when the SEC warned companies existing disclosure requirements apply to climate change. Their 2010 guidance emphasized that climate risks should be included in disclosures. Over the years, investors called for the disclosure of climate risks as the financial implications became clear.  

While the SEC climate rule is toast, the underlying duty to report material climate risks in financial filings remains. Also, new climate disclosure mandates are coming online in California and are being proposed in several other US states, as well as numerous countries.  

Europe Stops the Clock

This week Europe hit pause on implementing its ESG reporting rules as well as its supply chain due diligence rule - Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), respectively. 

The April 3rd vote was not close - a parliamentary majority of 531 to 69 approved the pause despite a series of amendments submitted by far-left and far-right parties.

This move allows the EU government time to simplify these policies while giving companies adequate time to comply. Importantly, some companies (larger enterprises) have already started filing their CSRD sustainability statements. The clock did not stop for these companies, and an estimated 2,000 CSRD reports will be filed this year.  

Europe to Simplify Sustainability Standards

A mandate to simplify the European Sustainability Reporting Standards (ESRS) – used for CSRD reporting - was issued this week. The EU Commission ordered the European Financial Reporting Advisory Group (EFRAG) to issue simplified standards by October 31st.

The official letter sent by EU Commissioner for Financial Services and Investments - Maria Luís Albuquerque - requested EFRAG to issue a timeline for the revisions by April 15 with a completion deadline of October 31. The Commission aims to use the simplified standards in its simplified version of the reporting directive set for completion this year. 

To put this accelerated timeline into perspective, the original ESRS took almost two and a half years. Another layer of complexity was added when it was announced that Patrick de Cambourg - Chair of the Sustainability Reporting Board - will step down after completing his term. Applications for the post are open until May 15th. 

Former Global Leaders Ask EU to Stay the Course

While Europe weakens its sustainability rules at a fast pace, a growing chorus of voices is cautioning EU policymakers to maintain their focus on the green agenda despite trade wars and increased defense spending. 

One of the loudest voices is The Elders, a group of former world leaders set up in 2007 by Nelson Mandela to advocate for peace, justice, human rights, and a sustainable planet. Former Irish President Mary Robinson, said the EU is missing a huge opportunity to fill the void left by the US to lead in clean tech, adding, "The crisis of a federal withdrawal in the United States from everything to do with climate and science is an opportunity for the European Union, the United Kingdom, and frankly, the rest of the world." 

Echoing The Elders, UN Climate Chief Simon Stiell worries that increased military spending could result in reduced green budgets. Saying, “The climate crisis is an urgent national security crisis that should be at the top of every cabinet agenda.”

US Companies Caught in the Middle

The ‘Prevent Regulatory Overreach from Turning Essential Companies into Targets Act’ - which cleverly spells out ‘PROTECT USA’ - aims to exempt US-based companies from Europe’s Corporate Sustainability Due Diligence Directive (CSDDD). The bill gained support since a report from the Heartland Institute (a right-leaning think tank) claimed: “If the CSDDD goes unanswered, the United States will effectively become a vassal state of the European Union.”

The PROTECT USA Act would penalize US companies up to $1,000,000 for following the law as well as bar them from Federal contracts.

If this policy were to become law, companies would face a dilemma: pay fines in the US or risk being shut out of the EU market since it is highly unlikely Europe would exempt US companies from requirements its own companies must meet - especially in the current political environment. 

EPA Cuts Continue

On Wednesday, a judge ruled there was no fraud in the allocation of $20B in climate funds EPA is trying to claw back, saying, “...you’re still unable to proffer me any evidence with regard to malfeasance.”

Meanwhile, Administrator Zedlin shut down the National Environmental Museum - cataloging US environmental history - claiming to save $600,000.

A New Age of Climate Activism

Former Vice President and climate activist Al Gore said that while the Trump administration's cuts and rollbacks are unprecedented, the US is “more resilient as a constitutional, representative democracy than many people of fear.”  

To counter the rollbacks, Gore is calling for “grassroots pressure in countries around the world…[to] mobilize public support for the urgent climate action…”

In the UK, the pressure group ‘Just Stop Oil’ – known for their acts of civil disobedience -  declared victory and ended their protests after the UK Government met their demand to end new oil and gas licences. Some group members have paid a high price for their civil disobedience, serving up to 5 years in jail. 

The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer. 

Other Notable News:

Global Weirding 

• Experts say climate change was behind South Korea’s worst wildfires.

Energy Transition

• The UK announced that their fossil fuel use was down to the same level as the 1950s.

• Finland closed its last coal-fired power plant this week. 

Climate Investing

• Pension funds in blue states are pushing investors to consider climate risks.

Sustainability Research

• A new study found that the average person will be 40% poorer if the world warms by 4°C, four times more than originally thought.

• More than 80% of large EU companies now peg climate performance to executive compensation packages, twice the rate of US companies.

Greenwashing and Greenhushing

• Mentions of sustainability terms in corporate earnings calls fell to a record low in Q1 this year, dropping 75% from the peak in 2022.

• Deutsche Bank was fined $27 million for greenwashing. The bank had already been fined by the US SEC for the same claims.

Notable Podcasts: 

• This week’s edition of the BBC’s The Climate Question podcast answers listeners' climate questions. The questions range from why we use large wind turbines instead of small ones, if you can turn a petrol car into an EV, and if flood water can be captured and stored.

• In this week’s episode of Bloomberg’s Zero podcast, the hosts discuss the threats to the global economy from water scarcity.

Notable Jobs:

• Cities Adaptation Assistant, The Nature Conservancy, New Jersey, NJ

• Biodiversity Engagement Lead, SkyTruth, US, Remote

• Senior Sustainability Analyst, Lockheed Martin, Bethesda, MD

• Senior Manager Sustainability, Revlon, Edison, NJ

• Climate Resilience Planning Intern, Summer 2025, Stantec, New York, NY

• Sustainability Intern, Alo Yoga, LA, CA

• Scope 3 Decarbonization Lead, GM, Warren, MA

• Director of Sustainability and Innovation, Simpli, Philidelphia, PA