The U.S. Securities and Exchange Commission has abandoned its defense of a climate disclosure rule designed to compel publicly traded companies to report climate-related risks and greenhouse gas emissions.  

The rule, finalized in March 2024 and known as the Enhancement and Standardization of Climate-Related Disclosures for Investors, was immediately challenged by industry groups and Republican-led states.  

This week, the SEC signaled that it would no longer fight for the rule in court, with Acting Chair Mark Uyeda calling the mandate “costly and unnecessarily intrusive.” 

The move coincides with a broader deregulatory push under the Trump administration, including in the banking sector. 

At a Senate Banking Committee hearing last week, Jonathan Gould – President Trump’s nominee to lead the Office of the Comptroller of the Currency – dismissed the concept of reputational risk in financial supervision. 

“Too often, reputation risk is used as a pre-text for other motives,” Gould told lawmakers, advocating for a return to more measurable forms of oversight, such as litigation and compliance risk. 

Investor advocacy groups have condemned both developments. Nonprofit group Ceres previously reported that over 300 institutional investors, representing $50 trillion in assets, supported the SEC’s rule.  

According to critics, eliminating it jeopardizes market transparency. “Climate change is a growing financial risk,” said Sierra Club’s Ben Cushing. “Ending the SEC’s defense of its own climate disclosure rule is a dangerous retreat from investor protection.” 

Meanwhile, some states are stepping in. California is pressing ahead with its own climate-related disclosure laws, enacted in 2023.  

Several others are expected to follow. The result may be a fragmented national landscape where climate reporting depends on local politics rather than federal oversight. 

These regulatory reversals are part of a larger trend. Since Trump’s return, major banks including JPMorgan Chase, Citigroup, and Goldman Sachs have exited the UN-backed Net-Zero Banking Alliance. Asset managers like BlackRock have followed suit, prompting the suspension of the Net Zero Asset Managers initiative amid accusations from Republican lawmakers of ESG collusion. 

The unraveling of these initiatives reflects a dramatic recalibration in U.S. financial policy. Even global banks are retreating. UBS recently postponed its net-zero targets by a decade, citing its merger with Credit Suisse. HSBC and Wells Fargo have also begun reconsidering their ESG timelines. 

In Washington, the message is clear: ESG regulation is being sidelined, and climate risk disclosures are now political battlegrounds rather than standard reporting tools.  

The implications for financial risk transparency and investor confidence remain uncertain, but the deregulatory momentum appears to be accelerating fast.