SEC moves to scrap climate disclosure rules, KPMG shifts advisory focus

The SEC’s move to scrap its climate disclosure rules handed legal, finance, ESG and assurance teams a new kind of whiplash: the federal compliance program they spent years building is no longer the main event, but the work is not over. The commission said the rules were overly burdensome and costly, and Chairman Paul S. Atkins has pushed disclosure back toward materiality, not a regime that would effectively steer corporate behavior. For KPMG clients, that means the immediate question is not whether climate reporting disappears, but which pieces of the reporting stack still matter under securities law, investor pressure and state requirements.

That shift matters because the SEC’s climate framework had been built to force a much more structured process. The final rule, adopted on March 6, 2024, in a 3-2 vote under then-Chair Gary Gensler, would have required companies to disclose material climate-related risks, board oversight, management’s role, transition plans, scenario analysis, internal carbon prices and, for some registrants, Scope 1 and Scope 2 emissions with attestation. The SEC stayed the rule on April 4, 2024, while litigation played out, and the U.S. Court of Appeals for the Eighth Circuit later held the challenge in abeyance while the commission reconsidered its position.

KPMG’s message to clients is that existing Reg S-K obligations still matter even with the climate rule stayed. The firm also points to the SEC’s 2010 climate disclosure guidance as a live reference point for disclosure judgment, which is where the practical work now shifts. Instead of treating climate reporting as a federal checklist exercise, companies will need to document materiality analyses, show how climate data flows into financial statements and risk management, and make sure investor communications are defensible against audit and legal review.

The regulatory history explains why so many teams are unlikely to walk away cleanly. On March 27, 2025, the SEC voted to end its defense of the climate disclosure rules in court, and in early May 2026 staff sent the rescission proposal to the Office of Information and Regulatory Affairs before the formal public proposal was issued on May 29. The proposal now sits in a 60-day comment period after publication in the Federal Register, leaving the rulemaking picture unsettled even as corporate planning continues.

For KPMG, that means sustainability advisory is moving from rule drafting to interpretation. The work now centers on comparability, assurance readiness, transition planning and how climate disclosures connect to controls, finance and risk. Companies that assume the rollback ends the job entirely could find themselves with gaps the next time investors, states or auditors ask for the evidence behind a climate claim.