Withdrawal of SEC Climate Disclosure Rule Doesn’t Mean Businesses Can Ignore Risks

The Security and Exchange Commission’s (SEC’s) proposed climate disclosure rule spent most of its brief life under a court stay, challenged in multiple lawsuits. Few observers were surprised when the new Acting Chair of the SEC, Mark Uyeda, announced in February 2025 that the SEC would withdraw the rule. Uyeda cited flaws in the rule, explaining that it “could inflict significant harm on the capital markets and our economy.” He said that climate-related financial risks were being addressed under existing disclosure requirements, even before the controversial new rule was proposed.

The withdrawal of this proposed rule marks the end of SEC’s efforts to mandate climate risk disclosures for public companies. However, the climate risks themselves remain. J.P. Morgan almost immediately published an article emphasizing that companies must acknowledge that climate risks are financial risks. Worldwide physical impacts of changing weather, from floods to fires, are already beginning to affect capital formation and asset prices, which must be factored into long-term planning.  Over 90% of public companies already disclose ESG data, setting the standard for transparency and accountability in today’s economy.

Therefore, even without a federal SEC rule, both public and private businesses must be prepared to understand, measure and report on their emissions and climate risks. In fact, state-level regulations and international investor demands may result in broader disclosures than the SEC rule would have.

State-Level Requirements May Prove More Challenging

As the SEC pulls back, states like California, New York, New Jersey, Colorado and Illinois are moving forward with aggressive climate disclosure laws that will impact both public and private companies. These state regulations mandate climate-related risk reporting and GHG emissions disclosure — including Scope 3 emissions — beginning as early as next year.

The California regulations were passed in 2023, with reporting required in 2026 (using 2025 data). Many of the other states modeled their regulations on California’s; D.A. Carlin & Company has produced a helpful chart of the requirements and timelines. Unlike the withdrawn SEC rule, which was limited to publicly traded companies, these state laws will apply to a broader set of businesses, affecting not just those headquartered in California or New York but also any company doing business in these states.

With California’s $4 trillion economy and New York’s $1.8 trillion market, such regulations will have a ripple effect across industries. Compliance will not be optional for companies seeking to operate in these states, and the sheer scale of their economies means the impact of these laws could rival, if not exceed, the impact of the withdrawn SEC rule.

Companies navigating this evolving regulatory landscape must stay ahead of multiple, inconsistent compliance requirements, ensuring they have robust data collection and reporting mechanisms in place. With more localized requirements, businesses need to be agile in addressing different state-level expectations while maintaining consistency in their reporting.

International Regulations Strengthen

Beyond state-driven initiatives, international regulations such as the Corporate Sustainability Reporting Directive (CSRD) in Europe are setting a new global standard for climate-related financial disclosures. The CSRD, which is already in effect, with the first reports required in 2025, mandates that large companies report on ESG factors such as detailed climate-related risks, emissions disclosures and sustainability governance.

Unlike voluntary reporting frameworks, the CSRD creates binding legal obligations that extend beyond Europe. U.S.-based companies with European operations will be required to align with its stringent requirements, making climate transparency a non-negotiable aspect of doing business internationally. The directive’s alignment with the Task Force on Climate-related Financial Disclosures (TCFD) requires that companies integrate climate-related risks into financial reporting, calculating how those risks affect long-term business projections.

Just as EU data privacy and security requirements have filtered into markets worldwide, climate disclosures will, too. Companies that align their processes with international standards will be poised to access global markets, attract investment and future-proof their operations.

Investor and Market Demand

While regulatory requirements are expanding, financial markets are reinforcing the expectation that companies disclose their climate risks and emissions. Investors, customers and stakeholders are pushing businesses to provide clear, credible information about their environmental impact and long-term climate strategies.

Institutional investors are integrating climate risk data into investment decisions, recognizing that companies with high climate-related risks face greater financial volatility, regulatory costs and reputational concerns. As capital increasingly flows toward businesses that demonstrate strong climate governance, those that fail to provide transparent disclosures risk falling behind their competition.

Climate risk disclosure is not just about checking a regulatory box; it is a key factor in financial performance and long-term value creation. Businesses that embrace transparency will gain a competitive edge, while those that delay risk losing access to capital, investors and customers.

Climate Risk Is Financial Risk

Increasingly, financial institutions emphasize that climate risk is financial risk. J.P. Morgan, in a recent article, underscored the role of financial institutions in helping markets assess and price climate-related financial risks. The firm showed that climate change is already influencing capital formation and asset pricing, with risks manifesting through extreme weather events, shifting regulations and evolving investor expectations.

This recognition is particularly evident in industries like insurance, where climate-related risks such as floods, wildfires and hurricanes are already driving up premiums. Insurers are embedding climate risk into underwriting decisions, making it more expensive — or even impossible — for businesses to obtain coverage if they operate in high-risk areas without adequate climate resilience measures.

Similarly, banks and lenders are scrutinizing corporate climate risks in financing decisions. Companies that fail to integrate climate considerations into their financial planning may face higher borrowing costs or limited access to capital as financial institutions prioritize businesses that demonstrate long-term resilience.

Building Business Resilience Through Climate Risk Assessment

Understanding climate risk is essential for business resilience. Companies that integrate climate risk assessments into their operations are better equipped to protect their employees, assets and long-term stability.

A comprehensive climate risk assessment allows businesses to identify vulnerabilities in their operations, from physical risks like extreme weather disruptions to transition risks tied to regulatory shifts and carbon pricing mechanisms. By evaluating these risks early, companies can make informed decisions about infrastructure investments, supply chain diversification and operational adjustments that reduce exposure.

For example, businesses in high-risk regions can fortify buildings to withstand extreme weather, invest in energy-efficiency measures (which also reduce operating expenses), and reevaluate supply chain dependencies. They can build climate resilience into workforce planning, ensuring employees are protected during weather emergencies and that business continuity measures are in place.

Adopting a proactive approach to climate resilience provides significant strategic advantages, enabling companies to enhance long-term stability and competitiveness. By identifying and mitigating climate-related risks in advance, businesses can reduce financial exposure, safeguard assets and ensure operational continuity in the face of extreme weather events and other climate-driven disruptions. Resilience planning also strengthens investor confidence, as capital markets increasingly prioritize organizations with robust risk management frameworks. Additionally, insurers are more likely to offer favorable coverage terms to companies that demonstrate climate preparedness, reducing the cost of insuring assets and operations. Furthermore, organizations that integrate resilience into their business strategy can maintain supply chain integrity and minimize downtime, allowing them to sustain market position and competitive advantage when disruptions occur. In contrast, companies that neglect climate resilience may face financial losses, regulatory penalties, supply chain vulnerabilities and diminished investor confidence, ultimately weakening their ability to compete in an evolving business landscape.

Maersk and Prologis set themselves apart in their industries by using climate risk assessments to inform decision-making, demonstrating how targeted investments can strengthen their competitive positions in markets facing increasing climate challenges. Their strategies protect assets and create value for stakeholders while adapting to evolving environmental and regulatory pressures.

Maersk, a global shipping and logistics leader, identified climate change — both physical and transition risks — as the greatest threat to its business following a recent enterprise risk management (ERM) exercise. The company evaluated vulnerabilities across 107 key land-based assets, including port terminals and warehouses, and determined that climate-related disruptions could increase physical damage and business interruptions by 130% by 2050. In response, Maersk partnered with Zurich Resilience Solutions to implement data-driven risk management strategies that protect infrastructure, reduce supply chain disruptions and minimize exposure to extreme weather. The company’s investment in methanol-fueled vessels and alternative energy sources also mitigates regulatory risks and fuel price volatility. By factoring climate risk data into route planning and infrastructure decisions, Maersk improves supply chain stability and efficiency, reinforcing its role in global trade. (Source)

Prologis, a leading logistics real estate firm, applies climate risk analysis across its U.S. operations to safeguard business continuity and strengthen value for tenants and investors. The company aligns its risk management strategy with the Task Force on Climate-related Financial Disclosures (TCFD) framework, evaluating physical climate risks at the asset level using science-based climate scenarios. This approach enables Prologis to anticipate acute risks such as hurricanes, flooding and extreme heat, while also planning for long-term climate-related shifts affecting its properties.

To maintain a resilient portfolio, Prologis incorporates Science Based Targets initiative (SBTi)-validated emissions reduction targets, committing to net-zero greenhouse gas emissions across its value chain, including Scopes 1, 2 and 3. The company integrates energy-efficient technologies, such as smart LED lighting, which cuts lighting-related energy consumption by 60-80%, and high-efficiency HVAC systems to reduce cooling demand. In addition, Prologis deploys on-site solar installations and battery storage to lower reliance on fossil fuels and provide tenants with cleaner energy options.

Beyond emissions reduction, Prologis applies climate risk data to investment decisions to ensure that new developments meet net-zero-ready building design standards. The company’s structured Investment Committee process, overseen by its Executive Committee, requires that all proposed developments above a certain threshold comply with these standards. Additionally, third-party climate risk assessments, including data sourced from Munich RE, enable Prologis to map, score and evaluate exposure to natural hazards across its global portfolio spanning 19 countries. These assessments guide risk mitigation strategies, such as elevating properties above base flood elevation, reinforcing roofs in hail-prone areas and adapting disaster response plans to account for site-specific risks.

By integrating climate risk data across governance, operations and investment strategies, Prologis ensures that its properties remain climate-adaptive, energy-efficient and financially viable. (Source)

Ready to Face the Future

The SEC’s withdrawal of its climate risk disclosure rule may represent a shift, but it does not slow the broader movement toward climate transparency. State regulations, international requirements like the CSRD and demands from investors and banks are all reinforcing the need for clear, reliable climate-related disclosures.

Markets and regulatory dynamics may fluctuate, but core fundamentals remain. The most successful businesses will be the ones that can understand facts, rather than trends, and prepare for change. Assessing and reporting on climate impacts aren’t truly about meeting regulatory requirements — they are financially and strategically imperative. Companies that integrate climate risks into their governance, financial planning and resilience strategies will be the ones who face the future and achieve long-term growth.

How Weaver Can Help

State and international requirements, investor expectations and market forces are all converging to make ESG reporting a business imperative. Companies that proactively manage climate risk and ESG factors are better positioned to access capital, retain top talent and align with evolving market expectations.

Weaver works with organizations to develop ESG reporting strategies that are more than a response to compliance — they are a foundation for long-term success. Whether you need to prepare for regulatory shifts, demonstrate resilience to investors or leverage sustainability initiatives to attract and retain employees, contact us for assistance in strengthening your company’s position in an increasingly competitive landscape.

©2025