What Does a Trump Presidency Mean for Mandatory Climate Reporting?

In recent years, we have watched as both international and national regulations trended towards increased mandatory climate reporting requirements for corporations.  However, now that a new administration will take control of the White House in January, many companies are likely wondering whether this will change. Below are our predictions for the state of climate reporting laws under the Trump administration.

Similar to what we saw in 2016, we will likely see a rollback of climate related regulations at the federal level, particularly by the Environmental Protection Agency (“EPA”) and Securities Exchange Commission (“SEC”). Notably, the SEC’s mandatory climate-related financial risk disclosure rules for public companies and in public offerings, enacted earlier this year (the “Climate Disclosure Rules”), are unlikely to survive a Trump administration. Even before the election, the SEC suspended the Climate Disclosure Rules due to numerous legal challenges.  Even if the Climate Disclosure Rules survive that litigation, the Trump administration under a new SEC Chair may rescind the rules.  Specifically, the Trump Administration may follow the Biden Administration’s approach to rescinding the Department of Labor’s (“DOL”) regulations (generally referred to as the DOL’s ESG regulations). Specifically, in Biden’s May 20, 2021 climate focused Executive Order 14030, he directed the DOL to consider suspending, revising or rescinding the DOL’s ESG regulations. The DOL did in fact pull the ESG regulations and issued new regulations.  It's important to note that the principles-based climate-related disclosure rules that have been in place since 2010 remain in effect but are permissive. 

Whoever succeeds SEC Chair Gary Gensler, will certainly take a hands off approach to climate-related financial risk disclosures.  Indeed, Trump’s likely pick to head the SEC (Hester M. Peirce) has openly expressed her opposition to the Climate Disclosure Rules in the past, labeling them as harmful to “investors, the economy, and th[e SEC.]” 

Despite these predicted changes at the federal level, we expect climate related laws to continue at the state level as well as at the international level. For example, the change in administration will not impact California’s climate disclosure laws (“the Climate Corporate Data Accountability Act”). Nor will it affect the European Union’s (“EU”) Corporate Sustainability Reporting Directive (“CSRD”), requiring certain companies located in or conducting business in the EU to report on sustainability matters, or the European Sustainability Reporting Standards thereunder.  

Beyond the regulatory landscape, the private sector has made investments and shifts in their business models or operations to address the impact of climate related events on their business resiliency.  We do not necessarily see the private sector reversing course on their actions but, as we have previously predicted, businesses will likely be more cautious in how they share their climate-related actions with their stakeholders. 

We will continue to closely monitor this rapidly evolving landscape and provide relevant updates.

If you have questions, please reach out to the authors and the Seyfarth Impact & Sustainability team for assistance.