Climate Risk Disclosure in the 10-K: 2026 Practitioner Walkthrough

If your team is still debating whether the SEC's 2024 climate disclosure rule applies to your next 10-K, stop. The rule is stayed and the current SEC administration is moving toward rescinding it. But that does not mean you have no climate disclosure obligations. You do, and the SEC is actively enforcing them through comment letters right now.

This walkthrough covers what your 10-K must include under existing law, what the stayed 2024 rule would have added, how California and the EU create parallel obligations, and the concrete steps to build a defensible climate risk section before your next filing.

Key takeaway: The 2024 SEC climate rule (Release No. 33-11275) is stayed as of April 4, 2024, and not currently in force. Existing Regulation S-K Items 101, 103, 105, and 303, plus the SEC's 2010 interpretive guidance, already require disclosure of material climate risks. Those obligations are live and enforced.

Is the SEC Climate Disclosure Rule in Effect for Your 2026 10-K?

No. The SEC voluntarily stayed its own climate disclosure rules on April 4, 2024, pending resolution of legal challenges consolidated in the Eighth Circuit Court of Appeals. The rules, adopted on March 6, 2024 (Release No. 33-11275), are not currently in effect and companies are not required to comply with them.

Under the Trump administration, Acting Chair Mark Uyeda signalled a significant retreat. In February 2025, the SEC filed a motion in the Eighth Circuit indicating it was reconsidering the rules, and the Commission subsequently voted to withdraw its defence of the 2024 rules. A formal rescission or replacement rulemaking is widely expected but had not been finalised as of mid-2026.

The current SEC leadership, including Commissioner Peirce, has publicly stated that existing materiality-based obligations are sufficient and that the 2024 rule was overly prescriptive. Any replacement rule, if issued, would likely be narrower and more principles-based.

The practical implication: Do not design your 2026 10-K around the stayed 2024 rule. Design it around existing Reg S-K obligations, California law, and investor expectations, and build infrastructure that positions you for whatever comes next.

What Climate Disclosures Are Already Required in Your 10-K

Under existing SEC rules, public companies must disclose material climate-related risks in their 10-K filings. This obligation traces to the SEC's 2010 interpretive guidance (Release No. 33-9106), which clarified that four existing Reg S-K items already capture climate risk when it is material.

Here is where each type of climate risk belongs:

The 2010 guidance specifically identified four categories of climate risk that can trigger disclosure obligations:

1. Impact of legislation and regulation (e.g., carbon pricing, emissions caps)
2. International accords (e.g., Paris Agreement-driven policy shifts)
3. Indirect consequences of regulation or business trends (e.g., consumer preference shifts, reputational risk)
4. Physical impacts (e.g., effects of severe weather on operations, facilities, or supply chains)

None of this requires the 2024 rule to be in force. These are live, enforceable obligations today.

What the SEC's Comment Letters Are Actually Asking

The SEC's Division of Corporation Finance continues to issue comment letters on climate risk disclosures in 10-K filings, citing existing Reg S-K obligations, not the stayed 2024 rule. Reviewing SEC EDGAR comment letter uploads reveals four recurring themes:

1. Boilerplate risk factor language. Staff push back on generic statements like "climate change may affect our operations" that do not describe company-specific risks. If your facilities are in flood-prone coastal areas, say so. If your supply chain runs through drought-stressed agricultural regions, quantify the exposure.

2. Failure to quantify financial impacts. Identifying a risk in Item 105 without discussing its financial magnitude in MD&A is a common trigger. Staff expect Item 303 to connect the risk to actual or reasonably likely dollar impacts on revenues, costs, or capital expenditures.

3. Inconsistency between the sustainability report and the 10-K. If your standalone sustainability report discloses Scope 1 emissions, transition plan milestones, or specific climate targets, and your 10-K is silent on the same topics, expect a comment letter. The SEC views material inconsistencies between voluntary disclosures and SEC filings as a disclosure problem, and potentially a greenwashing enforcement risk.

4. Inadequate MD&A discussion. Staff expect MD&A to explain how identified climate risks have actually affected results of operations, not just that they might in the future. If a severe weather event caused facility downtime or supply chain disruption in the reporting period, that belongs in MD&A with numbers.

For a broader view of how the SEC's comment letter process works across risk disclosures, see SEC Comment Letter Trends: Seven Issues and Three New Focus Areas.

What the Stayed 2024 Rule Would Have Added

Understanding the 2024 rule matters even though it is stayed, because it signals where any future rule will land and because California and CSRD requirements track similar concepts.

The 2024 final rule, had it taken effect, would have required the following beyond existing Reg S-K obligations:

• A new dedicated climate section in the 10-K (new Subpart 1500 of Reg S-K), covering governance, strategy, risk management, and metrics and targets, structured around the four pillars of the TCFD framework (which was formally disbanded in October 2023, with the ISSB assuming responsibility for climate disclosure standard-setting).

• Scope 1 and Scope 2 GHG emissions disclosure for large accelerated filers (LAFs) and accelerated filers (AFs), subject to a materiality threshold, reported in metric tons of CO2 equivalent using GHG Protocol methodology. Scope 3 was dropped entirely from the final rule, a significant concession from the 2022 proposal.

• Financial statement note disclosures for severe weather event impacts (capitalized costs, expenditures expensed, charges, and losses), subject to a 1% of pretax income or total shareholders' equity threshold and a de minimis exception. These note disclosures would have been subject to full audit, not just limited assurance, because they sit inside the financial statements.

• Assurance over GHG emissions, phased in: limited assurance first (for LAFs, beginning with fiscal year 2029 disclosures under the original timeline), then reasonable assurance (for LAFs, beginning fiscal year 2033). The distinction matters: reasonable assurance is the same evidentiary standard as a financial statement audit.

• Board and management oversight disclosure, requiring companies to describe any board oversight of climate-related risks and management's role in assessing and managing them. Critically, companies with no board-level climate oversight would have had to disclose that fact.

The original compliance timeline for LAFs would have required most disclosures for fiscal year 2025 (filed early 2026), with GHG emissions data for fiscal year 2026. That timeline is now moot, but it illustrates the pace regulators expected.

For a deeper look at how the ICFR implications of the 2024 rule interact with your existing controls program, see ICFR and Climate Disclosure Audit: A 2026 Practitioner Walkthrough.

How California and the EU Create Parallel Obligations

Many companies subject to SEC reporting are simultaneously subject to California's climate laws and the EU's CSRD, creating a multi-regime compliance burden that the 10-K must navigate carefully.

Three practical tensions to manage:

Scope 3 is the biggest gap. The SEC dropped Scope 3 from the 2024 final rule. California SB 253 requires it from 2027. CSRD requires it from 2028. If your 10-K is silent on Scope 3 while your California and CSRD filings disclose it, you face the same inconsistency problem that triggers SEC comment letters. Decide now whether to include Scope 3 voluntarily in the 10-K, and if so, how to frame it.

California applies to private companies too. SB 253 covers an estimated 5,300+ companies, both public and private, with over $1 billion in revenues doing business in California. If you are a public company in that category, your California GHG disclosure infrastructure will directly feed your 10-K climate risk section.

CSRD is not far away. US multinationals with significant EU operations face ESRS E1 reporting for fiscal year 2028. The data collection, assurance, and governance infrastructure needed for CSRD overlaps substantially with what any future SEC rule would require. Building it once, for both, is more efficient than building it twice.

For a detailed compliance guide on the California side, see California SB 261 Climate Risk Report: 2026 Compliance Guide.

How to Structure the Climate Risk Section of Your 10-K Right Now

The goal is a climate risk section that satisfies existing Reg S-K obligations, withstands SEC comment letter scrutiny, and positions you for California and future SEC requirements, without over-disclosing in ways that create greenwashing or litigation exposure.

Step 1: Run a Materiality Assessment

Start with a structured materiality assessment that covers both physical and transition risks. Physical risks include acute events (hurricanes, floods, wildfires) and chronic shifts (sea level rise, temperature change). Transition risks include regulatory (carbon pricing, emissions caps), technology (stranded assets, clean energy mandates), and market risks (consumer preference shifts, financing availability).

Document the assessment. The SEC materiality standard asks whether a reasonable investor would consider the information important. For climate, that means assessing both probability and magnitude of financial impact, not just whether climate change is a real phenomenon.

Common mistake: treating climate risk as categorically immaterial because the 2024 rule is stayed. The stay does not affect the materiality analysis. If a physical or transition risk could materially affect your results of operations, it belongs in the 10-K.

Step 2: Draft Item 105 Risk Factors That Are Company-Specific

Generic climate risk factors invite comment letters. A defensible risk factor:

• Names the specific risk (e.g., "increased frequency of Category 4+ hurricanes affecting our Gulf Coast manufacturing facilities")
• Describes the mechanism of financial impact (e.g., "facility damage, production downtime, and increased insurance premiums")
• Avoids framing the risk as purely hypothetical if it has already manifested (see Hypothetical Risk Factor SEC Enforcement for the enforcement risk here)
• Is consistent with what your sustainability report says about the same risk

For guidance on what goes in Item 105 versus Item 303, see Risk Factor vs. MD&A Disclosure Requirements: What Goes Where in 2026.

Step 3: Quantify the Financial Impact in MD&A

Item 303 MD&A is where climate risk becomes financial disclosure. For each material climate risk identified in Item 105, MD&A should address:

• Actual impacts in the reporting period: Did severe weather events cause facility damage, supply chain disruption, or increased energy costs? Quantify them.
• Capital expenditures for adaptation or mitigation: If you spent on flood barriers, backup power, or facility relocation, disclose the amounts and the reason.
• Regulatory compliance costs: Carbon taxes paid, renewable energy credits purchased, compliance program costs.
• Forward-looking impacts: If a transition risk is reasonably likely to affect future results, describe the expected magnitude and timing.

The forward-looking statement safe harbour under the Private Securities Litigation Reform Act applies to certain climate disclosures, including transition plans and scenario analysis, assuming the statements are identified as forward-looking and accompanied by meaningful cautionary language. This protection is available for voluntary disclosures in the 10-K, not just in sustainability reports.

Step 4: Address Board and Management Oversight

Even without the 2024 rule in force, investors and proxy advisors expect disclosure of how the board and management oversee climate risk. Major asset managers including BlackRock, Vanguard, and State Street continue to engage companies on this topic in their proxy voting guidelines for 2026.

At minimum, disclose:

• Which board committee has oversight responsibility for climate risk (audit, risk, sustainability, or full board)
• How often climate risk is reviewed at the board level
• Which management role (CFO, Chief Sustainability Officer, or equivalent) is responsible for day-to-day climate risk management
• How climate risk integrates into the company's overall enterprise risk management process

If you have no board-level climate oversight, the 2024 rule would have required you to disclose that fact. Even under existing rules, the absence of any governance structure is itself a material fact for many companies.

Step 5: Reconcile with Your Sustainability Report

This is the step most finance teams skip. Pull your most recent standalone sustainability report and compare every climate-related claim, metric, and commitment against your 10-K draft. Inconsistencies are the single most common trigger for SEC comment letters and greenwashing enforcement risk.

Specific checks:

• If the sustainability report discloses Scope 1 and 2 emissions, the 10-K should either include them or explain why they are not material to investors.
• If the sustainability report commits to net-zero by 2040, the 10-K should discuss the financial implications of that commitment, including capital expenditure plans and transition costs.
• If the sustainability report uses TCFD or ISSB S2 as its framework, the 10-K risk factor and MD&A language should be consistent with those disclosures.

Step 6: Build the Data Infrastructure Now

The GHG Protocol Corporate Standard is the dominant methodology for Scope 1 and Scope 2 emissions accounting referenced in both the 2024 SEC rule and California's SB 253. If you are building GHG measurement infrastructure for California compliance, you are building the same infrastructure that any future SEC rule will require.

Key decisions to make now:

• Organisational boundary: Will you use equity share, operational control, or financial control approach? This matters especially for companies with joint ventures, minority stakes, or complex corporate structures. The choice must be disclosed and must be consistent with how you define the scope of your consolidated financial statements.
• Emission factors and calculation tools: Document your methodology, sources, and assumptions. Limited assurance providers and auditors will need this documentation.
• Data controls: Climate data flowing into SEC filings needs the same internal control rigour as financial data. If the financial statement note disclosures from the 2024 rule ever come into force, they will be subject to ICFR and full audit.

Step 7: Decide on Voluntary Disclosures and Assurance

The question of whether to voluntarily include GHG emissions data, transition plan details, or scenario analysis in your 10-K is a legal and strategic decision, not just a communications one.

Arguments for voluntary inclusion:

• Reduces inconsistency risk between sustainability report and 10-K
• Responds to investor engagement from major asset managers
• Builds the disclosure muscle ahead of any future mandatory requirement
• ISSB S2, adopted or referenced in over 20 jurisdictions, is increasingly the benchmark investors use to evaluate disclosure quality

Arguments for caution:

• Forward-looking climate statements carry litigation risk if not properly caveated
• Voluntary GHG data without assurance may attract more SEC scrutiny than no data at all
• Over-disclosure of targets or transition plans can create legal exposure if progress falls short

If you include GHG data voluntarily, engaging a third-party assurance provider now, even for limited assurance, signals credibility and builds the relationship you will need when assurance becomes mandatory under California or a future SEC rule.

FAQ

Do we need Scope 1, 2, or 3 emissions data in our 2026 10-K? Not under current SEC rules. The 2024 rule requiring Scope 1 and 2 for LAFs and AFs is stayed. Scope 3 was dropped from the 2024 final rule entirely. However, California SB 253 requires Scope 1 and 2 for companies with over $1 billion in revenues doing business in California beginning in 2026, and Scope 3 from 2027. If you are subject to California law, that data will exist and the question becomes whether to include it in the 10-K voluntarily.

What triggers an SEC comment letter on climate risk? The four most common triggers are: boilerplate risk factor language that is not company-specific; failure to quantify financial impacts of identified risks in MD&A; inconsistency between sustainability report disclosures and 10-K disclosures; and inadequate MD&A discussion of how climate risks have actually affected results of operations.

Is assurance required for climate disclosures in the 10-K right now? No. The assurance requirements in the 2024 rule are stayed along with the rest of the rule. If you include GHG data voluntarily, assurance is not required but is increasingly expected by institutional investors. Note that if the 2024 rule or a successor ever takes effect, financial statement note disclosures (severe weather event impacts) would be subject to full audit, not just limited assurance, because they sit inside the audited financial statements.

How do we handle the inconsistency between our sustainability report and our 10-K? Conduct a reconciliation review before filing. Every material climate commitment, metric, or risk described in your sustainability report should either appear in the 10-K or be explicitly scoped out with a materiality rationale. The SEC treats material inconsistencies as a disclosure failure under existing rules, not just under the 2024 rule.

What is the PSLRA safe harbour for climate disclosures? The Private Securities Litigation Reform Act safe harbour applies to forward-looking statements, including transition plans, scenario analysis, and net-zero commitments, if they are identified as forward-looking and accompanied by meaningful cautionary language. This protection is available for voluntary climate disclosures in the 10-K. It does not protect statements that were false when made or that omit material facts.

Should we align our 10-K climate disclosures with TCFD or ISSB S2? TCFD was formally disbanded in October 2023, with the ISSB assuming responsibility for climate disclosure standard-setting. ISSB S2 is now the global benchmark, adopted or referenced by regulators in over 20 jurisdictions. Aligning voluntary 10-K climate disclosures with ISSB S2's four-pillar structure (governance, strategy, risk management, metrics and targets) is the most future-proof approach and is consistent with what CSRD's ESRS E1 standard requires.

The regulatory picture will keep shifting, but the underlying obligation has not changed since 2010: material climate risks belong in your 10-K. The companies that build the data infrastructure, governance, and disclosure process now will spend far less time scrambling when the next rule lands.