The US Court of Appeals for the Eighth Circuit recently granted the Motion to Hold Case in Abeyance (the Motion) in Iowa v. US Securities and Exchange Commission – the case challenging the SEC’s 2024 climate disclosure rules – thereby pausing or delaying the proceedings until further order of the Court.

The Motion, granted on April 24, 2025, was brought earlier in April by a group of 18 intervening states and the District of Columbia and was opposed by the petitioners challenging the rule. Additionally, the Court directed the SEC to file a status report no later than July 23, 2025 advising the Court whether it intends to review or reconsider the rules at issue in the case. 

As mentioned in our previous blog post, this decision puts the rules and the Iowa v. SEC case in a period of stasis and leaves open the possibility that they could be revived under a future administration.

However, the SEC under President Donald Trump may continue to voluntarily stay enforcement or formally rescind the rules through the Administrative Procedure Act, which would also leave potential for a future administration to reintroduce similar rules.

In the meantime, companies assessing climate-related risks and disclosures are encouraged to refer to the SEC’s 2010 guidance on climate-related matters. As reinforced by Acting SEC Chairman Mark T. Uyeda, climate and other ESG-related issues will be viewed through a “materiality” lens to determine whether such information would be important to a reasonable investor when deciding to buy, sell, or vote securities.

It is unlikely that the SEC will continue to scrutinize public companies’ disclosure in the form of detailed climate-related comment letters similar to those issued by the SEC under the Biden Administration. However, the SEC may continue to pursue material misstatement and fraud claims, reaffirming the significance of assessing the strength and rigor of the sustainability-related disclosures and disclosure controls and procedures. Learn more about sustainability-related disclosure controls and procedures in our previous client alert.

It remains to be seen whether institutional investors and proxy advisory firms, such as ISS and Glass, Lewis & Co., will continue to push for ESG-related disclosures and policies, but such efforts may be discouraged by the SEC’s new Staff Legal Bulletin 14M (discussed here) and its revised Compliance and Disclosure Interpretations on Section 13(d) and Section 13(g) of the Exchange Act (discussed here). Notwithstanding this uncertainty, ESG issues remain an investor concern this proxy season.

Since January 1, 2025, shareholders have filed 92 environmental and social-related proposals, which include 10 “anti-ESG” proposals – 6 raising concerns about corporate diversity, equity, and inclusion (DEI) efforts and 4 raising concerns about environmental practices.

However, these numbers represent a significant downward trend – 206 environmental and social-related proposals were filed in the same period in 2024, representing a 55-percent drop in such proposals year-over-year. The outcomes of these and similar proposals in coming months could meaningfully influence the ESG landscape.