By Nikos Avlonas, founder and President of CSE
Disclosure-focused regulatory activity in the US has accelerated and the Securities and Exchange Commission is intent on increasing mandatory disclosures on climate-related matters. Mandatory and consistent disclosure will enable companies to gain competitive advantage, ensure a better reputation, get ahead of regulatory changes and identify the investors’ demands. However, they should be prepared for some major pressure, especially the listed ones.
In anticipation of the upcoming reporting season, the SEC will likely concentrate primarily on the following issues:
The commission is expected to propose mandatory ESG-related disclosure rules in early 2022, but even without specific requirements, any ESG-related material impacts should be disclosed under existing SEC rules. Companies should adjust their disclosure procedures accordingly if they intend to provide more detailed disclosure about climate change in their SEC filings, including Form 10-K.
The SEC is trying to bring some degree of clarity to sustainability disclosure and put a financial metric on sustainability data. Sustainability is not a niche interest anymore and it’s crucial that material information can get into the markets in a timely manner.
The rules are expected to draw on the Task Force on Climate-related Financial Disclosures (TCFD) framework, which incorporates recommendations related to governance, strategy, risk management, metrics and targets. Many companies struggle with TCFD implementation, this is why they need to train their employees on technical aspects of TCFD reporting.
Investors have made their own net-zero commitments and to achieve them, they should invest in companies that are engaged with the investment community and the disclosure frameworks. The SEC is concerned that firms are not always providing investors with the information they need to assess on how the pledges are being met. The current voluntary framework cannot meet their expectations for consistent, comparable, and reliable data.
CSE was proudly a supporter of SEC’s consultation process that took place earlier in 2021 and continues to include updates on the upcoming legislation and important sustainability (ESG) developments in its Sustainability ESG Practitioner Programs where almost 90% of ESG Managers of Fortune 500 firms has been already certified.
CSE’s Certified Sustainability (ESG) Practitioner Program on February 24-25 & 28, 2022 will focus on the most important issues of ESG and disclosures in USA. Take this opportunity to upscale your knowledge along with other Business leaders and C-suite executives in corporate responsibility, sustainability, ESG, marketing and investors’ relations.
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