Prepare Now to Comply with Coming Sustainability Reporting Requirements
Climate-related disclosures that provide investors with consistent, comparable and decision-useful information are the goal of a Securities and Exchange Commission (SEC) regulation that is currently scheduled for publication in October 2023.
The regulation requires specific publicly traded companies to disclose information about:
• Governance of climate-related risks and relevant risk management processes.
• Material impact or likely impact of climate-related risks identified by the company on the business and consolidated financial statements in the short-, medium- or long-term.
• Effect or likely effect of climate-related risks on the company’s strategy, business model and outlook.
• Impact of climate-related events such as severe weather or other natural conditions and transition activities on line items of the consolidated financial statements as well as estimates and assumptions in financial statements.
The timeline for implementation is based on the publication of the final rule. “The SEC originally planned to issue the final regulation in December 2022, then the target slipped to May 2023, and in the most recent update, the SEC indicated the rule is likely in October 2023,” said Ted Kowalsky, director of commercial sustainability for Guidehouse. “Given that timeline, odds are strong that if the rule is published in October, it would likely go into effect for fiscal year 2024, with first reporting in 2025.”