Article
How to prepare for the proposed SEC ESG disclosure requirements
Aug. 22, 2022
In March 2021, the SEC announced plans for a greater focus on climate-related risks, which included the formation of an SEC Climate and ESG taskforce to oversee the initiative. In March 2022, the SEC sought public comment on the proposed climate change related disclosures and is currently reviewing comments with a final rule anticipated later this year (2022).
The proposed disclosure ties to the Task Force on Climate- Related Disclosures (TCFD) and the newly formed International Sustainability Standards Board (ISSB), a part of the International Financial Reporting Standards (IFRS) Foundation. The TCFD focuses on governance, strategy, risk management, and metrics and targets of climate change disclosures. Companies should view their disclosure development process with these focus areas in mind and it’s important to prepare early to avoid being caught off guard. How can your organization get started?
Steps to prepare for disclosure requirements
As organizations await the final rule, there are a few suggested steps to take to prepare for the disclosure requirements:
Develop your ESG strategy and assess your current state
Regardless of if you’ve produced a robust sustainability report previously or are just beginning on your ESG journey, consider the following:
- Have you identified ESG strategy goals, metrics or targets?
- Are your ESG goals aligned with your corporate strategy?
- What actions and resources are needed to support these goals and strategies?
Educate and upskill your team
ESG may be a new focus for many companies who might lack the internal expertise to successfully implement and deploy these programs, which requires an understanding of the roles of risk management and oversight related to ESG. Identifying the skill gap and education necessary for the following support teams is crucial for a successful strategy:
