SEC Rule on Climate Risk Disclosures. Here’s What You Need to Know

On March 6, 2024 the SEC passed a new regulation mandating that publicly listed companies disclose certain emissions risks . We sat down with FigBytes co-founder Ted Dhillon to get his perspectives.

“I’m encouraged by the SEC’s recent approval of their climate disclosure rules, which will undoubtedly shape the future of corporate reporting and accountability. These regulations – while scaled-backed from the original proposal – still signify a pivotal moment in the evolution towards greater transparency and sustainability in business practices.

Considering these new requirements, companies must prepare to meet these enhanced climate disclosure mandates – currently some Scope 1 and 2 emissions and only large and mid-sized public companies.  Organizations will still need robust solutions to track their operational data, generate emissions impacts, and generate these reports for the SEC. While the initial scope of reporting may not encompass all emission sources, it’s prudent for companies to anticipate future expansions of this rule and proactively address their climate-related disclosures now. Moving in this direction also helps with working toward compliance in other jurisdictions like California’s Climate Corporate Data Accountability Act and the European Union’s CSRD. So we strongly urge companies to take a long-term approach to climate disclosures and not limit their focus on what the SEC is immediately requiring.

How can your company prepare? We advise organizations to assemble a dedicated team with cross-departmental ownership of climate disclosures to ensure comprehensive coverage across all aspects of operations. By assigning clear accountability and establishing a committee to oversee the process, companies can begin to streamline their reporting efforts and foster a culture of sustainability throughout the organization.

Also key is conducting a materiality assessment to identify which climate-related factors are most significant to your company’s operations and stakeholders. This assessment serves as the foundation for baseline greenhouse gas emissions and the development of a comprehensive sustainability strategy. A robust sustainability platform can help organizations capture, analyze, and report this climate data across multiple frameworks, ensuring compliance with SEC mandates and other global reporting requirements.

But beyond regulatory compliance, public engagement is increasingly vital for companies looking to demonstrate their commitment to sustainability. By embracing transparency and actively communicating their environmental efforts, organizations can build trust with stakeholders and enhance their reputation as responsible corporate citizens.

So while the SEC’s climate disclosure rules provides the impetus for companies to embrace sustainability and drive meaningful change, taking a proactive approach, leveraging advanced tools, and prioritizing public engagement, companies can also position themselves for success in a rapidly evolving regulatory landscape while advancing their environmental objectives.”