Understanding The SEC Climate Disclosures
What are the SEC Climate Disclosures and why do they matter?
The Securities and Exchange Commission (SEC) Climate Disclosures, while not yet final and still open for public comment, is a proposed set of rules that would require publicly traded companies to disclose their greenhouse gas emissions and any climate-related risks to their operations alongside their usual financial disclosures.
The SEC Climate Disclosures require more than just a brief overview of an organization’s net-zero goals. These rules are an effort to help standardize climate-related disclosures for organizations. While many organizations already disclose their greenhouse gas footprint (GHG) there are discrepancies in how these things are reported and calculated. This ruling would harmonize emissions reporting, ensuring data is comparable and transparent for shareholders, investors, and the public.
The SEC ruling would require the following:
The disclosure of potential risks and significant effects of climate change on the business, strategy, and future prospects, is in line with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations (such as risks associated with specific assets in certain locations).
Companies would also be required to disclose their Scope 1 and Scope 2 greenhouse gas (GHG) emissions with a phase-in over time, to promote the reliability of GHG emissions disclosures for investors.
Disclosure of Scope 3 emissions would be necessary if they are significant or if the company has established a GHG emissions reduction target that includes Scope 3 emissions. Scope 3 emissions disclosures will likely have an additional phase-in period.
Additional disclosures would encompass both qualitative and quantitative information on climate-related risks, including the financial impacts of severe weather events, natural conditions, and transition activities on specific financial statement items.
Companies would need to disclose their governance practices related to climate-related risks and risk management processes.
The proposal would also mandate that companies:
Develop plans to support their environmental claims, such as net-zero commitments.
Implement assurance measures gradually for accelerated filers and large accelerated filers, allowing for a phased-in approach.
Who needs to adhere to the SEC Climate Disclosures?
The rule proposal would require All US public companies to disclose annually how their organization is assessing, measuring, and managing climate-related risks. These disclosures would be required to be integrated into regular financial filings. If your company is publicly traded and in the US you will be required to meet this new ruling.
Just like you, Sustaira is working hard to stay on top of new and upcoming regulations. Keep in mind that while we are reporting to the best of our ability, you will want to check in with your local policies and regulating bodies to understand if you are required to disclose based on the SEC rulings. The exact applicability and scope of the SEC may vary and should be reviewed according to your local regulations and guidelines.
When will The SEC Climate Disclosures be Implemented?
In short, organizations need to start right now in order to be compliant with The SEC requirements. Originally intended to be published in December 2022 and then delayed to April 2023. Today, it’s looking as though things will be published in the Fall of 2023, which is just around the corner. With the rules likely to commence in either late-2023 or 2024, companies have very little time to waste in preparing themselves.
When should you get started?
The time to start is now! With the SEC Climate Disclosures going public very soon, having a clear understanding of your baselines, goals, and reporting practices is a must-have, and that starts today. For many organizations, gathering, tracking, and reporting ESG and Sustainability data comes with significant challenges that will take time to address. These challenges include but are not limited to:
Sustainability/ESG data is siloed.
No easy and efficient way to aggregate and manage the data
Too many manual processes and Excel spreadsheets: error-prone
Lack of a centralized data hub and a single source of truth
Inefficient reporting.
Difficult to demonstrate the impact
Once a year reporting versus real-time and ongoing insights
Lack of transparency in the supply chain and product lifecycle
Hard to turn Insights into actions.
No real way to track progress and results based on set goals
Unable to engage employees in sustainability
Hard to keep up with constantly changing requirements
In order to be compliant with SEC Climate Disclosures and ensure that your organization
won’t face negative repercussions, it’s important to get your house in order now, so that
reporting can be as
smooth as possible later.
Ready to get started?
Here’s how Sustaira can help!
How Sustaira can help you prepare for The SEC Climate Disclosures
An overview:
Sustaira’s Sustainability and ESG Software Platform offers a growing portfolio of customizable applications that help organizations tackle the common challenges in Sustainability and ESG. Many of these challenges you will face while preparing for the SEC Climate Disclosures. Sustaira applications go beyond the "E" of ESG and include social and governance applications as well. These applications expand to include risk and compliance, Environmental Health and Safety, and more. Because Sustainability and ESG are broad topics, users need a more broad platform and approach which Sustaira offers.
Sustaira understands that Sustainability and ESG is not just a single disclosure or yearly report, but instead, it’s a journey that we outline through the Sustaira Sustainability Circle seen above. Sustainability and ESG start with goal setting, data aggregation, and awareness, taking action, seeing the results and rewards of those actions, and then of course the ever-important reporting and disclosures.
Sustaira is the only software and solutions provider that implements a low-code, building block approach to ESG and sustainability. Using this low-code approach, Sustaira has pre-built application templates or building blocks within and between all domains of goals, actions, etc. If you look at any of the categories on the Sustaira Sustainability circle you will see a solution that pertains to that domain. All Sustaira applications or solutions are meant to be a starting point that you then expand on, customize, and add to at any time. This allows you to implement a solution sooner, with the flexibility of customization to ensure that whatever you do adopt, completely fits your needs now, and has the option to grow and change with you as those needs or requirements change. With Sustaira, you can be sure that you will be prepared for the SEC Climate Disclosures, and ensure you can stay compliant should the requirements shift moving forward.
Finally, Sustaira has an open and collaborative partnership approach in its go-to-market and implementation approach. With a strong partnership with global Fortune 500 organization, Siemens and their leading low code platform, Mendix, Sustaira offers a building block approach that translates into highly flexible customization options, seamless integration capabilities, and overall agility to allow organizations to adjust to any future stakeholders requirements or policy changes that are expected. The organization is also strategically partnering with global and regional ESG and Sustainability Consultancy firms and technology providers and implementation partners. Sustaira’s local presence across the globe directly and through partners, enables an intimate understanding of the country’s needs, resulting in tailored Sustainability and ESG enterprise solutions.
Sustaira Solutions that can help:
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Sustainabiltiy and ESG Goals & KPI Tracker
The first step in most journeys is planning. You will need to define your priorities, set goals, and outline which KPIs are going to best represent if you’ve been successful in your efforts, or if something needs to be adjusted. Managing your goals is made easier with Sustaira.
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Carbon and Emissions Accounting Scope 1, 2 and 3
The Carbon Accounting Application is used by organizations to get an overview of their Scope 1, 2 and 3 emissions. Allowing organizations to make informed decisions around their sustainability efforts, not only internally, but throughout their supply chain.
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Sustaira's ESG Disclosures and Reporting Template
The ESG Disclosures and Reporting application is able to walk users through their disclosure process using a prebuilt disclosure structure that can be applied to frameworks such as CSRD, SEC, GRI, CPD, SASB and more. This app can pull info from Carbon Accounting to auto-populate your disclosures.
Need help exploring software and solutions providers?
Download the Evaluation Criteria Framework for ESG & Sustainability Software Now!
This framework is an easy to use checklist that organizations can reference as to do comparisons. This gives you a space to walk through all of the ESG and Sustainability Criteria that Sustaira has aggregated for organizations to consider when looking for a sustainability and ESG solution. Compare between multiple vendors and find the best fit for you!
Keep me up to date!
We are committed to staying up to date on new SEC Climate Disclosures updates or requirements. Join our waitlist to get updates regarding SEC Climate Disclosures as well as helpful resources!
What People Are Saying about Sustaira
“Sustaira makes it easier to aggregate and report sustainability and ESG data, while also making it actionable, insightful and rewarding.”
— Suzanne Kopcha, Siemens Digital Industries Software Vice President of Strategy
“Sellen needed a Sustainability Platform that would enable us to track metrics for our current reporting commitments and provide additional features as our sustainability journey continues. The platform and custom application that we co-created with Sustaira enabled us to expand the breadth of our carbon accounting efforts and integrate them with our Contractor’s Commitment reporting”
— Angi Rivera, Sellen’s Director of Sustainability
“The flexibility of Sustaira’s platform provides a robust solution and centralizes sustainability reporting challenges for companies of any size. In partnering with Sustaira’s development team, we have created an application to accelerate a data-driven future”
— Jenny Moshea, Sellen’s Chief Information Officer
“Sustaira is great, and very user-friendly. It’s a platform any organization can utilize to improve stewardship and sustainable practices in terms of: Accounting, metric tracking, action items tracking, footprint calculators and educational resources. We see great value in our Goals and KPI Tracker Application. It offers a lot of direction and capability that helps us move the needle in sustainability.”
— - Tyler Kanczuzewski, Sustainability Manager at Logistick
More ways to adopt Sustaira
Sustaira has created building-block applications that address the key challenges in Sustainability and ESG, but unlike other applications, these have the flexibility and customization options to fit any of your unique needs. Select the applicable apps from our menu and see which applications you would want to start ith. We also develop completely custom apps. All your apps are then centralized in the Sustaira launchpad. Sustaira makes it easy for you to get started today!
Sources:
https://www.sec.gov/rules/proposed/2022/33-11042.pdf
https://www.pwc.com/us/en/services/esg/library/sec-climate-disclosures.html?WT.mc_id=CT3-PL300-DM1-TR1-LS3-ND30-PRG7-CN_ESG-Google&gclid=CjwKCAjwhdWkBhBZEiwA1ibLmNX3SrN7ljJSgqSUUKi9-NjtMqP8S2JgreCQm_UXoRW__GVX84pmcBoCtBkQAvD_BwE&gclsrc=aw.ds
https://www.thomsonreuters.com/en-us/posts/esg/sec-climate-rules/
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/sec-climate-disclosure-rule-delayed-until-fall-former-commissioner-says-75479173