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What Executives Need to Know about the SEC’s Ruling on Climate-Related Disclosures

On March 6, 2024, the SEC finalized its much-anticipated climate disclosure rule for public companies.  The final ruling introduces new mandatory reporting requirements and presents a significant shift for public companies, impacting the entire C-Suite (CFOs, CIOs, CSOs, CCO). Here's a breakdown of the key things executives need to know to prepare for these new mandatory disclosures.

What the New Rule Requires:

  • Material Climate-Related Risks. Companies must identify and disclose the present and predicted impact of climate change on their business. This includes physical risks (extreme weather, rising sea levels) and transition risks (regulatory changes, carbon pricing).

  • Risk Mitigation Strategies. Outline the actions your company is taking to mitigate or adapt to climate-related risks. This could involve investments in clean energy, supply chain resilience strategies, or climate-resilient infrastructure.

  • Board Oversight and Management Role. Demonstrate how the board oversees climate-related risks and how management integrates these considerations into strategic decision-making.

  • Climate-Related Targets and Goals (if material). If your company has set climate targets (e.g., net-zero emissions by 2050), you'll need to disclose those, as well as any progress made towards achieving them.

  • Financial Statement Impacts. Companies will need to disclose the financial implications of climate change, including capitalized costs associated with severe weather events and potential write-downs of assets affected by climate risks.

Action Steps for Your C-Suite:

  • Cross-functional Collaboration. Effective ESG reporting requires collaboration between finance, IT, sustainability, and legal teams. Establish a clear ESG task force with representatives from each department.

  • Data Gathering and Management. Climate disclosures hinge on robust data. Assess your current data collection and aggregation practices. Identify any gaps in your information and manual processes that could hinder the efficient collection of data related to climate risks and opportunities.

  • Standardization and Consistency. Ensure consistent application of ESG metrics across the organization. For metrics and guidance, consider leveraging frameworks like the Sustainability Accounting Standards Board (SASB) or the Task Force on Climate-Related Financial Disclosures (TCFD).

  • Technology Integration. ESG software solutions can significantly improve data collection, reporting, and scenario modeling. Evaluate and implement software that simplifies compliance and streamlines ESG integration into existing workflows and your enterprise risk management platforms.

  • Internal Communication and Training: Educate your team on the new SEC rules and their impact on different departments. Foster a culture of transparency and accountability around ESG practices.

How Archer ESG Solutions Can Help:

  • Automated Data Collection. Archer ESG Management can quickly and efficiently gather, aggregate, and analyze ESG data internally and across your supply chain, empowering decision-makers with actionable, accurate, and timely data.

  • Streamlined Reporting. Generate standardized ESG reports that comply with the SEC's new regulations and streamline disclosure processes. Archer ESG Disclosure Management is a comprehensive solution that addresses the growing demand for transparency in ESG reporting and allows for systematic and efficient capture of climate-related disclosures.

  • Materiality Assessment. Archer Double Materiality Calculator helps you quickly and easily assess, calculate, and report on double materiality impacts. Pre-configured assessments based on the E.U. ESRS framework allow for the evaluation of impact and financial materiality assessment.

  • Integrate to the ERM Suite. The Archer platform allows you to connect to governance, risk, and compliance use cases for a holistic and programmatic approach.  This connectivity provides an integrated view that ensures that ESG is not treated in isolation but rather as an integral part of a broader corporate ERM strategy.

The Road to Sustainability

The SEC's new climate disclosure rules mark a significant step towards greater transparency in corporate sustainability practices. By taking a proactive approach, prioritizing collaboration, and leveraging technology solutions, your organization can comply with regulations and demonstrate leadership in the evolving ESG landscape.

Archer’s ESG solution enables organizations to collect and centralize ESG data into a single platform, evaluate the impact of risks and the opportunities on business strategy, understand 3rd party ESG risks, set ESG goals, and produce auditable reporting all from one integrated platform. If you would like to learn more about how Archer ESG Management Solutions can help your organization address the SEC’s latest rule on climate-related disclosures, download the whitepaper, ESG Reporting: From Data to Action. 

For more information or if you would like to speak to an Archer ESG expert, you can contact us here.


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