The US Has Spoken on Climate Risk Disclosure

On March 6, the US SEC issued its final rule on climate risk disclosure.  The US accounts for 42.5% of the global equity market capitalization (followed by the EU and China at ~ 11% each, and Japan at 5%).

Why it Matters

This final rule elevates climate risk disclosures (and sustainable business management) from supplemental guidance issued by the SEC in 2010 to a formal rule with liability consequences that must be included in financial disclosures of public companies and those looking to go public (e.g., IPOs).  This sends a signal to US companies that it is time to act, or accelerate progress, on materiality assessments, gap analysis, and a documented compliance plan for the enterprise.

Top of Mind Board Questions and Concerns

  • How do we stay current with the evolving global regulatory environment?
  • How do we best address the trust deficit that exists with this type of data, and mitigate the risks of fraud and greenwashing?
  • What type of governance structures should we consider to manage risk, implement controls, and develop a scenario planning process?
  • How do I compare with peers in my industry?

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