Introduction
Last month, E78 released a comprehensive guide to help public companies navigate the SEC’s new climate disclosure rule. These rules, designed to enhance and standardize climate-related disclosures, have sparked significant debate. While initially adopted, the SEC has temporarily paused certain enforcement requirements, pending judicial review.
The Pushback
The business community is divided over the SEC’s climate disclosure requirements. While some companies view this as an opportunity to lead in Environmental, Social, and Governance (ESG) practices, others see it as a regulatory overreach with potentially significant financial implications.
A coalition of states and public companies filed a lawsuit against the SEC, arguing that these new rules exceed the agency’s authority and could place unnecessary burdens on businesses. They fear that the costs and complexities of compliance may divert resources from core operations and impact profitability.
Despite the pushback, some leading companies are proactively assessing and disclosing climate-related risks, recognizing the strategic value in aligning with investor and stakeholder expectations. For these companies, ESG is not just a compliance issue—it may be a competitive differentiator.
The SEC’s Stay
Currently, the SEC has suspended the requirement for calculating the financial impact of certain climate-related events. However, other aspects of the rule remain in effect, and companies must stay vigilant across various reporting frameworks.
Looking Ahead
As the judicial review unfolds, the outcome could have far-reaching consequences for US public companies and the broader climate change disclosure landscape. Regardless of the ruling, the debate underscores the evolving expectations for corporate responsibility in addressing climate change.
Public companies must prepare for investor, shareholder, and market demands in compliance with relevant reporting frameworks – as applicable to each Company’s jurisdiction and fact pattern, including:
- SEC’s Climate Disclosure Rules
- European Sustainability Reporting Standards (ESRS)
- IFRS Sustainability Reporting Standards
- Task Force on Climate-Related Financial Disclosures (TCFD)
- Climate-Related Laws in California
Navigating this complex environment requires strategic planning. Outsourcing tax and compliance risks can alleviate the burden, allowing leaders to focus on growth. Explore how E78 can support your company’s compliance needs. .