If you’re like many CFO and finance leaders, 2023 was a waiting game when it came to ESG regulations. We anticipated the climate risk disclosure rule from the Securities and Exchange Commission (SEC) to drop in mid-2023, then the fall 2023, and now we’re staring down a new timeline of early 2024.
What’s the Hold Up?
The SEC’s controversial ruling on Scope 3 greenhouse gas emissions has been – to put it generously – a sticking point. Record-breaking comments on the proposal (at last count, more than 16,000) has been part of the delay. The brew-ha-ha has made strange bedfellows: U.S. Senator Amy Klobuchar (D-MN) warned last month against undue data collection burdens borne by farmers, ranchers, and small agribusinesses; and the traditionally more conservative U.S. Chamber of Commerce has signaled a possible lawsuit when the rule drops (sparking SEC Chair Gary Gensler to quip, “Wait, are you already suing us? I just walked in!” while speaking recently with the business lobby). Meantime, the EU, ISSB, California’s Senate Bill 261, and COP28 have all made ESG decisions since the SEC’s proposed rule came out in early 2022.
It remains to be seen if SEC pares back its rule. The good news? There’s still time to prepare, even if you’re not among the 98% of S&P 500s or the 90% of Russell 1000s that voluntarily track and publish ESG data in some form. If the final rule is released this year, it won’t be in effect until 2026. Between now and then, get clear on your readiness with a scope assessment, identify goals as well as existing data sources and gaps, name key personnel to head the effort, and determine if assurance is required. Beyond that, hang in there and keep an eye on the headlines. We will too.
“While you might outsource your supply chain, your logistics, or your investments, you do not outsource your responsibility for them.”
– Paul Polman, Net Positive: How Courageous Companies Thrive by Giving More Than They Take
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