Posted on July 20, 2024 by Editor

The evolving landscape of climate-related regulations poses significant challenges and costs for companies. This was the focus of a recent discussion led by Marc Siegel, PwC Partner, during a virtual panel hosted by CFO Dive. The panel explored the implications of the SEC's climate-risk disclosure rule, which, despite being approved in March, remains stayed pending legal challenges.

Siegel emphasised the risk of complacency, warning that companies might find themselves unprepared if the rules are suddenly enforced. He pointed out that the market is already moving towards greater transparency, with 98% of S&P 500 companies voluntarily reporting ESG data, and two-thirds of these providing some level of assurance.

To manage compliance costs and complexities, Siegel advised treating climate risk disclosure like any major project. Companies should integrate climate risk reporting with other global regulations to leverage existing voluntary disclosures, avoiding redundancy and reducing costs. He warned against siloing information, stressing the importance of considering all relevant regulations to avoid reworking processes later.

Building a cross-functional team for ESG reporting is crucial. Engaging representatives from across the company ensures alignment with the company's culture and enhances the effectiveness of compliance efforts. The fragmented regulatory landscape adds complexity, although reporting standards have been making promising harmonisation efforts.

The discussion underscored the importance of proactive preparation and a comprehensive strategy in addressing climate disclosure requirements - despite the current uncertainties surrounding the SEC rule.

Companies are encouraged to stay informed and build robust reporting procedures to navigate these evolving regulations effectively. We would add to Siegel's recommendations that building an ESG reporting strategy that is digital from the get-go will put companies in a good position to effectively report XBRL-tagged, structured ESG information - something increasingly required by regulators.

For a deeper dive into these insights, read the key takeaways from the panel discussion here and here.