The long-awaited moment arrived on March 6, 2024, as the U.S. Securities and Exchange Commission (SEC) voted 3-2 to adopt final rules for climate-related disclosures.
Although the final rules have been watered down to address concerns about increased costs and operational difficulties associated with calculating emissions, some important points remain.
The final rules will require companies to:
There will be a phased-in compliance period for all registrants based on their filer status. The following chart outlines the anticipated compliance date for each registrant type.
What didn’t make the cut from the original proposal? Virtually all aspects related to greenhouse gas (GHG) emissions reporting.
The original proposal mandated that all filers disclose their Scope 1 and 2 emissions, along with Scope 3 emissions for large filers or registrants with specific climate goals related to Scope 3 emissions. However, the final version only requires large accelerated filers (LAFs) and non-exempt accelerated filers (AFs) to report Scope 1 and 2 emissions.
The kicker? This reporting is contingent on these emissions being deemed material to the company. Scope 3 emissions reporting is not required for any filers under the finalized rules.
While it may be disappointing to some that the finalized rules were watered down, it’s encouraging that the proposed rule was not struck down in its entirety.
On the plus side, there is legislation out there, such as the California climate disclosure bills and the EU’s Corporate Sustainability Reporting Directive (CSRD), that will require U.S. companies to comply with their more stringent GHG reporting requirements.
The finalization and passage of the SEC climate-related disclosures rules signal the increasing consumer and investor demand for corporate sustainability. A growing number of companies are opting to embrace ESG practices, procure carbon offsets, and enhance the transparency and strength of their sustainability commitments.
This is unsurprising given that recent COGNITION Smart Data shows that nearly 60 percent of consumers believe that companies with a strong ESG focus are more likely to achieve long-term financial success than those without. 74 percent have stopped purchasing from a company due to inadequate ESG commitments, and 85 percent are more likely to do business with a company that has a strong ESG focus compared to one that does not.
No longer merely a market differentiator, sustainability has become the new baseline standard for conducting business. To distinguish themselves from competitors, companies must elevate their sustainability commitments by embracing ESG principles and establishing ambitious climate goals.
Navigating the complexities of ESG implementation can be intimidating for beginners, but it doesn't have to be. Green Builder Media is simplifying the process by offering tiered ESG consulting services.
With the release of the ESG for Building Defining Principles, we aim to help companies at every stage of their ESG journey craft or enhance their ESG strategy. Our ESG consulting services include:
Alongside our ESG consulting services, we operate a carbon offset marketplace. This platform offers our clients a convenient one-stop shop to purchase high-quality carbon offsets. Thereby, eliminating the uncertainty involved in the tedious process of finding a credible marketplace offering high-quality, third-party verified carbon offsets.
Whether you're aiming to strengthen your ESG strategy by acquiring carbon offsets, require assistance with your ESG messaging, or wish to embark on an ESG strategy from the ground up, we're here to help you achieve your goals while ensuring compliance with the new SEC climate-related disclosures rules and other regulatory requirements.