Climate change has become synonymous with financial risk. Increased intensity and frequency of natural disasters and rise in global average temperature have led to a surge in physical damage to properties1. Investors need to know their assets’ vulnerability to climate risk and what steps can be taken to mitigate that risk and increase resiliency. We’ve seen this investor demand being met by voluntary disclosure, a heightened regulatory environment, and now the U.S. Securities and Exchange Commission’s (SEC) push for investors to have the right to know these vulnerabilities.
Yesterday, the SEC held an open meeting to discuss proposals for standardized climate-related disclosures in financial reporting. As a result, the SEC voted 3-1 in favor of the proposed climate risk disclosures.
What do the proposed SEC disclosure requirements mean for business?
The proposed disclosures would require public companies to release information on climate risks likely to have a material impact on the business, how those risks have and are predicted to impact the business, and how the company plans to address those risks2. Additionally, companies would need to report their Scope 1, 2, and in some cases Scope 3 greenhouse gas emissions. The proposed disclosures will be comparable to the Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas Protocols.
"I am pleased to support today’s proposal because, if adopted, it would provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers," – SEC Chair Gary Gensler2
How can EBI help?
EBI understands that navigating ESG can be challenging. That’s why we continuously track the regulatory environment and voluntary disclosure frameworks to ensure our clients have the most up-to-date information. We offer a wide variety of services, from benchmarking to advisory, to assist organizations in their sustainability efforts against climate risks, as well as social and governance considerations. Our expertise includes, but is not limited to:
- Task Force on Climate-Related Financial Disclosures (TCFD) Reporting
- Global Real Estate Sustainability Benchmark (GRESB)
- Climate Change Analysis Report (CAR) / Climate Change Risk Assessment (CCRA)
- ESG Checklists
- ESG Strategy, Materiality Assessments, and Reporting
- Energy and Water use, plus Greenhouse Gas Emissions (GHG) Benchmarking