3 big ways the new SEC rule will change ESG reporting

illuminem summarizes for you the essential news of the day. Read the full piece on GreenBiz or enjoy below:

🗞️ Driving the news: The U.S. Securities and Exchange Commission (SEC) has introduced a new rule on corporate climate risk disclosure that, despite criticisms for not being stringent enough, mandates companies to disclose direct Scope 1 and 2 emissions
• This rule aligns environmental reporting with regular SEC filings, offering clarity amidst diverse international jurisdictions

🔭 The context: After reviewing over 24,000 comments, the SEC's rule, less strict than its 2022 proposal, exempts smaller companies and omits mandatory Scope 3 emissions reporting
• However, it still enforces more detailed emissions reporting, marking a significant shift in how companies account for their environmental impact

🌍 Why it matters for the planet: This rule is a step towards integrating environmental accountability into corporate financial reporting, making companies' direct emissions data more transparent and comparable 
• It supports global efforts to standardize ESG reporting, aiding stakeholders in making informed decisions about environmental sustainability

⏭️ What's next: The rule, phased in over three years, demands "limited assurance" on the accuracy of environmental disclosures initially, with a shift to "reasonable assurance" expected 
• This change might encourage the hiring of ESG controllers, similar to financial controllers, to ensure compliance and accuracy in reporting

💬 One quote: "In order to report your emissions data with confidence and to be able to get them assured and put them into a 10-K, you need to treat them like financial numbers," (Sophia Mendelsohn, former CSO at SAP)

Click for more news covering the latest on ESG and social responsibility