The New SEC Climate Rule and Evolving ESG Landscape

By Jim Burton, Marjorie Whittaker, John Friedman and Mark Lemon of Grant Thornton

The SEC’s proposed rule on climate disclosure confirms that ESG reporting is a business reality and not a trend that will fade and go away.

In March of 2022, the SEC proposed the Enhancement and Standardization of Climate-Related Disclosures for Investors, a rule which would require companies to include certain climate-related information in registration statements and financial reports. The SEC’s action to standardize climate reporting takes into consideration feedback from investors as well as replies to a request for public feedback issued in 2021. According to a potential timeline included in the Proposal, using an example Final Rule issuance in December 2022, the timeline will be quick: Large accelerated filers with a calendar year end will need to be compliant with most of the proposed requirements for fiscal year 2023.

A recent webcast hosted by Janet Malzone, Grant Thornton’s National Managing Partner of audit services, provided an opportunity to hear representative board and corporate leadership perspectives on the evolving disclosure landscape, and the strategic opportunities for companies that look at it as more than a compliance exercise. The discussion featured Marjorie Whittaker, Managing Director ESG & Sustainability, Grant Thornton LLP; Kimberly Ellison-Taylor, CEO of KET Solutions, LLC, and independent board director for Mutual of Omaha, US Bancorp, and EverCommerce Inc.; and Brad Korch, Senior Vice President and Head of Investor Relations at EverCommerce Inc.

Key survey findings

• Descriptor of your company’s current ESG maturity level:

  • 11.5% – ESG is a significant driver of strategy
  • 22% – Making good progress
  • 51% – Basic level or just getting started.

• How many internal and external stakeholders are asking for the company’s ESG data:

  • 33.5% – Either a significant number, many, or majority of stakeholders are asking
  • 43% – Few stakeholders are asking

• Descriptor of confidence in the company’s ability to tackle ESG requirements over the next 2-3 years considering the ongoing talent shuffle and current economic outlook:

  • 32% – Confident or strongly confident
  • 22% – Somewhat concerned

Survey findings from webcast polling questions N=667. Responses do not total 100% as each question contains the opportunity to opt out of responding.

What is the SEC’s proposed rule for climate-related disclosure?

“Investors understand that some companies in their portfolios are better positioned to weather the transition from a high carbon economy to a low carbon economy and they are increasingly using emissions information to assess a company’s exposure to transition risks. That’s why there is a need for investor-grade reporting,” said Whittaker.