Adrian Johnson
TLDR:
Key points:
- SEC climate rules require new audited financial details for public companies.
- The SEC has lightened the reporting load for auditors, but companies still need to disclose climate-related information.
Article Summary
Accountants and auditors will play a crucial role in implementing the SEC’s new climate reporting rules, which require companies to disclose how they address climate risks and greenhouse gas emissions. While the SEC has reduced the financial reporting requirements compared to the initial proposal, companies still need to provide information on carbon offsets, renewable energy credits, severe weather impacts on estimates and assumptions, and more. The threshold for disclosure has been set at costs totaling more than 1% of income before taxes or shareholder equity.
The SEC’s decision to finalize financial disclosures, even in a scaled-back form, emphasizes the importance of considering climate risk as a financial issue. The regulator’s move signals that climate risks, including severe weather events and companies’ strategies to meet climate goals, are not simply social or environmental concerns but numerical, financial challenges that must be addressed.
