FINANCE THAT SCALES WITH YOU

Easy multi-entity management and reporting

Sage Intacct cloud finance software for financial services

LEARN MORE

And while the final adoption of the new ruling may not happen until 2024, Wes urges business leaders to “pay attention and make preparations now to properly anticipate and prepare for the rule requirements”.

Challenges for business

Wes explains that like other compliancerelated measures, the proposal does require additional resources, costs, investments and time, which may present a burden especially for smaller businesses that are public companies.

“Businesses are at different points in their ESG journey making it easier for some to comply with the proposal, whereas for others, significant investments will be necessary,” he says.

To meet these new requirements, many businesses will likely need to transition to investor-grade and tech-enabled reporting, to “dramatically accelerate their climate change reporting processes, while implementing effective governance and internal controls”.

In a comment letter to the SEC, PwC proposed that the effective date of any final rules should be phased and should also consider the time needed to develop and implement related systems, processes, and controls. “A phased approach would allow businesses to have additional time to review the final rule’s impact, potentially reducing the cost and burden of implementation,” explains Wes.

Ramifications for the leadership team

For senior leaders, the SEC’s climate disclosure rule carries various ramifications but perhaps the most important, according to Wes, is how compliance with the proposed rule will play an important part in telling a company’s overall financial picture to investors, government regulators, and other critical stakeholders.

“Senior leadership will need to continually consider how its climate-related risks position a company across both the short and long term. With these disclosures no longer being voluntary, senior leadership also must be mindful of how climate-related risks offer a new way for investors to compare companies across the same industry.”

Ultimately the role of complying with SEC’s ruling will lie with the CFOs and their role leading a company’s overall finance operations. The climate-related disclosures will filter into a company’s overall filings which squarely sits as the responsibility of the CFO.

Additionally, part of a CFOs role will be explaining how these climate-related risks translate to a company’s overall financial