Blog  •  March 13, 2024

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Navigating the Latest SEC Climate Disclosure Rules: We’ve Got Your Back

“Don’t sweat the small stuff” were the words of motivational speaker Richard Carlson, author of the popular book series of the same name. At DFIN, we reassure our clients, “Don’t sweat the big stuff.” We have helped thousands of companies manage their U.S. Securities and Exchange Commission (SEC) reporting and filings — and we are here to help you with the long-awaited climate-related disclosure rules mandated by the SEC, also referred to as the environmental, social, and governance (ESG) mandates.

The new SEC mandates are the latest in sustainability-related regulations. In January 2023, the European Union adopted the Corporate Sustainability Reporting Directive (CSRD), a rule requiring EU and non-EU companies with activities in the EU to file annual sustainability reports. Additionally, ahead of the SEC, California passed two new ESG disclosure laws last fall — Climate Corporate Data Accountability Act and Greenhouse gases: climate-related financial risk. — which impact companies doing business in California.

While the new climate rules may make your head spin, we’re here to reassure you that we’ve got your back, whether you’re a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller company, or an emerging growth company.

DFIN is uniquely qualified to support companies of all sizes on their growth path with affordable SEC filing and reporting software, ActiveDisclosure, which enables seamless reporting to ensure compliance with the wide range of regulations, including the latest climate-related disclosure rules. At DFIN, we have years of compliance leadership, advanced and proven software solutions, and strategic partnerships with ESG industry leaders. Read our press release here.

Large and small public companies already rely on DFIN to manage their SEC regulatory compliance reporting. DFIN also serves many private companies that are scaling toward going public. They rely on our reporting solutions to help them file as a public company — while they’re still private. This ensures that when they do go public, they will already be experts at handling these complex tasks.

DFIN Standardizes the Measurement and Reporting for You

Using automatic workflows, DFIN’s ActiveDisclosure helps ensure accuracy and audit-readiness at every step by:

  • Simplifying data collection. ActiveDisclosure pulls together disparate ESG data from across the organization and maps it against a variety of standards, including those set by the Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), Task Force on Climate-Related Financial Disclosures (TCFD), Carbon Disclosure Project (CDP), and the World Economic Forum (WEF).
  • Integrating with Excel for easy data entry and seamless data sharing.
  • Enabling XBRL and inline XBRL (iXBRL) tags to make reporting more accurate and efficient. XBRL is important for standardization and is being widely adopted in the U.S.
  • Providing 80 pre-configured, audit-ready reports that can be filed directly with the SEC — yielding 60-80 percent time savings.

What the SEC Climate Disclosure Ruling Means for You

For more information on the climate rules, see the SEC fact sheet, The Enhancement and Standardization of Climate-Related Disclosures: Final Rules. The SEC also provides an 896-page final rules document: The Enhancement and Standardization of Climate-Related Disclosures for Investors. We summarize both documents as follows:

  • Companies must disclose climate risks that have had or are reasonably likely to have material impacts on operations.
  • Companies must disclose risks in their SEC filings, such as annual reports and registration statements.
  • Companies must disclose activities taken to mitigate or adapt to a material climate-related risk.
  • Large companies must disclose Scope 1 and Scope 2 greenhouse gas (GHG) emissions on a phased-in basis when those emissions are material.
  • Companies must disclose the costs and losses associated with severe weather events and other natural conditions.

Check out this infographic to see when you need to be compliant and how to get up and running quickly.

Why Start Now

Whether your company needs to file the financial effects of climate-related risks on its operations in FY 2025, FY 2026, or FY 2027, DFIN can help you meet the deadlines with confidence.

And it’s best to have an ESG risk and reporting strategy in place now. This is vital for discovering your potential exposures and for tracking your data, while enabling better engagement with your stakeholders and investors, attracting capital, and reducing regulatory risk.

For Smaller Companies, Help is Here

The challenge isn’t the same for all businesses. SEC Commissioner Hester Peirce said that the rule might disproportionately burden small public companies, amplifying the challenges they already face.

“Measurement and reporting are not standardized within companies, let alone across companies. Attempts to treat climate data on par with financial data are strained,” Peirce said in a statement. She added, “The rule is particularly likely to overwhelm small public companies, many of which are already struggling under the costs of being public.”

But fear not. DFIN has the expertise and solutions that empower companies of all sizes to standardize their measurement and reporting of the financial effects of climate-related risks on their operations consistently and reliably — not to mention easily and affordably. We’ve got your back.

Craig Clay

Craig Clay

President, Global Capital Markets, DFIN