An article published recently offers companies three key tips for moving from voluntary to mandatory ESG reporting. Focusing on the SEC’s ruling in March, which mandated climate risk disclosures, here are some recommendations offered to companies in scope of the SEC ruling for reporting.
Reuse whenever possible: Mandatory sustainability reporting is not “reinventing the wheel”, there are numerous existing voluntary standards and frameworks to which companies are already responding to. Notably, the SEC’s final ruling is based on the TCFD which offers 11 recommendations for climate reporting.
Prepare to “assure” your results: ESG ruling will soon be subject to audits and companies should report their data with this in mind. It is also a way of reducing the risk of greenwashing. “Now is also an excellent time to begin differentiating between what assurances and audits entail. Broadly speaking, a ‘review’ engagement will offer limited assurance, while an ‘audit’ engagement, which costs more, offers greater scrutiny and a higher level of assurance. Deciding what’s right for your company will hinge on what’s ultimately required from a regulatory standpoint.”
Think of Digitization Earlier, Not Later: Publishing ESG disclosure into a machine-readable format will save time and be more efficient in the long-term. Preparing your disclosures in this way also means that the data is more comparable, transparent and accountable.
