The SEC’s new ESG rule: What to know to get started

The Securities and Exchange Commission adopted final rules that require registrants to disclose certain climate-related information, outlined in their document, “The Enhancement and Standardization of Climate-Related Disclosures for Investors.” Many organizations are finding themselves at varying stages of readiness—and they likely fall within two main groups: those in the early stages of ESG program development, and those with established ESG functions looking to enhance their reporting capabilities.

Here’s our breakdown of each category and the high-level compliance actions that are most important to each:

Category 1: Early stages

Main focus: Readiness assessment

Companies in this category typically lack defined ESG functions or programs. They might be starting from scratch or have some ESG initiatives that are not yet fully integrated into a formal program. Their focus should be building a solid foundation for ESG reporting—starting with a readiness assessment. Here’s what that looks like:

  1. Conduct a gap analysis: Evaluate any current ESG initiatives and identify gaps in data collection, management, and reporting practices compared to the SEC’s new requirements.
  2. Establish an ESG task force: Form a cross-functional team responsible for developing and implementing ESG strategy—this group will lead the efforts of data gathering, analysis, and reporting.
  3. Develop an ESG framework: Create a structured ESG framework that aligns with industry standards and regulatory requirements, focusing on material aspects relevant to your business.
  4. Initiate data collection processes: Start establishing processes for collecting the necessary ESG data, particularly around Scope 1 and Scope 2 emissions, which are crucial for initial disclosures.
  5. Educate stakeholders: Raise awareness and educate your board, management, and broader organization on ESG principles, the importance of ESG reporting, and the SEC’s new requirements.

Category 2: Established ESG functions

Main focus: Technology enablement

Although companies in this category already have a defined ESG function or program, they’ll need to focus on the “last mile” of ESG reporting—enhancing and supplementing their reporting capabilities with technology. Here’s what to keep in mind:

  1. Integrate ESG reporting tools: If not already in use, digital reporting tools like Workiva can streamline data management, reduce manual effort, and ensure accuracy—providing data-backed insights and a clear view of the health of the business as you scale.
  2. Automate data collection: Lean on technology and automate the collection of ESG data wherever possible. It’s not just beneficial from an efficiency standpoint—it also helps reduce the risk of errors in your data.
  3. Enhance analysis: Employ advanced analytics to deepen your understanding of ESG data, enabling more insightful disclosures and helping identify areas of improvement.
  4. Implement advanced reporting features: Workiva’s dynamic document linking and version control—among other features—help produce high-quality, consistent ESG reports. Feel confident knowing that if a change is made in one document, it will automatically update the same information in the other linked files.
  5. Seek third-party verification: Additional verification of ESG data and reporting practices can add credibility to disclosures. Consider engaging external auditors to review any reports.

Regardless of which category you fall into, taking structured steps towards compliance and improvement is key. We’d love to hear where you are in your journey—and when you’re ready, we’ll provide the expertise and support you need to stay compliant and positioned as a leader in sustainability and corporate responsibility.

Categories: Digital reporting
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