Workiva Inc., the company behind clear reporting for a better world, praises the climate disclosure rules introduced by the U.S. Securities and Exchange Commission. These new rules improve and standardize the disclosure of climate-related data and associated financial risks, with the aim of providing investors with consistent, comparable, and reliable data in annual reports and registration statements.
“The climate disclosure rule increases the importance of climate data in public filings to show its significance to investors in evaluating company performance and risk,” said Julie Iskow, president and chief executive officer of Workiva. “Organizations will need to start thinking about adopting a consistent disclosure process for financial and sustainability information, including assurance, on both numbers and narrative. This is what Workiva does. This is what assured integrated reporting is all about.”
Earlier this week, Workiva published insights from the 2024 Executive Benchmark on Integrated Reporting survey, which included perspectives from more than 800 executives and 100 institutional investors in North America. 92% of institutional investors surveyed acknowledge the importance of ESG data in evaluating long-term financial outlook and organizational risks, and 88% emphasize that ESG should be approached with the same rigor as financial reporting.
The survey highlights a significant advantage for executives whose companies integrate financial and ESG reporting: they are nearly twice as confident in complying with the SEC climate disclosure rules as those who do not (68% versus 37%). Integrated reporting goes beyond regulatory compliance, with 91% of executives agreeing that it provides stakeholders with a comprehensive view of performance and value creation.
These findings emphasize the crucial role of accurate business reporting and underscore the need for companies to prioritize non-financial reporting to promote confidence and transparency for organizations and their stakeholders, regardless of regulatory mandates. Read the full report here.
The SEC released a fact sheet outlining the new requirements, accessible here. Below are the essential points to note from the SEC’s recent climate-related disclosure mandates:
- Scope 1 and 2 emissions, if significant, with reasonable assurance for large accelerated filers and limited assurance for accelerated filers (with a phase-in period)
- An additional financial statement footnote disclosing the impact of climate-related events, mitigation efforts, and transition activities (subject to existing financial statement audit requirements)
- Disclosure of climate-related risks and their material impact on strategy and financial performance
- Quantitative and qualitative disclosures on activities undertaken to mitigate or adapt to climate-related risks (if these activities are undertaken)
- Inline XBRLTM tagging requirements
The new rule will pose challenges for sustainability and financial reporting teams. Consistency between reports will be heavily scrutinized, and many organizations have different reporting timelines for financial and sustainability reports. Addressing these requirements will require companies to adopt technology that can streamline processes, connect data and teams, and ensure data consistency, accuracy, and integrity.
