The recent final climate risk disclosure rules issued by the Securities and Exchange Commission (SEC) and two new climate laws signed into law in California have put a lot of pressure on businesses to comply. Kristen Sullivan, a partner at Deloitte, emphasizes the importance of businesses understanding and adhering to these new regulations in order to stay ahead of the curve and turn this burden into an opportunity.
The SEC implemented these rules due to the increasing financial impacts of extreme weather events on businesses. Investors are seeking reliable, consistent, comparable, and timely data on climate-related issues in order to make informed decisions. Companies that are able to obtain and report this data may be able to identify inefficiencies and market opportunities that can give them a competitive advantage and affect their bottom line.
Despite the challenges associated with complying with these new regulations, companies may be able to leverage the potential federal financial incentives offered by recent legislation to support their sustainability efforts. Sullivan believes that regulation can be a catalyst for business transformation and integration, leading to improved strategic decision-making and competitive advantages.
Disclosure of climate-related financial data builds trust with stakeholders and demonstrates a commitment to transparency and accountability. Independent validation of this data increases trust and loyalty among employees, customers, suppliers, regulators, and investors. Businesses that demonstrate progress towards achieving their strategic objectives are more likely to be trusted and successful in the long run.
While legal challenges to the new rules are ongoing, Sullivan stresses the importance of preparing to report this data as soon as possible in order to stay ahead of the curve and seize the opportunities it presents. Companies that strategically prepare for compliance with these regulations will be able to reveal insights and data that support their strategic goals and help them capture new opportunities.
Overall, focusing on strategic preparation and viewing compliance with these regulations as an opportunity for transformation and growth can help businesses navigate the complex landscape of climate disclosure rules and emerge as leaders in sustainability and environmental stewardship. By embracing these new regulations and leveraging the data they provide, businesses can position themselves for success in a rapidly evolving decarbonized economy.
