Volume 2: Issue 6

We end this year with a summary of our fifth pillar: Integrated Reporting and Advocacy.

 

At the beginning of the year, we expected that the SEC would have adopted the final rulings on climate reporting before the end of 2022. Alas, this was not to be. As we enter 2023 without guidance from the SEC, we ask, “What is the responsibility of CFOs regarding ESG disclosure?”

 

The proposal is unusual in that it covers both the front part of the 10K — the narrative portion that includes the business description management’s discussion and analysis, etc. — and proposes a section on climate that would include a narrative discussion of the company’s greenhouse gas emissions, as well as its strategy for addressing climate-related financial risks. Further, the proposal also addresses what’s called the back part of the document that suggests that there be a note in the financial statements that addresses the impact of climate-related risks and opportunities. 

 

The proposal will likely require all filers to disclose Scope 1 and Scope 2 greenhouse gas emissions, such as onsite or controlled by the company. Some companies may need to include more information about Scope 3 emissions, which are emissions that aren’t produced directly from the reporting company but from the activities of its value chain. (Note: There is ambiguity about how hard it will be for companies to report their Scope 3, as it is permissible to report on Scope 3 using averages.) The ramifications of the above complexity is that the CFO needs to be thinking both strategically and systematically to fully address new K and Q reporting requirements.

 

Although the regs are not yet in full swing, the ramifications are clear: Get ready for an unprecedented level of reporting. This means that CFOs and CPAs (controllers and accountancies) need to begin to prepare for this inevitability. Like it or not, reporting will take on a new meaning in 2023/24.

 

There is more to cover on this topic (Pillar 5 of our framework) and we will do so in depth during our “How To” workshops at the INTEGRATE 2023 Conference June 20 & 21, 2023 at Fordham University in New York City.

 

Stay informed with the latest insights on our blog:

 

Harvard Law School | In recognition of this modern disclosure environment, this article coined the phrase “dynamic disclosure” to shift disclosure discourse from a binary debate, pitting voluntary disclosure against mandatory disclosure, toward a recognition of the inextricable link between mandatory and voluntary disclosure. Read now

 

Fortune | Experts argue that the CFO will need to drive both the front and back sections to a company’s 10K report. Read now

 

Lexology | This article discusses the recent trends in Delaware law that have led to a revitalization of Caremark and the SEC’s current proposals for enhanced ESG disclosure, and some commonsense steps corporations can take to mitigate this potential new category of risk. Read now

 

Wolters Kluwer | The AICPA & CIMA conference on current SEC and PCAOB developments highlights. Read now

 

Nasdaq | With the hopes of expanding sustainability reporting globally, CSRD will impact approximately 50,000 companies in the EU that will now be required to collect and share sustainability information. Read now

 

PRovokeMedia | The PR industry has been quick to capitalize on the ESG boom, but a wide-ranging backlash requires them to bridge the disconnect between specious rhetoric and measurable progress. Read now

 

Bloomberg Law | Upcoming SEC climate-disclosure rules will likely present a major challenge to public companies, according to climate watcher David Callaway. President Biden’s recently released rules for federal contractors signal how the SEC rules might look, he says. Read now

 

 

Wes Bricker is the Vice Chair of PwC’s U.S. Trust Solutions Co-Leader. In this role he oversees the largest Trust platform in the world, bringing together the firm’s combined Audit, ESG, Digital Assurance and Tax Reporting capabilities to best help clients as they seek to build trust with their stakeholders. As co-leader, Wes is responsible for the quality of service, excellence in the work performed by over 21,000 partners and staff, developing diverse teams, and driving innovation. Previously, Wes was the Chief Accountant for the SEC.