SEC ESG proposal plants the seeds for responsible reporting

Recently, regulators have shown an increased focus on companies reporting their sustainability impact and goals. The SEC’s recent proposal includes an illustrative timeline assuming an effective date of December 2022 for public entities to become compliant with a new set of climate-related disclosure requirements. In the coming years, companies will be responsible for including these disclosures in their annual filings with any material updates to disclosures included in quarterly filings. Compliance with the disclosures will be subject to a phased approach over time. As the strategic drivers of financial reporting, the chief accounting officer (CAO) is well equipped to respond to the proposals and thus help to generate value for their companies through sustainability reporting.

Companies should rely heavily on their CAOs to accurately report their climate-related impacts to investors and other stakeholders, and this gives CAOs an opportunity to partner with their business leaders by helping to execute on their sustainability initiatives. These proposed disclosure requirements give CAOs yet another chance to become strategic contributors by influencing their company’s strategy with respect to its impact on our natural world. CAOs routinely interact with their organization’s financial data, which can be used to help support a clearer picture of progress towards Environmental, Social, and Governance (ESG) objectives. The content addressing this topic shares one common message: it’s critical for CAOs to start preparing now for reporting on a more sustainable future.

How can the CAO create value and go beyond their traditional financial compliance and reporting roles to tackle ESG initiatives?

Planning

• Be engaged as the company sets measurable and achievable sustainability goals
• Design effective systems of controls to achieve and support compliance
• Establish a methodology for classifying and organizing ESG-related data
  

Reporting

• Develop reporting policies that are in-line with business expectations
• Provide the public and investors with a clear view of the organization’s ESG strategy

Executing

• Evaluate what skills and resources will be needed to scale data collection and interpretation

Key stakeholders are closely watching – a company’s sustainability strategy and commitments continue to play an increasingly important role in guiding investment decisions. To help CAOs prepare for these disclosures, check out the KPMG IMPACT page, which contains the latest insights into ESG-related developments from regulators and other relevant insights for the CAO. CAOs should also look at KPMG’s Financial Reporting View library, which has in-depth guides for reference to understand these proposed financial reporting requirements.

For more insights and content relating to the CAO role, please visit the content library on the CAO of the Future webpage.