Bracewell’s Charles Still talked with Law360 about risk management strategy following the US Securities and Exchange Commission’s recent climate risk disclosure proposal, which signaled hundreds of companies that fall under the regulator’s watch could face an even heavier compliance burden than anticipated if the rules are finalized.
The rules are likely to lead companies to call on the accounting industry, auditors and independent climate risk consultants for assistance. But there was a consensus that simply outsourcing the requirements won’t cut it.
If they haven’t already, public companies should be thinking about climate-related risk as “part of their overall risk management strategy,” said Still. “That means the involvement of the board and the audit committee. It means getting the C-suite focused on the ultimate need to disclose this sort of information.”
Companies will have to individually assess their needs, ultimately employing some combination of board input, in-house reporting teams, new staffers with climate-related expertise and third-party consultants, and ramping up training across all these areas.
“You’re going to have to designate a reporting team,” Still noted. “If you don’t have that in place right now, you may need to hire the people necessary to gather the information and report it.”
The proposal would require reporting of scope 1 and scope 2 emissions, those tied to operations and energy purchases.
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