Getting Ready

I’m back from more time on the road – most recently at GreenBiz in Scottsdale, Arizona. The first day saw downpours, which cast the desert landscape in an otherworldly beauty. The rain also drove participants indoors, where it quickly became apparent the extent to which people are focused on climate change. The venue was packed. I understand the headcount topped 2,000. As always, Joel Makower and Grant Harrison put on a great show. It was wonderful to see old friends and meet new ones.

One of the pervasive themes, naturally, over the course of the last few months has been how to prepare for the SEC’s upcoming climate disclosure rules. The proposed rules were release in March of 2021 and the SEC’s regulatory flexibility agenda has slated the final rules for adoption in the first half of 2023. The questions I hear consistently are “what is likely to be in and what will be out?” “How should I get ready?” “What will the phase-in periods be?”

These are all good questions and important ones. But, in my opinion, not the most important ones. When folks ask whether they should wait for the rules or get ready now, my answer is always to get ready. But the readiness is not directly tied to compliance with the forthcoming SEC rules. We will know soon enough what the rules will require. We have a good sense of the contours of those disclosure requirements. The question isn’t how to get ready to disclose in accordance with the rules. Rather, I would encourage companies to get ready to address their climate related financial risks and opportunities. That is, let’s not worry for now about what the specific disclosure requirements will be. Let’s avoid treating the rules as a check the box compliance exercise. Rather, let’s use the proposed rule to help guide how we think about the management of climate-related financial risks and opportunities.

I’m biased toward the proposed rule. I’ll admit it. I also am a huge fan of the TCFD, on which much of the proposal was framed, as described in the front part of the document. Given that most public companies are receiving investor inquiries about climate, are asked to report to CDP, are under pressure from customers to report their emissions, and many will be subject to reporting in Europe pursuant to the CSRD (and possibly California under SB253), doesn’t it make sense to take the steps to better understand one’s climate-related financial risks? More on a breakdown of the TCFD in future newsletters.

For now, the big news from Persefoni – the launch of our new newsletter, Climate Decoded! Please subscribe and tell your friends.?