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Source: Change in the Climate: How US business leaders are preparing for the SEC’s climate disclosure rule. Survey commissioned with Workiva. PwC, 2023.
In March 2022, the US Securities and Exchange Commission (SEC) proposed sweeping changes for how US companies disclose data and risks on climate-related issues. The SEC is expected to finalize the rules sometime in Spring 2023. While it’s unknown exactly what the final rules will hold, one point is clear: the changes will be of seismic importance for US companies’ ESG efforts.
To gauge levels of preparedness and common company challenges in complying with the rule, PwC and Workiva commissioned a survey of 300 executives at US-based public companies with at least $500 million in annual revenue.
The findings show two different sides of a coin. On one side, an encouraging story about how US companies have embraced ESG reporting and are implementing it into corporate strategy. But on the other - 39% of leaders surveyed admit their company isn’t fully prepared to meet the expected disclosure requirements.
It’s evident that we’ve reached a tipping point, where many will need to address challenges head-on in order to meet both compliance requirements and stakeholder demands for trust and transparency.
Leaders highlight three key challenges to proposed SEC climate rule compliance: technology, resourcing, and budget
Technology is a top concern of leaders: A majority (85%) are concerned their company “does not have the right technology in place to support ESG reporting that meets the potential new requirements”. One-third report their company is not currently using technology to help with ESG reporting, which is particularly alarming considering that almost all (97%) anticipate technology playing an important role in their company meeting the potential new requirements.
Also on the list: A shortage of talent at more than a third of companies could make compliance that much more of a challenge when the rule comes into effect; budgetary issues are also a major concern.
Leaders report their businesses aren’t yet fully prepared to meet the expected new disclosure requirements
Four in ten (39%) executives share that their companies are not fully prepared to meet new requirements. And at least seven-in-ten business leaders believe a reasonable timeline for filing data for currently proposed requirements is at least two years after the rule goes into effect.
Executives plan to proactively comply with the SEC’s proposed climate disclosure rule and desire independent assurance
Our survey results show that executives recognize the importance of ESG reporting, with 89% already reporting some ESG data now.
The trend shown in our findings is clear: Almost all (95%) say their company is prioritizing ESG reporting more now than before the rule was proposed—and that they are taking proactive, compliance-related measures.
- Seventy percent report they will “proceed with compliance” regardless of when the rule becomes US law.
- 96% say they will proceed with independent assurance, whether it’s required in the final rule or not.
Independent assurance has already played a critical role in preparing for the rule. Executives at companies who currently use an independent assurance firm report much higher levels of preparedness—69% of those who use an independent assurance firm feel very prepared vs. 40% of those who do not.
About the survey
To get a sense of how businesses are thinking about—and preparing for—the final SEC Climate Disclosure rule, Workiva and PwC commissioned a survey of 300 executives at US-based public companies with at least $500 million in annual revenue. Leaders were surveyed online between December 2022 and January 2023, and are defined as senior-level decision makers, ranging from C-suite to Vice President, with knowledge or responsibility for ESG reporting. They represent teams or departments that play a role in ESG reporting (i.e., Business Strategy/Risk Management, Communications, Corporate Affairs, Executive Management, Finance/Accounting, Human Resources/Personnel Management, Investor Relations, Legal/Compliance, Operations/Facilities, Sustainability/ESG).
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