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Despite regulatory delays and potential legal battles, investors and customers are expected to want regular sustainability-related information from organizations.
A recent article published by GreenBiz has highlighted the consistent and sustained demand for sustainability information, despite the delays to the U.S. Securities and Exchange Commission’s rule to standardize climate-related disclosures.
Upcoming regulations in Europe and California merely emphasize the increasing need for companies to comply with expanding disclosure requirements, regardless of the specific details of the forthcoming SEC rule.
CSRD and California regulations
Under the European Union’s Corporate Sustainability Reporting Directive (CSRD), organizations listed in an EU-regulated market with 500 or more employees must start reporting on social and environmental risks and impacts in 2025. California’s SB 253 rule mandates companies with annual revenue over $1 billion that do business in the state to disclose their greenhouse gas emissions starting in 2026.
Despite potential challenges to these regulations, such as legal battles and the possibility of a conservative shift in European politics, GreenBiz asserts that ‘investors will still demand and expect consistent and comparable sustainability information’, even if it is not necessarily mandated.
The importance of ESG disclosures in investment
With financial statements no longer the sole determinant for investment analysis, ESG disclosures are increasingly valued in investment decisions and organizations’ ability to attract and retain financial capital.
Regardless of regulatory uncertainties surrounding timing and enforcement, there is a growing need for tools and solutions to help companies collect, analyze, and disclose their sustainability data.
Investor and customer-led demand for sustainability-related information underscores the importance of ESG software in assisting companies to align with investor demands, meet customer expectations, and navigate and comply with evolving regulatory requirements.
IsoMetrix Lumina is a comprehensive ESG and GHG reporting software that helps organizations improve the efficiency, accuracy, and consistency of their data collection and ESG disclosures.
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