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The Latest SEC Climate Rule Delay Allows Companies to Get Ahead of the Game

While the delay may be welcomed by many, it provides an opportunity for others to potentially gain a competitive advantage.

The latest delay in the finalization of the SEC’s climate risk disclosure rule means that companies will have yet more time to prepare for the types of disclosures mandated by the agency.

The proposed SEC rule, unveiled in March 2022, requires publicly traded companies to disclose their greenhouse gas emissions and any climate-related risks to their operations.

The SEC has opened the proposal to comments and has repeatedly delayed the finalization and issuing of the rule, potentially due to the volume of feedback received together with its desire to set the optimal directive.

Pushing back the ruling means that company financial statements and disclosures issued under the directive will most likely not be due until at least 2024.

An unwelcome distraction

The delay in finalizing and issuing the rule is a double-edged sword. On the one hand, companies have more time to hire the required resources and do the necessary internal (re)organization to be able to comply with the ruling. Yet on the other, it’s an excuse to delay this groundwork and preparation further.

Many companies are currently focused with ramping up their operations and getting back to pre-Covid levels of sales and revenue. For some, undertaking the necessary legwork to be able to comply with the SEC rule is likely to be viewed as an unwelcome distraction from the daily activities of maximising sales and revenue, with each delay favorably embraced.

Companies should look to take advantage of the opportunities offered by the technology in this space however. For many businesses, gaining a competitive advantage is their main climate change strategic ambition, along with complying with stakeholder requirements. Laying down the groundwork and investing in technology solutions now will not only enable them to be better prepared for when the rule is finalized, it will begin to reap the benefits immediately.

Early mover advantage

Implementing technology solutions in this space can enable businesses to collect and aggregate emissions data, as well as perform carbon emissions calculations. Software dashboards can provide at-a-glance feedback on current situations, as well as facilitate deeper analysis to uncover trends, opportunities, and threats. Reports can be generated accurately, timeously, and efficiently. 

Equipped with more accurate and more complete information and reports, investors can make better operational and strategic decisions. Businesses can protect themselves from climate-related risks such as potential legal threats around environmental and social sustainability, or fines and suspensions resulting from non-compliance with government or industry regulations for example.

Internal resources can be allocated and distributed for more efficient business operations, brand reputations can be upheld regarding DEI and ESG concerns, and businesses can do good sooner and more effectively.

Rather than breathing a sigh of relief and silently welcoming every successive delay to the implementation of climate-related rules and regulations, organizations owe it to themselves to instead investigate the virtues of adopting ESG technology solutions, and the potential competitive advantages that being early adopters thereof may provide.