Companies that have not started identifying potential areas of non-compliance with upcoming sustainability regulations such as the SEC climate disclosure rules are behind the curve, says a new survey
Executives in the US, Canada and Mexico expect to face a series of challenges over the next 12 months to comply with growing sustainability disclosures, according to the executive benchmark on integrated reporting survey by reporting platform Workiva.
The study asked executives and institutional investors across North America about their preparedness to comply with the EU’s Corporate Sustainability Reporting Directive, California’s climate disclosure laws, and the US Securities and Exchange Commission’s proposed climate and human capital disclosures. A total of 894 corporate executives and 103 institutional investors were surveyed in December 2023.
Sixty-seven per cent of the executives said they were concerned about their company’s ability to comply with new reporting requirements and 65 per cent said they feared their business reporting technology was insufficient for meeting the new standards.
The SEC is set to release its final and much-awaited climate disclosure rules this week.
Workiva vice-president and industry principal Steve Soter said in a LinkedIn post that companies will have to assess how the SEC’s new climate disclosure rules will be enforced, given the commission has already taken action against misleading environmental, social and governance statements under its existing framework.
On the investors’ side, almost all (91 per cent) survey participants agreed the new rules will help them make more informed decisions and better assess a company’s financial outlook and risks.
A majority of investors (82 per cent) also said they had not adjusted their investment strategies and decisions, despite the recent backlash in the US against ESG.
A common belief among both executives and investors is that third-party assurance for non-financial reporting is critical, regardless of whether it is mandated in regulation or not.
The full survey report is accessible here.