esg disclosures regulations primer | the recap

Jun 8

published 6.9.24

Earlier this year, we hosted a primer on all things ESG Disclosure. qb. reporting experts, Erica Chan Glueck, Sarah Kempke and Kyra Ferber, delivered a crash course covering the California regulations, the new hotly contested SEC climate-related rules and what CSRD might mean for US companies. While we chose not to record this session, given how quickly things are changing, we did capture the highlights here.

Please note that this recap is accurate as of 6.9.24. For questions on the current state of the alphabet soup, please contact us.

California Senate Bills 253 and 261

These are generally grounded in existing standards; read: not groundbreaking, but some progress nonetheless. Here’s the deal:

Companies doing business in California* have to report on Scope 1 and 2 by 2026 (with 2025 data) + Scope 3 data in 2027 (with 2026 data).
There are many resources available to get started — if you haven’t yet, we suggest measuring your GHG emissions to understand your baseline.
Once you complete your baseline GHG inventory, you can uncover the hot spots and understand where your most sizable value chain risks are (e.g., energy efficiency vs. renewable energy procurement) and what your most feasible/economically viable interventions are (e.g., renewables).
Don’t let perfection get in the way of progress. Having an inventory of your data doesn’t have to be the most complete — just having that data as a baseline allows you to make timely/realistic decisions on what levers to pull on first and how to make the most impact.

*Here is the resource we shared about what “doing business in California” means.

SEC Climate-related Rules

These rules are relevant no matter what happens on the litigation side (whether you’re private or public). Here’s what you need to know:

The disclosure requirements are closely aligned with TCFD’s recommendations; companies must disclose information including:

Risk management
Identification and assessment of climate-related risks that materially affect the business, operations, finance, etc.
Scope 1 and 2 disclosure (and methodology) will be required if it’s impactful for the company

Companies must disclose risks relating to natural events: hurricanes, rising seas, etc.
When it comes to timelines (which are likely to change):

The SEC issued a voluntary stay, which could take years
It is still unclear whether these will be upheld, partially upheld, or scrapped entirely

Lastly, as you’re making the case for disclosure internally, keep in mind that these rules were devised to meet investor demands. Having strong, transparent systems, strategy, governance and good sense of GHG emissions is best practice for any company.

CSRD (Corporate Sustainability Reporting Directive)

These disclosure requirements were designed for investors and stakeholders to assess climate and sustainability related risks and apply to about 50,000 companies. Any business with significant operations in the EU or that is listed in the EU will need to comply. Compliance for non-EU parent companies is expected in 2029 at the earliest. Here’s the skinny:

EFRAG has the task of developing the standards to report this information. They also created ESRS, which was officially adopted by the EU in 2023 and includes:

Twelve standards, plus more that are sector-specific
Non-EU parent company standards (these are coming later; development has been delayed until 2026)
A double materiality requirement, asking companies to:

Go to a wide range of stakeholders to evaluate the impact on a company’s finances, people and the environment
Disclose information throughout their value chain

Here are a few things to keep in mind as you get started:

Familiarize yourself with the CSRD requirements in relation to your company size / structure to evaluate what information you will be required to report and when.
Conduct a materiality assessment. When we’re building ESG practices from the ground up with our clients, we like to start by engaging stakeholders. In this case, you can ask what metrics/factors are important, then determine your focus areas. Learn more about materiality here.
If you are thinking about CSRD or GRI, keep in mind the interoperability between GRI and ESRS as well as other frameworks/standards. Make it easier on yourself and your team wherever possible!
Align on your ambition level internally. Are you trying to lead the way? Are you hyper competitive? Are you resource constrained and trying to comply to start out? Be realistic on where you are, and plan accordingly.

To learn more about our ESG strategy or communications services, contact us.