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May Day: SEC's GHG Ruling Is Stalled but Your ESG Team Doesn’t Have To Be

May 23, 2023

By Kari Hayden Pendoley, Founder of Impact Savvy a strategy firm bringing profit and purpose together for its clients through ESG (Environmental, Social, Governance) and DEIB (Diversity, Equity, Inclusion, Belonging) outcomes.


May is here but the SEC climate risk disclosure ruling is not. Not ringing a bell? Get a quick catch up from my article last year. In short, the Securities Exchange Commission (SEC) signaled it would provide new requirements for publicly traded companies to report greenhouse gas emissions (GHG), a wave of backlash ensued, followed by a public comment period, leaving practitioners on hold while the more controversial items went under a final review. In the middle of this timeline we saw the country’s most significant climate legislation in history - the Inflation Reduction Act - providing momentum when coupled with the final SEC ruling to advance U.S. efforts to cut carbon emissions by 2030. April 2023 had been the promised timeline for final ruling but rumors suggest a final ruling will not come until the Fall. Now experts worry, including Former SEC Commissioner Paul Atkins, that legal challenges including a Supreme Court case will stall the ruling even further.

Ruling Rundown

Here’s the topline on the proposed SEC ruling and required disclosures and reporting. Given the deep complexities of this proposal and its related impacts, the information below is high-level only.

  • Scope 1 and Scope 2 Greenhouse Gas (GHG) Emissions: Publicly-traded companies will be required to disclose direct GHG emissions (Scope 1), indirect emissions related to energy consumed (Scope 2), and any material indirect emissions within their supply chain, from purchased goods, or via investments (Scope 3).
  • Climate-Related Risks and Climate-Related Events: Publicly traded companies must be transparent about how climate-related risks are being identified and if and how those risks could impact the bottom line. Similarly, companies must disclose how severe weather and other climate-related events may impact day-to-day financials and projections.
  • Updates to Reporting: Mandated climate-related disclosures will be a part of its Regulation S-K and Regulation S-X reporting. (e.g., in registration statements or annual reports filed with the SEC, as notes in consolidated financial statements) SEC Fact Sheet
  • Third-Party Sign Off: If a publicly traded company is an accelerated or large accelerated filer, it is required to secure an attestation report (similar to an audit) from an independent attestation service provider on emissions disclosures.
  • Transparent Progress Toward Climate Goals: Publicly traded companies that have made public announcements on climate-related targets or goals will be required to disclose their strategy to achieve those goals AND their actual progress against those goals.


The gap between promise and performance has been a sore subject for investors, rating agencies, and the SEC itself, in discerning actual progress. Morgan Stanley reported in 2021 that two-thirds of companies in the S&P 500 have set targets to reduce GHG emissions. Yet in a review of 6,000+ reports submitted to the SEC between 2019 - 2020, only 33% of companies’ reports contained some disclosure related to climate change. In fact, rating agency MSCI announced it would downgrade the ESG ratings of thousands of ETFs (exchange-traded funds) not meeting the new increased scrutiny on ESG claims to stamp out greenwashing. 

Around the World

Most G20 companies require some level of emissions reporting, but the global trend is moving quickly towards multinational companies improving their measurement, disclosures and compliance with local and international standards. In the EU, the Corporate Sustainability Reporting Directive (CSRD) went into force in January 2023, increasing the number from 11,700 to 50,000 companies impacted by the EU’s ESG reporting requirements. U.S. companies with significant subsidiaries or operations in the EU will be subject to the requirements as well, based on a scheduled timeline. Additionally, Environment and Climate Change Canada announced in January 2023 new and expanded reporting of GHG requirements for companies that operate facilities in Canada under its Greenhouse Gas Reporting Program.

The global reporting community is rapidly working under the IFRS Foundation’s newly formed International Sustainability Standards Board (ISSB) to develop a global baseline of sustainability disclosures, expected completion Q2 of 2023. The ISSB will consolidate the following: Climate Disclosure Standards Board (CDSB), the Value Reporting Foundation, and Sustainability Accounting Standards Board (SASB) Standards. The Global Reporting Initiative (GRI) will remain separate, with an MOU in place with IFRS Foundation to align and cooperate on sustainability-related frameworks. Note that the current common denominator for all of these frameworks is climate and carbon.

Practitioner Takeaway

Given this context, ESG practitioners should not wait for the SEC ruling to begin, or reengage, your leadership on how ESG-related work needs to be included in top-level discussion as an important business driver. Here are a few ways to position the conversation.

  1. Compliance: Risk-Watcher. The SEC will provide a phase-in period for the various requirements, giving companies a timetable to comply before facing any associated violations or fines.
  2. Cost: Act Now / Save Later. The increased demand for carbon sequestration and related vendors and products is already driving up the prices. Moving quickly to secure programs and contracts ensures your budget can stretch to cover your commitments.
  3. Growth: Chase Future Customers. Look ahead to where the business could grow, what new markets are on the horizon, model expansion plans, and what future customers will demand and how to win them with a strong authentic ESG program.
  4. Talent: Upskill Internally or Hire For Soft Skills. A slew of possibilities around career opportunities and professional development continue to emerge in social impact. Look to grow your team by considering upskilling strong internal candidates or hiring candidates with strong soft skills (e.g. negotiating) that can be taught the hard skills (e.g. GHG data collection).
  5. Deja Vu: Go Back to the Business Case. Similar to the proof points that now drive diversity, equity, inclusion and belonging; validated environmental action is now a business imperative, and our future depends on our present action.

We can still hope the SEC will utilize its authority to push for greater engagement, transparency and accountability on this issue. Until then, let’s use this time as a catalyst for forward momentum.

About the Author:

Kari Hayden Pendoley is the Founder of Impact Savvy a strategy firm bringing profit and purpose together for its ESG and DEIB clients. Kari has worked with Fortune 5 companies, Nobel Laureates, Forbes Top 10 Self-Made Women, celebrated social entrepreneurs, and government agencies. Kari is a National Diversity Council certified practitioner, a Board member, and a thought leader writing for industry blogs and speaking at events.