Lessons From the Green Room - You are going to have to report climate information

Robert A. F. Reisner

Even though the SEC’s March 2024 proposal requiring major corporations to report climate information in an “enhanced” and “standardized” manner was put on hold by the courts, there is still the basic requirement for companies to report on material threats (such as worsening climate risks) that may impact their future financial well being. Plus, for companies doing business in California, Europe, the UK and multiple other places, there are possible obligations to report climate related information.

Even limited regulatory reporting obligations may be significant. Companies must report on their changing risk profile when they anticipate major potential climate related costs and impacts. When companies have environmental goals, investors, consumers and senior management will want to know how they are going to reach them.

Reports are gong to have to be made in a marketplace that is increasingly sensitive to the threat of climate change. By the beginning of 2024 it was clear that the world was slipping behind on achieving goals that were set less than a decade ago.  Many audiences will want to know who's at fault?

Public attitude surveys show that sensitivity is increasing, even in the US. The Yale Program on Climate Change Communication has been conducting surveys and national and international studies for more than a decade.  In one of their most recent studies on American attitudes, they found that concern has grown to the point where “Americans who think global warming is happening outnumber those who think it is not happening by a ratio of nearly 5 to 1 (72% versus 15%).”

So in spite of the seeming reprieve that businesses may have had from being ordered to disclose climate related information along with financial information, the need to report on increasing risk is still going to impact brand reputation and investor perceptions.

What’s more, the importance of climate related information is dramatically different for different constituencies.  Investors and consumers will still be interested even if the SEC’s rule is not going to go into effect.  And consumers are not all the same.  Younger consumers are notably more concerned about climate change than older age groups.

My personal encounter with the growing importance of climate related information came in 2016 when I was asked to speak at SXSW.  I had to meet one of the speakers on the panel that I was leading in the Green Room before the event.  That was where I met two other speakers, recent college graduates, and who wanted to require strategic plans to look 35-50 years into the future. 

I paused, fortunately, before telling them that I thought they were being naïve about strategic planning.  As they were explaining that plans needed to reach past 2050 (the goal for limiting global temperature increases set in the 2015 Paris Climate Accords), I did the math.  In 2050 they would still be younger than I was that year at SXSW. 

The world that future generations will have to live in is going to be shaped by plans for mitigating risk that are being written today. Reports on climate related information may not be standardized. But reporting will be demanded. For many audiences reports on risks, investments and impacts are going to matter. Proactive leaders need to do the work to get ready.