US Businesses Prepare for Triple Climate Disclosure Burden
US companies in the US are gearing up for a wave of climate disclosure requirements that are coming from three different directions. The US Securities and Exchange Commission (SEC), the European Union (EU), and the state of California all have their own mandates for companies to report on their environmental impact.
It’s a lot for these businesses to handle. Each set of rules has its own quirks, making it complicated for companies to comply with all three. For example, the SEC only requires reporting on climate change risks if they are considered material, while the EU has a different double-materiality requirement that includes financial and environmental concerns. And California requires disclosure of material risks regardless of materiality, making things even more confusing.
Not only are these rules inconsistent, but they also come with a hefty price tag. US companies could be looking at spending millions of dollars just to keep up with all the reporting requirements. With the estimated costs totaling $12.3 billion for businesses affected by all three rules, it’s clear that this is going to be a major expense for many companies.
And the penalties for noncompliance are nothing to sneeze at either. The SEC, the EU, and California all have their own penalties in place for companies that fail to comply with the rules. These penalties can add up quickly, reaching into the millions for some businesses.
As US businesses gear up for these new disclosure requirements, one thing is clear: it’s going to be a challenging road ahead. With so many different rules to follow and potential costs to deal with, it’s essential for companies to start preparing now. Stay tuned as we continue to track how these new regulations will impact US businesses in the coming months.
