The future of climate change disclosures: 4 critical risk areas boards should address

Brian McLoughlin, claims officer, Complex Management Liability Claims, Ironshore 

In a 2020 study on climate outlook in business, 78 percent of leaders at the world’s top 500 companies reported that managing climate-related risks will be critical in keeping their jobs over the next five years. They know that climate change is a vital business issue — and it’s particularly urgent for companies in the U.S., where experts anticipate that mandatory climate disclosure requirements are on the horizon.

The Securities and Exchange Commission (SEC) has considered climate change a risk area since 2010, and many companies already voluntarily disclose information. But in July 2021, Gary Gensler, chair of the SEC, spoke about his plan to submit a proposed rule for mandatory climate disclosures — and based on an outpouring of public messages, that proposal will likely pass. Mandatory disclosures should make it easier for buyers and investors to access consistent, comparable data about climate impact, and for companies to showcase their positive work. However, these new regulations can feel daunting for board members, particularly at companies with less experience in this area.

“In July 2021, Gary Gensler, chair of the Securities and Exchange Commission (SEC), spoke about his plan to submit a proposed rule for mandatory climate disclosures — and based on an outpouring of public messages, that proposal will likely pass.”

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