More companies are boosting their board members’ sustainability experience as mandatory climate-disclosure rules loom, according to The Wall Street Journal (subscription).
What’s going on: “Among Fortune 500 companies, 25% of board appointees in 2022 had previous experience on sustainability committees, up from 14% in 2021, according to executive search firm Heidrick & Struggles International Inc.”
- Boards have formed more such committees to help their companies make sustainability-related decisions in the run-up to the Securities and Exchange Commission’s release of final climate-disclosure rules.
- The expected regulations would require publicly traded firms to disclose their greenhouse gas emissions (including so-called Scope 3 emissions), incorporate climate reporting into their financial statements and disclose information about their plans to respond to climate-related risks.
- Similar efforts are underway in the European Union.
Why it’s important: “Nearly 40% of business leaders say they aren’t ready to make the disclosures, according to a survey from PricewaterhouseCoopers and Workiva of 300 executives at U.S.-based public companies with at least $500 million in annual revenue. The executives cite challenges stemming from technology, staffing and budgeting.”
- The rules would prove prohibitively costly for many. “Around 61% of PwC–Workiva survey respondents say they believe the rules will cost their companies more than $750,000 in the first year of compliance.”
What we’re doing: The NAM has been pushing back on the proposed changes, which would require manufacturers to institute costly new processes to collect and report climate-related data, NAM Senior Director of Tax and Domestic Economic Policy Charles Crain said.
- “The SEC’s proposed climate-disclosure rules would institute an unworkable mandate that dramatically increases costs and liability for manufacturers,” Crain told us. “The SEC must fundamentally revise its proposed rule to make compliance feasible for manufacturers, including small and medium-sized businesses.”