How will the new SEC climate disclosure rule affect internal controls?

Today’s corporate regulatory landscape is incredibly complex. Regulations vary greatly across regions and occasionally overlap. For public organizations and those seeking public offerings, a new reporting requirement was recently adopted that will change how companies disclose certain climate-related data – a change that demands the appropriate internal controls and procedures are in place.

With the adoption of its new climate disclosure ruling, the U.S. Securities and Exchange Commission (SEC) is standardizing and enforcing how companies report on such topics as greenhouse gas (GHG) emission metrics, the impacts of severe weather events, and how climate risks affect their business strategies and outlooks. Despite legal challenges to the new rule, KPMG recommends that organizations get prepared for these new requirements and consider the proper internal controls and processes needed to ensure complete and accurate reporting. Here are four ways they can begin:

• Start with assessing and leveraging existing control environments.
• Consider the need for new controls and processes.
• Formalize and/or update policy and process documentation.
• Integrate climate related controls into your internal control testing program.

For more in-depth advice from KPMG professionals, read our report to understand how your organization can get ready for the ruling’s pending implementation and which internal controls to consider adopting or adjusting.