Data fans rejoice! The March 2024 U.S. Securities and Exchange Commission climate-related disclosure rule is a huge win for us.

Sharing my five takeaways below:

1. Climate Risks Have a Material Impact on Business. Large public companies must define and disclose climate risks and emissions data, responding to investors’ concerns. This sets a precedent, signaling to the broader market that climate risks are financially material and that companies will be evaluated based on their climate strategy.

2. Disclosure Data Needs to Be Trusted. Climate risk and emissions disclosure data will need to be standardized and assured. Formal and transparent data disclosures can help combat claims of greenwashing and reward companies with well-executed climate strategies.

3. Large Companies with Complex Data Will Lead by Example. While the rule is targeted at only a subset of public companies (Large Accelerated Filers, Accelerated Filers), it will have a broad, indirect impact on many public and private companies. Large, complex businesses will set a precedent for how data is leveraged in climate risk management and accountability.

4. Climate Risk Strategy Will Have an Even Stronger Presence in Board Rooms. While the new SEC ruling is less stringent than others (i.e. CSRD in Europe, SB 253/261 in California), the legal exposure across jurisdictions continues to grow. Company leadership will need to be educated and armed with timely climate-related insights so they can articulate their position appropriately.

5. A Data-driven Strategy Will Be a Competitive Advantage. The SEC’s mandate sets a new baseline for climate-related disclosures, and its underlying data moving forward. Forward-thinking companies that implement data strategies now will benefit from positive stakeholder engagement and differentiate themselves from companies doing the minimum.