Editor choice

Editor’s pick: What does the SEC’s climate disclosure proposal mean for supply chains?

Note: Today’s post is part of our ‘Editor’s Picks’ series where we highlight recent posts from our sponsors that provide supply chain insights and advice. This article comes from GEP and examines the impact of the SEC’s climate disclosure proposal.

With such current focus on sustainability and climate change, it should come as no surprise that a US regulator is proposing to require companies to report on their climate-related risks and greenhouse gas emissions. Greenhouse effect. It might be surprising, however, that the agency is not the Environmental Protection Agency but the Securities and Exchange Commission.

The SEC’s proposed new rules for climate-related disclosures would require public companies to report companies’ exposure to climate-related risks and greenhouse gas emissions to help investors make informed decisions about consistent and reliable database.

This approach is not entirely new. SEC Chairman Gary Gensler says the proposed rules are consistent with recommendations from the Task Force on Climate-Related Financial Disclosures, and similar requirements are in effect in the European Union and other countries. .

The SEC’s decision presents both challenges and opportunities for companies if they take the right steps today. What are some of the potential implications of the proposed rules?

The competitive advantage of digital transformation

Companies subject to the proposed requirements will benefit from partnering with technology providers who can help them collect emissions data, identify climate-related risks in their operations and find opportunities to reduce costs.

Digitally mature companies that have mapped their supply chain and developed a unified data model will likely have a competitive advantage in scaling up to meet requirements.

Benefits for brand image and investor confidence

Climate-related disclosures can help or hurt a company’s brand image in the public sphere, as well as make it more attractive to investors and more favorable lending terms from financial institutions.

As a result, companies can leverage their climate-related disclosures to increase revenue and talk about how they are adapting to address climate risks.

For a more resilient supply chain, prioritize sustainability

The pandemic has shown businesses that their supply chains can drive innovation and impact bottom lines, instead of just being a cost center.

The SEC’s proposed rules will incentivize companies to work with suppliers with more sustainable practices, thereby building supply chain resilience and helping companies innovate throughout their supply chain.

To read the full article, click here.