Signed into law in October 2023, the California Climate Corporate Data Accountability Act, or SB 253, is a gamechanger for ESG in North America. A first of its kind in the USA, all companies operating in California, whose annual revenue exceeds $1 billion, must now disclose their greenhouse gas emissions data in line with GHG Protocol standards. Why is SB 253 important?California is the world’s fifth largest economy. And while ESG has become entangled in America’s culture wars, the blue state has been at the forefront of progressive climate legislation for decades. “It is very significant that the fifth largest economy in the world – the state of California – now requires large corporations to publicly disclose greenhouse gas emissions across their entire value chain. This landmark legislation will have ripple effects far beyond California’s borders and can serve as a model for national and subnational governments to follow,” attests Director of Greenhouse Gas Protocol Pankaj Bhatia. SB 253 will function within a suite of complementary measures and regulations aimed at promoting renewable energy and the use of electric vehicles, reducing emissions, and spearheading the widespread adoption of clean technologies. These efforts, combined with ongoing investment in renewable energy infrastructure, position California’s economy to reap the rewards of the transition to net zero while strengthening investor trust.
Author: ESGTree
ESGTree, a leading environmental, social, governance (ESG) software platform for private capital investors, and Together|Ensemble (TE), Canada’s national conference to track progress on the United Nations Sustainable Development Goals (SDGs), are partnering to host Sustainable Finance Experts at this year’s conference in Waterloo, Ontario.
The CSRD targets financial and non-financial companies covered by the Accounting Directive and the Transparency Directive, and falling into the following categories:
The United States Securities and Exchange Commission (SEC) is poised to release its highly anticipated climate-related disclosure rules for public US companies – a ruling that has been in the making for over a year.
Originally published in March 2022, the SEC proposed that all publicly listed US companies be mandated to report their climate data in alignment with reporting recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD).
When the proposal was then opened for public comment, the SEC received over 3,400 letters, significantly more than it customarily does when seeking public input.
While the SEC ruling applies to public companies, given the current global regulatory environment, along with calls for greater scrutiny of ESG claims within the private equity industry, it is only a matter of time before similar climate considerations be asked of private funds. Moreover, although the proposal will almost certainly face some measure of legal challenges, this will likely not deter 98% of companies from implementing climate reporting, according to a PricewaterhouseCoopers survey of 300 senior executives at US public companies with at least $500 million in revenues
The Regulatory Rise of TCFD Reporting
The United Kingdom now mandates TCFD-aligned reporting requirements for the private sector. The United States Securities and Exchange Commission has proposed requiring publicly traded US companies
Climate risk is now recognized as financial risk — and rightly so. Understanding climate risk, as well as climate opportunities, is a paramount concern for investors, regulators, and indeed, all economies striving towards sustainable business models and net-zero futures. This is why ESGTree has published a comprehensive guide for financial institutions to stay ahead of the game: Decoding Climate Disclosures for Financial Institutions. In this guide, we break down and simplify the much anticipated climate reporting proposals by the US Securities and Exchange Commission (SEC), the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG).
While the ESG regulatory landscape is evolving and complex, ESGTree is with you every step of the way. Between our Carbon Calculator, streamlined data collection platform, automated ESG reports, and benchmarking capabilities, we believe the climate challenge is really an opportunity for business excellence.
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We recently had an insightful conversation with Tanya Carmichael, ESGTree’s Advisory Board Member, ex-Head of Global Funds Private Capital at Ontario Teacher’s Pension Plan (OTPP) and ex-Chair of the Institutional Limited Partners Association (ILPA). In our candid talk below, Tanya shares her thoughts about ESG integration, reporting and how LPs can prevent GPs from drowning in due diligence questionnaires (DDQs).
ESGTree – one of the first platforms globally to automate EDCI data submission – is now collaborating with the ESG Data Convergence Initiative (EDCI) on inbound data submission. By integrating directly with the EDCI data portal, ESGTree can further streamline data submission & validation to the EDCI for ESGTree clients.
When the European Union’s Sustainable Finance Disclosure Regulation (SFDR) came into force in March 2021, it signalled to the world that the EU was ready to take a global lead on ESG reporting and sustainable finance.The move impacted all financial market participants and financial advisors based within the EU. Along with the European Green Deal (which aims to see the bloc carbon neutral by 2050), and the EU’s “green taxonomy” (an industry-based classification system of what can and cannot be marketed as a sustainable product), a potent mix of regulatory mechanisms is set to usher Europe towards an economy in line with the Paris Agreement and the United Nations Sustainable Development Goals (SDGs).
Our fully integrated SFDR Reporting Software addresses these challenges by:1)Translating legislation & technical indicators into an intuitive interface that enables portfolio companies to track & improve their performance.