The sustainability landscape is an uncertain one for US business leaders right now. The long-awaited SEC climate rule was softened, then put on pause altogether. Activist investors are ramping up anti-ESG proposals. The federal government has taken a sharp turn toward deregulation. And the EU has proposed changes to the Corporate Sustainability Reporting Directive (CSRD), which could affect US entities that do a significant amount of business there.
At the GreenBiz25 corporate sustainability conference, Maura Hodge, US sustainability leader at KPMG, spoke with CFO Brew about how she’s advising clients to proceed in the face of this ambiguity.
What have you been hearing about the future of the SEC climate rule?
SEC commissioners have said they’re not going to defend the rule. Honestly, when it came out in March, we said, “This doesn’t have a lot of teeth anymore.” There was still the financial statement component, but it was still pretty small, and everything else is stuff most companies were doing already anyway. In April [we decided] we’re not going to focus on the SEC rule any more, because now it’s being contested.
Should US companies be doing anything different in regard to sustainability, given the political climate right now?
What we are seeing is a change in language. We went through that change last year from ESG to sustainability…[What] we’ve always said is, it makes good business sense, it creates value for the organization…Reporting is required, but the actual actions and the steps that you’re taking don’t really need to change.
Are you seeing US companies pulling back from their sustainability commitments at all?
No, I think they are affirming the commitments that they have made and/or refining some of the targets and goals, because they’re recognizing, “Okay, this is the way that we’ve defined [them] before, but that might not continue to make sense” [and] “These are the actions we actually have in place to achieve [goals]. Are we really committed to that moving forward?”
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What are some of the biggest pain points you’re seeing from clients right now in terms of sustainability reporting?
Honestly, it’s the uncertainty with all the regulation. Previously, we had talked a lot about collecting the data and getting the data in the ways that we need it, putting the controls in place, etc. All that is still there, but it’s eclipsed by the uncertainty about, how much do we actually have to report and what is regulation going to look like?...It adds complexity and stress to everyone’s plate, when the reality is, you still need to do the work. Probably 95% of what you’re doing is still relevant, but there is a piece that may not be, and you don’t know what that is.
How are you advising clients to deal with the uncertainty?
It’s to keep moving forward. It’s very clear that doing a double materiality assessment is still necessary; understanding what you have versus what you need. That gap assessment is really important; working on assessing and understanding your climate risks and how you’re going to address them.
How are clients coping with the multiplicity of frameworks?
They are saying [that] CSRD is the thing we have to do right now. It is the most complex and has the most requirements, and it’s the one that’s coming the fastest. So let’s do that.