Today is the day the SEC presents its proposal for climate disclosures. We will be reviewing the proposal today and publishing a summary with our comments tomorrow.
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Audit Committees and ESG
On another topic close to my heart – audits, I borrow from Dave Lynn over on TheCorporateCounsel.net. Deloitte’s Consuelo Hitchcock, Maynard Cooper & Gale’s Bob Dow, Tapestry Networks’ Eric Shor and Ernst & Young’s Josh Jones discussed in recent webcast for members, “Audit Committees in Action: The Latest Developments” the ever-expanding areas of oversight responsibility for the audit committee, accounting and auditing topics on the SEC’s radar and auditor independence. Here is a nugget from Josh Jones about the role of audit committees in ESG oversight and documentation:
If you’re the audit committee, you’ll need to think about, ‘How have we thought about some more of these ESG risks?’ You’ll also need to consider how the company has thought through its own particular strategy and how that’s working its way into the financial reporting process, including all of these kinds of required kind of disclosure elements in the filing. Consider how the company’s controls are perhaps expanding beyond the normal financial reporting department to really capture those elements when thinking about things like impairment decisions.
It’s casting a wider net and adding more variables to some of those controls and decisions than we have in the past. And in some cases, those impacts may not be imminent and may not be easily discernible. But at the same time, at least asking the question, ‘How has the company thought about those in connection with the financial statements relative to public disclosures and elements of their public sustainability reports?’ It’s all things that audit committees would be well versed to making sure they’re connecting all those dots as it relates to meeting their regulatory obligations.
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