ALEXANDRIA, Va.—Environmental, social and governance (ESG) reporting is quickly moving from a voluntary corporate public relations tool to a regulated B2B communications prerequisite. To fully understand the drivers behind ESG planning and reporting, the Fuels Institute published a white paper that provides a history and outlook on ESG to help guide businesses.
Because ESG reporting is intended to provide business risk information (including climate change abatement approaches) to investors and boards, the Securities and Exchange Commission (SEC) recently proposed rules to govern ESG and provide some needed guidance. Even before this proposal, however, financial industry stakeholders, from investors to bankers and loan providers, were increasing their reliance on ESG principles when making investment and loan underwriting decisions.
Under the proposed rules, phased-in requirements will put new reporting requirements directly on publicly traded companies. In a surprise move, the SEC not only requires these companies to provide their direct CO2e emissions (Scope 1), but also includes the reporting of all indirect emissions (Scope 3). This will require associated companies (public and private) to report emissions to the publicly held SEC reporting company. As written, ESG requirements will touch every organization that is in the supply chain.
SEC requirements are likely to impact industry as early as 2023. If the SEC rules are delayed, large publicly traded companies have indicated that they will move forward regardless.
“The evidence is clear that ESG is not a new phenomenon and is not a temporary consideration,” said John Eichberger, Fuels Institute executive director. “It is becoming deeply embedded within society, and businesses who ignore it do so at their own peril.”
Download the Fuels Institute white paper “The Case for Developing an ESG Plan.”
A recent Convenience Matters podcast episode explores ESG planning, and the NACS Magazine article “Challenge or Opportunity” looks at how ESG is affecting the convenience retailing industry.