The Institute of Internal Auditors has announced that it is supporting new rules proposed by the Securities and Exchange Commission that would require public companies to say much more about their environmental, social, and governance initiatives.
“The Institute of Internal Auditors applauds this week’s release by the U.S. Securities and Exchange Commission of a proposed new rule that will require public companies to disclose climate-related information in their registration statements and periodic reports, including the 10-K,” the IIA said in a statement.
The types of disclosures covered by the proposed rule include:
- Climate-related risks and their actual or likely material impacts on a company’s business, strategy, and outlook;
- A company’s governance of climate-related risks and relevant risk management processes;
- A company’s greenhouse gas (“GHG”) emissions, which would be subject to assurance for larger companies;
- Certain climate-related financial statement metrics and related disclosures in a note to a company’s audited financial statements; and
- Information about climate-related targets and goals, and transition plans, if any.
“As climate-related and other ESG company disclosure requirements are introduced, we urge regulators such as the U.S. Securities & Exchange Commission to apply a consistent approach to the identification and role of the independent internal audit function for such disclosures,” said Anthony Pugliese, president and CEO of the IIA. “Investors and other stakeholders require consistent, comparable, and reliable information for investment decision-making and risk assessment. An organization’s independent internal audit function plays a central role in providing assurance that the organization has effective internal control and risk management systems around its climate change and other ESG data.”
The SEC proposed the new rules on March 21. A public comment period is now open to field views from stakeholders on the proposal. A vote is likely later this year. 