Insights & Perspectives

Expert analysis on ESG regulation, capital markets, and corporate governance.

Boardroom
Regulatory Reporting

Navigating the SEC Climate Rule: A Boardroom Guide

Executive Summary

The Securities and Exchange Commission (SEC) has fundamentally altered the corporate reporting landscape. Climate risk is no longer solely a sustainability concern; it is a financial reporting obligation. This guide outlines what Audit Committees and Boards must know to oversee the transition from voluntary CSR reporting to mandatory, investor-grade disclosure.

1. The Core Mandate: Financial vs. Impact

Unlike European regulations (CSRD) which focus on “Double Materiality,” the SEC rule is strictly grounded in Financial Materiality. Boards must ensure management is identifying climate risks—both physical (e.g., extreme weather affecting assets) and transitional (e.g., carbon pricing)—that have a material impact on the company’s consolidated financial statements.

2. Scopes 1 & 2: The Assurance Clock is Ticking

For Large Accelerated Filers (LAFs), the rule mandates not just disclosure of Scope 1 and 2 emissions, but Limited Assurance followed by Reasonable Assurance.

  • Limited Assurance: The auditor states they are “unaware of any material modifications” needed (similar to a quarterly review).
  • Reasonable Assurance: The auditor provides a positive opinion that the data is accurate (the same standard as a financial audit).
Board Action: Ask your CFO if the current carbon data controls are robust enough to withstand an external audit.

3. The Financial Statement Footnote

A critical, often overlooked component is the requirement to disclose severe weather event impacts in the footnotes of the financial statements if they exceed 1% of a line item. This requires tight integration between the sustainability team and the Controller’s office.

Conclusion

Compliance is not just about data collection; it is about governance. Boards must treat climate data with the same rigor as financial data, ensuring internal controls (ICSR) are documented, tested, and audit-ready.

Data Systems
Technology & Data

From Spreadsheets to Systems of Record

The Problem with Excel

For decades, sustainability teams have relied on spreadsheets to calculate carbon footprints. While flexible, spreadsheets lack the audit trails, access controls, and data lineage required for modern regulatory compliance. In an era of mandatory assurance, a broken formula or a manual data entry error is no longer a minor mistake—it is a material weakness.

What is a “System of Record”?

A System of Record (SoR) for ESG acts as the “single source of truth.” It automates the ingestion of utility data, production volumes, and spend data, applying validated emissions factors automatically.

Key Benefits of Digital Transformation:

  • Traceability: Every number in your final report can be traced back to the original invoice or meter reading.
  • Audit Efficiency: Auditors can be given “read-only” access to the system to verify calculations, reducing audit fees and time.
  • Scenario Planning: Advanced systems allow you to model “what-if” scenarios—e.g., “How will our Scope 2 emissions change if we switch our Texas facility to 100% renewable power?”

The Resilient Sustainance View

We advise clients to move “from disconnected spreadsheets to connected intelligence.” Whether implementing Workiva, Persefoni, or Microsoft Cloud for Sustainability, the goal is the same: treat non-financial data as a strategic asset.

Supply Chain
Supply Chain

Decarbonizing Scope 3: The Supplier Engagement Model

The Scope 3 Trap

For most sectors, over 80% of emissions lie in the supply chain (Scope 3). Historically, companies have calculated this using “spend-based” methods (e.g., we spent $1M on steel, therefore our emissions are X). This is a trap: if you spend more to buy “green” steel, your emissions calculation ironically goes up because the spend increased.

The Shift to Primary Data

To show genuine decarbonization, companies must move to hybrid or activity-based models. This requires collecting actual emissions data from suppliers.

The Supplier Engagement Maturity Ladder:

  • Phase 1 (Education): Hosting webinars to explain to suppliers why you need this data (the “Why”).
  • Phase 2 (Data Collection): Sending simple surveys to gather Scope 1 & 2 data from critical Tier 1 vendors.
  • Phase 3 (Collaboration): Co-investing in efficiency projects with key suppliers to lower the shared carbon footprint.

Strategic Advantage

Companies that master Scope 3 data don’t just reduce risk; they build resilient supply chains. By identifying carbon hotspots, you often identify energy inefficiencies and cost-saving opportunities deep in your value chain.

Double Materiality
Governance & Strategy

Double Materiality: The New Standard

Defining the Concept

Traditional reporting focused on how the world impacts the company (Financial Materiality). Double Materiality, popularized by the EU’s CSRD (Corporate Sustainability Reporting Directive), asks two questions:

  • Outside-In: How do climate and social risks impact our enterprise value?
  • Inside-Out: How do our operations impact people and the planet?

Why It Matters for US Companies

While the SEC focuses on the first half (Financial), global investors and customers operate on the Double Materiality standard. If you have significant operations in Europe or sell to global majors, you will be asked to report on your impacts (biodiversity, human rights, community impact).

The Assessment Process

A robust Double Materiality assessment involves stakeholder engagement—interviewing investors, employees, customers, and NGOs—to map issues on a matrix. This matrix becomes your strategic roadmap, defining which ESG topics require Board oversight and which are operational management issues.

Chicago Illinois Skyline
Compliance & Regulation

HB 3673 Climate Corporate Accountability Act Compliance Services

Your Partner for Scope 1–3 Emissions Reporting & Climate Compliance in Illinois.

About HB 3673

Illinois’ HB 3673 — the Climate Corporate Accountability Act — introduces one of the most comprehensive corporate emissions reporting requirements in the United States. Companies with over $1 billion in annual revenue doing business in Illinois must:

  • ✔ Measure and report Scope 1 & Scope 2 emissions annually
  • ✔ Report Scope 3 emissions within 180 days
  • ✔ Follow GHG Protocol standards
  • ✔ Undergo third‑party verification
  • ✔ Publish disclosures to a state-managed public registry
Reporting begins in 2027. Now is the time to prepare.

RSustain’s End‑to‑End Compliance Solution

1. HB 3673 Readiness Assessment

Applicability review, gap analysis of data/systems, maturity scoring, and a compliance roadmap to ensure full readiness before deadlines.

2. GHG Inventory (Scope 1, 2 & 3)

RSustain develops audit‑ready carbon inventories aligned with the Greenhouse Gas Protocol, covering direct emissions, purchased energy, and all 15 categories of Scope 3 (Value Chain).

3. Data Governance & Reporting Infrastructure

We provide the policies, tools, and structure needed for reliable annual reporting, including templates, data quality controls, and systems integration (Workiva, Persefoni, etc.).

4. Verification & Assurance Preparation

HB 3673 mandates third‑party verification. We manage pre‑assurance internal reviews, evidence file preparation, and verification body liaison to reduce audit risk.

Why Choose Resilient Sustainance LLC?

  • ✔ Deep expertise in ESG, carbon accounting & climate strategy
  • ✔ Specialized Scope 3 and supply-chain emissions capabilities
  • ✔ Experience with U.S. and Canadian climate laws
  • ✔ Technology‑enabled reporting solutions
  • ✔ Flexible engagement models (project-based or annual subscription)

Who We Serve

We support large enterprises across Manufacturing, Retail, Logistics, Data Centers, Utilities, and Healthcare. If your organization operates in Illinois and exceeds $1B revenue, HB 3673 applies to you.