Vol. 2 No. 2 (2022): Journal of AI-Assisted Scientific Discovery
Articles

Integrating ESG into Financial Reporting: A Focus on the SEC’s New Climate Risk Disclosure Rules

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  • Piyushkumar Patel
Piyushkumar Patel
Accounting Consultant at Steelbro International Co., Inc, USA
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Published 19-10-2024

Keywords

  • ESG,
  • financial reporting
Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

How to Cite

[1]
Piyushkumar Patel, “Integrating ESG into Financial Reporting: A Focus on the SEC’s New Climate Risk Disclosure Rules”, Journal of AI-Assisted Scientific Discovery, vol. 2, no. 2, pp. 299–319, Oct. 2024, Accessed: Jan. 01, 2025. [Online]. Available: https://scienceacadpress.com/index.php/jaasd/article/view/260

Abstract

Integrating Environmental, Social, and Governance (ESG) factors into financial reporting has become a critical focus for organizations, particularly with the SEC’s heightened emphasis on climate risk disclosure. As investors demand more transparency on businesses' long-term sustainability and environmental impact, the SEC’s proposed rules aim to standardize how companies report climate-related risks and opportunities. These rules emphasize the disclosure of greenhouse gas emissions, climate-related governance, and the financial impact of climate risks on operations, supply chains, and overall business strategies. This shift challenges organizations to align their ESG initiatives with financial reporting frameworks, ensuring compliance while delivering meaningful insights to stakeholders. The integration of ESG into financial reporting enhances accountability and positions companies to meet evolving regulatory expectations and stakeholder demands for sustainability. This paper explores the implications of the SEC’s climate risk disclosure requirements, highlighting their potential to influence corporate behaviour, drive data transparency, and promote long-term value creation. It also delves into the operational and strategic adjustments businesses must undertake, such as investing in robust data collection systems and fostering cross-functional collaboration between finance and sustainability teams. By embedding ESG considerations into financial reports, companies can strengthen their competitive edge, mitigate climate risks, and demonstrate commitment to responsible business practices. The discussion underscores the transformative role of ESG in reshaping corporate reporting, focusing on achieving compliance while advancing broader sustainability goals.

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