ESG Financial Reporting

This issue highlights accounting considerations for airlines, SAF developers, and partners related to purchases and sales of (1) SAF and (2) SAF emission reduction reporting rights. In addition, it discusses efforts to develop a SAF certificate framework (e.g., by the World Economic Forum) and a centralized registry for claiming the environmental benefits of SAF (e.g., by the Sustainable Aviation Buyers Alliance, the Energy Web Foundation, and the Rocky Mountain Institute).

This Heads Up discusses COSO’s recently issued landmark interpretive report on how its "Internal Control — Integrated Framework" (the “COSO Framework”) can apply to sustainable business activities and information. The report illuminates how the COSO Framework’s 5 components and 17 principles can help companies establish an effective and integrated system of internal control over their material or decision-useful sustainable business information.

This Heads Up highlights key provisions of the European Union’s recently approved Corporate Sustainability Reporting Directive (CSRD), whose sustainability reporting requirements are much broader than those proposed in the United States and will affect all companies with significant operations in E.U. jurisdictions, including U.S.-based companies with as little as one subsidiary or branch in the European Union.

This Financial Reporting Alert examines certain potential impacts of climate-related matters on an entity’s financial accounting and reporting in the context of the existing accounting guidance and current regulatory environment. While these impacts will vary depending on the entity’s industry and other factors, all entities should evaluate environmental-related financial accounting and reporting implications.

This Accounting Spotlight examines environmental credits and certain current U.S. accounting practices, regulatory developments, and other accounting issues associated with them. Originally issued in October 2022, this publication was updated to reflect the expanded coverage of this topic in Deloitte’s November 16, 2022, Financial Reporting Alert on financial reporting considerations related to environmental events and activities.

This issue summarizes and compares key provisions of (1) the SEC’s March 2022 proposed rule on climate-related disclosure, (2) the International Sustainability Standards Board’s March 2022 proposed standards on general sustainability and climate reporting, and (3) the European Financial Reporting Advisory Group’s April 2022 proposed European Sustainability Reporting Standards developed in accordance with the European Commission’s proposed Corporate Sustainability Reporting Directive. The newsletter also discusses considerations for companies as they take action to prepare for the changing disclosure landscape.

This issue expands on our March 21, 2022, executive summary by providing details and considerations related to specific disclosures that would be required under the SEC’s proposed rule "The Enhancement and Standardization of Climate-Related Disclosures for Investors." Under the proposed rule, such disclosures would include metrics that reflect the impact of climate-related events, transition activities, and expenditures; financial statement estimates and assumptions; greenhouse gas emission data; governance plans; and climate-related risks, among other information.

This issue discusses the SEC’s proposed rule The Enhancement and Standardization of Climate-Related Disclosures for Investors. Under the proposed rule, a registrant would be required to provide disclosures about greenhouse gas emissions (with attestation for Scope 1 and Scope 2 disclosures), certain financial statement disclosures, and qualitative and governance disclosures within its registration statements and annual reports (e.g., Form 10-K). Comments on the proposed rule are due 30 days after its publication in the Federal Register or May 20, 2022, whichever is later.

This issue summarizes key insights from this year’s AICPA & CIMA Conference on Current SEC and PCAOB Developments. The conference brings together key stakeholders to discuss developments in accounting, financial reporting, auditing, and other related matters, serving as a platform to address emerging areas of focus and trends affecting the profession.

This issue discusses recent and anticipated moves toward improving the consistency and comparability of companies’ sustainability disclosures in their general-purpose financial reporting, including a key development announced at the 26th United Nations Conference of the Parties (COP26).

This issue takes a strategic look at some of the most common accounting and reporting considerations associated with climate-related matters in the current business environment along with relevant SEC developments.

This issue discusses a sample letter recently released by the SEC’s Division of Corporation Finance (DCF) that highlights the types of comments the DCF may issue to public companies regarding climate-related disclosures.

This issue discusses the increasing importance of providing consistent, comparable, and transparent disclosures about environmental, social, and governance (ESG) matters. Companies should begin to prepare themselves for mandatory climate-related and other ESG disclosures, since this regulated landscape for ESG disclosures will differ significantly from the current landscape of voluntary reporting. In the forthcoming regulatory environment, it will be essential for companies to improve the completeness, accuracy, and reliability of their ESG-related disclosures by employing sound governance, oversight, and data-management processes and controls.

This issue examines certain potential effects of environmental, social, and governance (ESG) matters on a company’s financial accounting and reporting in the context of the existing accounting guidance and the current regulatory environment. While these effects will vary depending on the company’s industry along with factors such as relevant regulatory, legal, and contractual obligations, all entities should evaluate ESG-related financial accounting and reporting implications.

This issue discusses the SEC’s recently issued request for input on climate-change disclosures. Interested parties are encouraged to provide feedback to the SEC by June 13, 2021.

This issue extracts key insights from this year’s three-day AICPA Conference on Current SEC and PCAOB Developments. The conference featured speeches and panel discussions by members of the SEC, PCAOB, FASB, and other professional groups on current accounting, reporting, and auditing practice issues. Although the event was fully virtual this year in light of the COVID-19 pandemic, conference participants shared important updates and reminders related to maintaining high-quality financial reporting.

This issue discusses the growing market movement toward enhanced human capital management disclosure, both as a result of the SEC’s final rule that amended Regulation S-K and of gathering momentum in the marketplace toward more standardized and relevant ESG disclosures, including human capital metrics. The Heads Up also provides considerations related to identifying and evaluating human capital disclosures in light of the amendments to Regulation S-K.

This issue discusses market developments related to a company’s environmental, social, and governance (ESG) disclosures and steps companies can take to enhance the quality of their ESG reporting.

This issue discusses the SEC’s recently issued Final Rule Release No. 33-10825, which modernizes the disclosure requirements in Regulation S-K, Item 101, “Description of Business”; Item 103, “Legal Proceedings”; and Item 105, “Risk Factors.”

This issue discusses the SEC’s recently issued proposed rule Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, which would modernize Management’s Discussion and Analysis (MD&A) and certain financial disclosure requirements in SEC Regulation S-K.

The AICPA Conference on Current SEC and PCAOB Developments provides a forum for key stakeholders involved in the financial reporting process to come together and discuss issues and trends affecting accounting, financial reporting, auditing, and other matters. Attendees at this year’s conference left with a greater appreciation for the critical role stakeholder communication plays in maintaining investor confidence and in the delivery of high-quality financial reporting.

This issue discusses various developments in the marketplace that have resulted in increased pressure on companies to disclose or improve the transparency of environmental, social, and governance topics and the move by some companies toward disclosing such information in their financial filings.

On March 30, 2023, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) released a study with supplemental guidance, “Achieving Effective Internal Control Over Sustainability Reporting (ICSR): Building Trust and Confidence Through the COSO Internal Control — Integrated Framework.”

The Center for Audit Quality (CAQ) has released a publication, “The Role of the Auditor in Climate-Related Information.”

The GASB has issued a publication, “Intersection of Environmental, Social, and Governance Matters With Governmental Accounting Standards.”

At its May 25, 2022, meeting, the FASB discussed its projects on (1) interim reporting: narrow-scope improvements, (2) agenda consultation, and (3) ESG-linked financial instruments.

The SEC has issued a proposed rule, "Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices." The proposal would “promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of environmental, social, and governance (‘ESG’) factors.”

At its May 11, 2022, meeting, the FASB discussed its projects on the following topics: (1) accounting for exchange-traded digital assets and commodities, (2) targeted improvements to income tax disclosure requirements, and (3) accounting for financial instruments with environmental, social, and governance (ESG)–linked features and regulatory credits.

The International Sustainability Standards Board (ISSB) has issued two exposure drafts (EDs): ED/2022/S1, “General Requirements for Disclosure of Sustainability-related Financial Information,” and ED/2022/S2, “Climate-related Disclosures.” The EDs would provide “requirements for the disclosure of material information about a company’s significant sustainability-related risks and opportunities that is necessary for investors to assess a company’s enterprise value.”

The SEC has issued a proposed rule, "The Enhancement and Standardization of Climate-Related Disclosures for Investors." The proposal would require “registrants to include certain climate-related disclosures in their registration statements and periodic reports, including information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.”

The IFRS Foundation has announced that it is establishing a new International Sustainability Standards Board (ISSB). The ISSB’s objective is to develop global standards and disclosure requirements “that address companies’ impacts on sustainability matters relevant to assessing enterprise value and making investment decisions.”

The Center for Audit Quality (CAQ) has released Audited Financial Statements and Climate-Related Risk Considerations, a report that addresses “how the key elements of the current accounting and auditing requirements in the United States are required to be applied by company management and auditors with respect to climate-related risks and the audited financial statements.”

The SEC’s Division of Examinations has issued a risk alert on environmental, social, and governance (ESG) reporting. The alert highlights “observations from recent exams of investment advisers, registered investment companies, and private funds offering ESG products and services.”

The SEC’s Acting Chair Allison H. Lee has issued a statement requesting input from investors, registrants, and other market participants on whether current disclosures related to climate change “adequately inform investors.”

The SEC’s Acting Chair Allison H. Lee has directed the Division of Corporation Finance to review the existing climate-related guidance from its 2010 interpretation, "Commission Guidance Regarding Disclosure Related to Climate Change."

The AICPA, CIMA, and CAQ have issued a roadmap, "ESG Reporting and Attestation: A Roadmap for Audit Practitioners."

The World Economic Forum has issued a publication, Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.