ESG Reporting Compliance: Finance an Important Part of the Team Effort

ESG Regulatory LandscapeThousands of public and private companies are being scoped into global ESG requirements with varying levels of reporting obligations Our client base is focusing on the European Unionamp8217s EU Corporate Sustainability Reporting Directive CSRD the US Securities and Exchange Commissionamp8217s SEC proposed rule amp8220The Enhancement and Standardization of ClimateRelated Disclosures for Investorsamp8221 and the recently enacted California Climate Accountability Package CCAP Knowing which regulations apply to your company and when you are expected to report is critical for maintaining complianceSpotlight on CaliforniaWith the industryamp8217s large base in California it is likely that many media companies will be subject to the CCAP which has a specific focus on climaterelated disclosures Those who are part of their companyamp8217s financial management and reporting functions will play a key role in complying with the new regulationsCovered entities amp8220doing business in Californiaamp8221 with 500 million or more in total annual revenue must digitally publish a Task Force for ClimateRelated Disclosures TCFDaligned climate risk report on or before Jan 1 2026 and biannually thereafter Reporting entities amp8220doing business in Californiaamp8221 with 1 billion or more in total annual revenue must begin to disclose and subsequently gain assurance over their Scope 1 2 and 3 greenhouse gas GHG emissions as set forth by the Greenhouse Gas Protocol annually phasing in from 2026 onwards Failure by covered entities to comply with these requirements could result in administrative penalties of up to 500000 in a reporting year With the enaction of CCAP California has made it clear that climaterelated disclosures are critical to a companyamp8217s continued business operations in the stateIn addition to emissions and climate risk disclosures companies operating in the state of California making netzero or carbonneutrality claims in the state may be subject to disclosures related to the voluntary carbon market If your company has published netzero or carbonneutral goals or ambitions or utilized carbon offsets in your emissions management strategy it will be important to review your public sustainability disclosures to ensure they are accurate and verifiable when reviewed against stated claimsIndustry Climate Disclosure ConsiderationsWhether your business is involved with print or digital media live entertainment or is a service provider to the industry there are a lot of inputs to consider when mapping your climate disclosure activities and timelines To prepare for compliance media ampamp entertainment professionals should undertake the followingDefine regulatory applicabilityIt is important that all companies especially those with complex organizational structures evaluate regulatory applicability across the business doing so for subsidiaries parents and the ultimate parent Some regulations may have phasedin reporting timelines that begin with inscope subsidiaries while others may require consolidated reporting from the onset Undergoing a regulatory scoping exercise can help your company gain confidence in knowing which disclosures are required when across your organizationSet organizational boundariesLeveraging your organizational structure will also help your company define its organizational and operational boundaries as part of developing a GHG inventory management plan Developing a GHG emissions inventory management plan allows your company to enhance governance over its emissions data understand emissions sources and prepare complete and accurate reporting of scope 1 2 and 3 emissions Executing that inventory management plan can also help your company prepare for regulatory disclosure across numerous jurisdictions and determine the baseline for future reduction goals Media companies in particular will want to consider emissions sources for traditional media eg carbon emitted through harvesting trees for printed content as well as digital assets eg carbon emitted from energy used to host streaming platforms on owned or leased data serversIdentify and monitor climaterelated risksAs part of climaterelated disclosures your company will also want to conduct a climate risk assessment to better understand the impact climate has or will have on your business In the media and entertainment industry the effects of climate change could pose physical risks eg longterm viability of physical offices or event spaces cost of repairs for shortterm extreme weather events and transition risks eg cost of installing onsite green power generation or the profitability of businesses whose operations are affected by the switch to renewable energy Knowing both climaterelated risks and opportunities can help your company build a climateresilient near and longterm strategyCapture sustainable activitiesIn some jurisdictions like the EU your company may be required to disclose its activities or products that improve the sustainability of your business and society Examples of this include companies with large physical structures eg event venues that have undertaken zerowaste initiatives installed green energy technology onsite andor deployed consumerusable measures such as electric and hydrogen vehicle refueling stations to support a sustainable world Disclosing these efforts and quantifying their impact can tell a positive story about your companyamp8217s efforts to move towards a lower emissions worldAny companyamp8217s approach to compliance with ESG and climaterelated regulations should be rooted in the same principles that MFM members apply to their accounting and financial reporting Your disclosures should be complete accurate relevant transparent and consistent While applying these principles to your ESG disclosures it is also important to bear in mind the unique ways in which your company operates when evaluating your sustainability disclosures and specifically your climaterelated metrics Applying these principles from the onset of and throughout your disclosure journey will help your company remain compliant with the regulations by which your company must abideThis article was written by Deborah Newman Grant Thorntonamp8217s National Media ampamp Entertainment Industry Leader Newman has worked with some of the largest and most transformative companies in the world Her experience includes Global Compliance ampamp Business Process Improvement Leader at Warner Bros Entertainment Inc and former PwC partner focused on Technology Media ampamp EntertainmentPosted at MediaVillage through the Thought Leadership selfpublishing platformClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillageorgMyersBizNet

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