10/03/2022 | by
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Tom Ehmann, partner at KPMG, participated in a video interview in conjunction with Nareit’s REITworks: 2022 Conference held on Sept. 12-13 in La Quinta, California.

Ehmann discussed some of the common themes coming out of the Securities and Exchange’s (SEC) climate change comment letter process. “The one resounding theme is just the need for more time and also greater clarity as to various elements of the rulemaking,” he said.

As for the most challenging components of the proposal, Ehmann noted that “the 1% benchmark has caught the attention of a lot of folks. It runs in conflict with some of the existing materiality considerations both from the SEC and the PCAOB, so there will be some greater clarity needed there.”

Ehmann also commented on some of the ‘no regrets’ actions companies should take regardless of the final SEC rulemaking on climate change. He suggested companies take inventory of what ESG information is already out there, understand what is already being reported on, and educate the board and management on that.

Ehmann added that companies should also understand what goals and commitments are out there and how they impact their financial reporting. In addition, companies should build cross functional teams encompassing performance, governance, data and tech, and financial reporting.

As for other potential SEC rulemakings, Ehmann said he expects the agency to address human capital probably sometime in October. Another rulemaking to watch for is the Names Rule, which will determine whether funds designate themselves as ESG-focused or more of an integration fund, he added.