SEC climate proposal is key topic during KPMG panel

BVWireIssue #246-1
March 1, 2023

valuation methods & approaches
cost of capital, income approach, risk analysis, cash flow, discounted cash flow (DCF), conference

At the recent Global Financial Reporting and Valuation Conference, a panel of KPMG leaders shared their knowledge and insights on the evolving landscape regarding environmental, social, and governance (ESG) factors. During this session, audience members were particularly interested in how the SEC climate proposal can impact private companies.

The panel discussed the proposed financial statement footnote and the complexities involved in measuring and recognizing climate-related risks (and opportunities) within the financial statements. Comment letters the SEC has received to date were also discussed. Some respondents have urged expanding safe-harbor provisions for certain forward-looking and third-party information used for Scope 3 GHG (greenhouse gas) reporting. The speakers urged finance and accounting leaders to monitor how the SEC responds in order to track the likely provisions of the final rule.

The proposal is part of new sustainability-related regulations that are emerging both domestically and internationally that are creating “seismic shifts” in corporate reporting for U.S. companies. These changes will significantly affect everything from financial reporting to tax compliance, to valuations during M&A deals.

A replay of the ESG session has just been posted and can be found if you click here . Also, KPMG has an ESG webpage that can alert you to various ESG insights, information, and events.

Extra: A recent academic paper finds that companies with higher ESG scores have a lower cost of capital.

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