Carbon Management Software - A Prerequisite for SEC Disclosure Compliance?

Carbon management software serves as a comprehensive solution for businesses to track, calculate, and disclose their carbon footprint by automating data collection, calculating emissions, and providing analysis and scenario modeling capabilities. It enables organizations to generate standardized reports for compliance with regulatory requirements and industry standards, while also serving as an auditable source of truth for an organization’s carbon footprint.  With features for continuous improvement, like setting targets and monitoring progress, carbon management software acts as a compass guiding companies towards greater transparency, accountability, and sustainability in their operations. 

Carbon emission reporting just got more complex and comprehensive for public companies with the finalization of the U.S. Securities and Exchange Commission (SEC) rule on March 6, 2024.  Where spreadsheets and disparate files were once enough to support enterprise-wide carbon accounting, the shift in increased transparency, higher stakes, and new rigor around Scopes 1 and 2 emissions reporting in the SEC ruling demand more agile solutions.   

SEC-aligned carbon accounting and management involves tracking and managing greenhouse gas emissions (GHG) across an entire organization's boundary.  At this scale, the complexity of carbon accounting often surpasses the capabilities of traditional spreadsheets. Carbon management software addresses this challenge by providing robust reporting capabilities and scalability to meet the expanding needs of organizations. 

Data accuracy, integrity, and auditability are critical in carbon accounting and management. Manual entry into spreadsheets is prone to errors, leading to inaccuracies in emissions calculations. Carbon management software automates data collection processes, reducing errors and ensuring data integrity while also providing audit trails for accountability. It also offers real-time monitoring capabilities, enabling organizations to track emissions continuously and make prompt, data-driven decisions. This real-time visibility facilitates proactive emission reduction strategies even between reporting periods and helps identify areas for improvement. 

The shift from spreadsheets to carbon management software is particularly imperative in light of the new SEC Climate Disclosure requirements. These requirements mandate that companies disclose their climate-related risks and Scopes 1 and 2 greenhouse gas emissions, reflecting a growing emphasis on transparency and accountability in corporate environmental reporting. Carbon management software can play a crucial role in helping companies comply with these regulations by providing robust data collection, analysis, and reporting capabilities tailored to meet the specific SEC disclosure requirements. By leveraging such software, organizations can streamline the process of compiling and reporting climate-related data, ensuring accurate and comprehensive disclosures to stakeholders and regulators.  

Increasingly, carbon management software must be considered a prerequisite for companies to comply with the growing regulations, like the SEC rule. These tools and accompanying consultant support ensure accurate data collection, comprehensive reporting, auditability, and real-time monitoring of emissions.  In this quickly evolving regulatory landscape, carbon management software will continue to prove itself and be an essential tool for companies complying with regulatory requirements like the SEC rule. 

Learn more about EcoStruxure Resource Advisor, Schneider Electric’s Carbon Management Software, recognized as a 2023 Leader by Verdantix.

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Contributor:
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Katie Browning, Reporting, Compliance and Analytics Sr. Sustainability Manager

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