How comms can prepare for the SEC’s upcoming climate change rules

The SEC’s new climate change rules will require more disclosure. That’s a good thing for communicators.

At the height of the Cold War, a U.S.S.R. submarine inadvertently gets stuck on a sandbar off a Nantucket-like island in the 1966 comedy, “The Russians are Coming, The Russians are Coming.”

Lt. Yuri Rozanov, played by Alan Arkin in his first starring role, leads a team ashore to find a boat to pull the sub free.

Rozanov and the sailors come to the first cottage they see, where Walt Whittaker, played by Carl Reiner, and his family have been staying for the summer. Whittaker’s son tells the family there are nine men outside with machine guns who look like Russians and one looks like Uncle Harry.

Whittaker doesn’t believe his son until Rozanov comes to the door, as shown in this clip. Rozanov explains in faltering English that they are Norwegian sailors on a NATO training exercise. Then there’s this exchange:

Whittaker: Are there nine of you out there? Are you all Russians with machine guns?  And does one of you look like Uncle… I mean, look like a wrestler?

Rozanov: I’m sorry to comply with your statement, but misfortunately … all of the answers to these questions are yes.

Professional communicators have a lot of questions about climate change regulations expected from the Securities and Exchange Commission in April. Will the rules anger conservatives and environmentalists? Will some companies continue to open themselves up to accusations of greenwashing or even SEC charges? Will other companies pull back on disclosure for fear of litigation?

Misfortunately, all of the answers to these questions are yes.

The rules would be the biggest change in corporate disclosure since the Great Recession, creating a reporting framework for information about climate-related risks. While some chief executives will grumble, the new rules will be good for professional communicators. With more facts, communicators can show, not just tell, what their companies are doing, and how.

Meanwhile, companies are already changing their approach to Environmental Social and Governance practices. Even as they strengthen their ESG data collection, they are also moving beyond it.

“As U.S. companies begin to prepare for the SEC disclosure requirements …, they are beginning to shift from commitment to action to address evolving stakeholder expectations,” Big Four accounting firm Deloitte wrote in a report last month. “They are starting to see the strategic benefits that can be realized through enhanced ESG governance, controls, and disclosure.”

That means telling stories about the actions that organizations are taking, not the promises they are making. If those actions fall short of the promises, ‘fess up. Explain why and say what you’ll do to fulfill the promises. As audiences grow increasingly skeptical of ESG claims, this approach will earn organizations great credibility.

The stories lie in a company’s journey toward business practices that minimize the risks that ESG is meant to protect against while at the same time achieving benefits to the environment and society. It’s a journey that employees and customers want to know about.

And it’s also a trip investors look to spot early, according to Terrence Keeley, a former senior executive with BlackRock, a major player in ESG investing.

“It will always be preferable to own companies before they adopt best practices,” he writes in “Sustainable: Moving Beyond ESG to Impact Investing.”site: “Investors benefit most through the additional value created during and after positive transformation.”

Corporate communicators must change their approach. Cut through the politicization of ESG. Forget the PR spiel.Urge for more disclosure, not less.

“Isn’t ESG boring? Don’t be so sure,” writes Peter Vanham, an executive editor with Fortune. “If there was one major ESG trend in 2022, though, it was companies are beginning to make ESG tenets central to corporate strategy, and that’s something that involves creative problem solving and innovation—aka the stuff that’s not boring.”

Tom Corfman is a senior consultant with Ragan Consulting where he likes showing communicators how to tell ESG stories that people actually want to read.

Schedule a call with Kristin Hart to learn how we can help you improve your ESG storytelling with training, consulting and strategic counsel. Follow RCG on LinkedIn and subscribe to our weekly newsletter here.

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