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New Climate Disclosure Requirements Require Detailed Auditing Standards, Groups Argue

WASHINGTON, D.C. – More than 20 consumer advocacy, environmental, and transparency organizations today called on the Public Company Accounting Oversight Board (PCAOB) to adopt new attestation standards for firms providing climate disclosure auditing services to public companies. 

The PCAOB, an external and independent oversight board responsible for overseeing auditors and audits of public companies, is scheduled to update its attestation standards in 2024. In a letter sent by the organizations, the groups call for this revision of the standards to incorporate GHG emissions and climate-related disclosures.

“Amid emerging transparency rules and market demand for climate-related disclosures and data from publicly traded firms, companies have growing incentives to greenwash and downplay their actual climate impacts,” said Mekedas Belayneh, policy advocate with Public Citizen’s Climate Program. “Rigorous attestation standards are needed to prevent assurance providers from rubber-stamping inaccurate climate-related disclosures, ensuring the investors receive credible information to inform their decisions. The PCAOB must provide guidance and oversight of assurance providers to instill confidence in the accuracy of companies’ disclosed GHG emissions and climate-related impacts.”

In 2023, California enacted a law requiring the reporting of Scopes 1, 2 and 3 emissions by 2027. Additionally, the U.S. Securities and Exchange Commission (SEC) is expected to finalize   a rule later this year that would apply similar reporting requirements to all publicly traded companies in the United States. 

“Investors have made it crystal clear: they need audited climate disclosures to manage financial risk and value securities,” said Alex Martin, climate finance policy director at Americans for Financial Reform Education Fund. “Fortunately, the days of companies getting away with unverified, cherry-picked metrics masquerading as full and fair disclosure should be coming to an end. PCAOB should move quickly to establish clear attestation standards for climate and greenhouse gas disclosures to meet the needs of investors.”

Currently, no standardized attestation process is required for sustainability disclosures, creating confusion for investors and raising questions about the quality and reliability of the limited data that companies release.

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