support this kind of cross-functional collaboration, helping teams assemble data and create reports, Mellen says. Many companies already calculate their climate risk and emissions so they can comply with rules from other jurisdictions, such as California or the European Union. But those who haven’t made that move should start right away. The first step is to study how the SEC’s rules, and other climate disclosure rules, apply to the company’s situation. Then figure out which requirements the company is not already equipped to meet, and map out how to get into compliance. “We do that all the time with our clients, to help them understand what their existing capabilities are and where they will need us to help—what gaps to fill.” n
Just like companies affected by the UFLPA or the EUDR, companies may need to gather information from several tiers’ worth of suppliers. Fortunately, those suppliers—if they are publicly- traded in the United States.—will be doing their own research. “They need to follow the same process that you are with them, with their own suppliers,” Glaser says. To get ready for compliance, companies should first set up a governance structure. “Get the right teams together within the organization,” says Mellen. Many companies have already created such structures to comply with other sets of rules and regulations, such as those focused on conflict minerals. Workiva offers technology to
managing their climate risk, and also report on their greenhouse gas emissions. While the plan could face further delay, the SEC expects to release the new rules in April 2024. Once that happens, companies will have between one and three years to comply, depending on what’s known as their “filer status” at the SEC, says Deon Glaser, senior vice president of sustainability, social impact and ESG at The Uplift Agency, a social impact and sustainability services firm based in Detroit. The main point of the rules is to give investors information they can use to assess, for example, how climate-driven events such as floods or wildfires might affect a company’s operations, or how much carbon the company releases through its activities. “Investors have demanded that companies report this information,” says Mark Mellen, industry principal, ESG at Workiva, a company in Ames, Iowa that provides a cloud-based compliance reporting platform. “They want the same caliber of disclosure from organizations that they see for financial statements.” The proposed rule divides greenhouse gas emissions into three categories: • Scope 1: Direct emissions, such as the carbon released in a manufacturing process. • Scope 2: Indirect emissions from purchased services such as electricity, heat, and cooling. • Scope 3: All other emissions linked to the company’s activities, including its supply chain. It’s not yet clear whether the SEC will include Scope 3 in the final rules. If it does, then companies will have to take a hard look at their supply chains to estimate how components, materials, or finished goods they buy contribute to emissions, both when these items are made and when they’re transported. The final phase of the Drug Supply Chain Security Act stipulates that pharmaceutical products in the United States must be electronically traceable at all times in the future, not only at batch level but also at package level. (Photo: ©Arvato)
March 2024 • Inbound Logistics 29
Powered by FlippingBook