The US Securities and Exchange Commission has proposed new rules that, if they pass, will require US‑listed companies to disclose detailed and specific climate information, including quantified emissions data and an assessment of the risks that climate change poses to the company. The United Kingdom has already passed similar rules and put them into effect for large public and private companies and for banks and insurers. The European Union also plans to mandate climate reporting for large companies within its forthcoming Corporate Sustainability Reporting Directive.

The increasing integration of climate risk and financial risk and the resultant quantification of climate-risk information are generating a new industry for software and professional companies that help organizations manage climate accounting, reporting, and risk management. Companies that offer platforms to help companies calculate emissions and generate reports include Watershed Technology, Persefoni AI, and Sweep. Newcomers such as Sinai Technologies and Greenly also continue to emerge. Such firms compete to increase automation of the climate-accounting process and to create tangible recommendations for emissions-reduction strategies. All services generate new data sets, and vendors seek to add value by applying data analytics and AI to the data.

Climate-intelligence firms focus specifically on climate-risk information. Firms such as Cervest use data sets, modeling, and AI to predict the risk that an organization's assets face from climate-risk factors such as fire and flood. Similar firms include One Concern and Jupiter Intelligence.

Implications

For large companies, climate disclosures are rapidly becoming a standard part of compliance and financial reporting. Legislators across jurisdictions vary in their speed of implementation, but they are all heading toward essentially the same set of requirements. The emerging rules reflect growing interest in climate information among investors, who increasingly see climate risk as part of financial risk. Companies are also motivated to gain a better understanding of their climate risks because of the increasing prevalence of fires, floods, and other physical impacts of climate change.

The changes seem set to make climate data a new and major category of enterprise data. Previous new waves of enterprise data have led to the rise of significant new tech companies such as SAP and Salesforce. Data analytics and AI will likely automate and optimize climate reporting. Beyond services to deliver the mechanics of climate accounting are opportunities to integrate and analyze new data sources to manage risk, benchmark companies, and discover decarbonization strategies.