ESG Reporting Compliance: Finance an Important Part of the Team Effort

ESG Regulatory Landscape

Thousands of public and private companies are being scoped into global ESG requirements with varying levels of reporting obligations. Our client base is focusing on the European Union’s (EU) Corporate Sustainability Reporting Directive (CSRD), the U.S. Securities and Exchange Commission’s (SEC) proposed rule, “The Enhancement and Standardization of Climate-Related Disclosures for Investors”, and the recently enacted California Climate Accountability Package (CCAP). Knowing which regulations apply to your company and when you are expected to report is critical for maintaining compliance.

Spotlight on California

With the industry’s large base in California, it is likely that many media companies will be subject to the CCAP, which has a specific focus on climate-related disclosures. Those who are part of their company’s financial management and reporting functions will play a key role in complying with the new regulations.

Covered entities “doing business in California” with $500 million or more in total annual revenue must digitally publish a Task Force for Climate-Related Disclosures (TCFD)-aligned climate risk report on or before Jan. 1, 2026, and biannually thereafter. Reporting entities “doing business in California” with $1 billion or more in total annual revenue must begin to disclose and subsequently gain assurance over their Scope 1, 2 and 3 greenhouse gas (GHG) emissions (as set forth by the Greenhouse Gas Protocol, annually phasing in from 2026 onwards. Failure by covered entities to comply with these requirements could result in administrative penalties of up to $500,000 in a reporting year. With the enaction of CCAP, California has made it clear that climate-related disclosures are critical to a company’s continued business operations in the state.

In addition to emissions and climate risk disclosures, companies operating in the state of California making net-zero or carbon-neutrality claims in the state may be subject to disclosures related to the voluntary carbon market. If your company has published net-zero or carbon-neutral goals or ambitions, or utilized carbon offsets in your emissions management strategy, it will be important to review your public sustainability disclosures to ensure they are accurate and verifiable when reviewed against stated claims.

Industry Climate Disclosure Considerations

Whether your business is involved with print or digital media, live entertainment, or is a service provider to the industry, there are a lot of inputs to consider when mapping your climate disclosure activities and timelines. To prepare for compliance, media & entertainment professionals should undertake the following:

1. Define regulatory applicability

It is important that all companies, especially those with complex organizational structures, evaluate regulatory applicability across the business, doing so for subsidiaries, parents, and the ultimate parent. Some regulations may have phased-in reporting timelines that begin with in-scope subsidiaries, while others may require consolidated reporting from the onset. Undergoing a regulatory scoping exercise can help your company gain confidence in knowing which disclosures are required when across your organization.

2. Set organizational boundaries

Leveraging your organizational structure will also help your company define its organizational and operational boundaries as part of developing a GHG inventory management plan. Developing a GHG emissions inventory management plan allows your company to enhance governance over its emissions data, understand emissions sources, and prepare complete and accurate reporting of scope 1, 2 and 3 emissions. Executing that inventory management plan can also help your company prepare for regulatory disclosure across numerous jurisdictions and determine the baseline for future reduction goals. Media companies, in particular, will want to consider emissions sources for traditional media (e.g., carbon emitted through harvesting trees for printed content) as well as digital assets (e.g., carbon emitted from energy used to host streaming platforms on owned or leased data servers).

3. Identify and monitor climate-related risks

As part of climate-related disclosures, your company will also want to conduct a climate risk assessment to better understand the impact climate has or will have on your business. In the media and entertainment industry, the effects of climate change could pose physical risks (e.g., long-term viability of physical offices or event spaces, cost of repairs for short-term extreme weather events) and transition risks (e.g., cost of installing on-site green power generation, or the profitability of businesses whose operations are affected by the switch to renewable energy). Knowing both climate-related risks and opportunities can help your company build a climate-resilient near- and long-term strategy.

4. Capture sustainable activities

In some jurisdictions like the EU, your company may be required to disclose its activities or products that improve the sustainability of your business and society. Examples of this include companies with large physical structures (e.g., event venues) that have undertaken zero-waste initiatives, installed green energy technology on-site and/or deployed consumer-usable measures such as electric and hydrogen vehicle refueling stations to support a sustainable world. Disclosing these efforts and quantifying their impact can tell a positive story about your company’s efforts to move towards a lower emissions world.

Any company’s approach to compliance with ESG and climate-related regulations should be rooted in the same principles that MFM members apply to their accounting and financial reporting. Your disclosures should be complete, accurate, relevant, transparent and consistent. While applying these principles to your ESG disclosures, it is also important to bear in mind the unique ways in which your company operates when evaluating your sustainability disclosures, and specifically your climate-related metrics. Applying these principles from the onset of and throughout your disclosure journey will help your company remain compliant with the regulations by which your company must abide.

This article was written by Deborah Newman, Grant Thornton’s National Media & Entertainment Industry Leader. Newman has worked with some of the largest and most transformative companies in the world. Her experience includes Global Compliance & Business Process Improvement Leader at Warner Bros. Entertainment Inc., and former PwC partner focused on Technology, Media & Entertainment.

Posted at MediaVillage through the Thought Leadership self-publishing platform.

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The opinions expressed here are the author's views and do not necessarily represent the views of MediaVillage.org/MyersBizNet.