CAQ Reviews Form 10-K Climate, AI, and Digital Asset Reporting

The Center for Audit Quality (CAQ) has released an analysis of S&P 500 company Form 10-K disclosures on climate, artificial intelligence, and digital assets.  Analysis of S&P 500 Companies’ 10-Ks provides “a snapshot of what S&P 500 companies typically disclose and where they disclose that information within the 10-K” on these three topics. The CAQ’s analysis examines the most recent Form 10-Ks for S&P 500 companies as of June 2025. (These reports generally relate to the company's 2024 fiscal year.)  In addition, a CAQ blog post provides an overview of the analysis and highlights the fact that most of these disclosures appeared outside the financial statements. See AI, Digital Assets, and Sustainability: What Form 10-Ks Tell Us About Reporting Trends.

Analysis of Climate-Related Information

The CAQ’s review of S&P 500 companies' Form 10-K climate-related information reporting included disclosures on greenhouse gas emissions; net zero, carbon neutral, or other emissions reduction commitments; and reporting standards, frameworks, or requirements. Findings include:

• Climate-related disclosure is ubiquitous.  The number of S&P 500 companies mentioning climate-related information in their 10-K remained consistent at 494 companies in both 2023 and 2024. 

• Most S&P 500 companies that provide climate-related disclosure do so in their Form 10-K in Item 1A (Risk Factors) or Item 1 (Business). Sections of Form 10-K in which climate-related information appears less frequently include Item 7A (Quantitative and Qualitative Disclosures About Market Risk), Item 3 (Legal Proceedings), and Item 2 (Properties).

• Disclosure of a net zero or carbon neutral commitment decreased 16 percent (from 142 companies to 119 companies) in fiscal 2024 compared with 2023.  Seventy-four companies, 19 percent fewer than in the prior year, reported a GHG emissions reduction goal.

• Climate-related disclosures in the financial statements increased by approximately 18 percent from the prior year. Most mentions of climate-related information in Item 8 (Financial Statements) appear in one of four types of footnotes – significant accounting policies, commitments and contingencies, debt or borrowing arrangements, or income taxes.

• Approximately 13 percent of S&P 500 companies disclosed using specific sustainability reporting standards or frameworks in their Form 10-K, a decrease of four percent from the prior year. The most frequent standards or frameworks were those of the Task Force on Climate-related Financial Disclosures, the Sustainability Accounting Standards Board, and the Global Reporting Initiative. Roughly 21 percent of S&P 500 companies mentioned the European Union’s Corporate Sustainability Reporting Directive, up nine percent from the prior year.

Analysis of AI-Related Information

The CAQ found that AI is transforming business operations and that Form 10-K reporting is beginning to reflect that change. AI reporting highlights include:

• The CAQ observed that 448 S&P 500 companies, or 90 percent, mentioned AI-related information in their 2024 Form 10-K. This was an increase of almost 25 percent from the 359 companies that did so in 2023.

• The S&P 500 companies that disclosed AI-related information in their Form 10-K did so most frequently in Item 1A (Risk Factors) or Item 1 (Business). References to AI also appeared in Item 7 (MD&A), Item 8 (Financial Statements), and Item 1C (Cybersecurity). An increasing number of companies also mentioned AI-related information in their Cautionary Note Regarding Forward Looking Information.

• While the type of AI information disclosed varied, there were some common themes.  For example, when discussing AI-related topics in Risk Factors, companies were largely focused on legal, regulatory, cybersecurity, ethical, and reputational risks. In the Business item, companies discussed their use of and investments in AI-related technologies and often indicated how they incorporated AI into new or existing products or services or into internal operations.  In MD&A disclosures, companies often discussed AI-related acquisitions, investments in AI-related products or services, or AI-related enhancements to internal operations and infrastructure.

• AI-related disclosures in the financial statements increased by more than 50 percent from the prior year. The greatest increase in these disclosures related to acquisitions, description of business, and significant accounting policies.

Analysis of Digital Asset-Related Information

The CAQ observes that, as digital assets “continue to influence financial systems and corporate strategy, companies are beginning to address them in their public filings.”  Examples of digital asset disclosures in the CAQ’s study included mentions of cryptocurrency, Ethereum, and Bitcoin.  CAQ findings on digital asset disclosures include:

• Only 47 S&P 500 companies, or approximately nine percent, mentioned digital asset-related information in their most recent Form 10-K. Thirty-seven of those companies mentioned digital assets in Item 1A (Risk Factors). Some companies also referenced digital asset-related information in Item 8 (Financial Statements) (15 companies), Item 1 (Business) (14 companies), and Item 7 (MD&A) (ten companies). A smaller number of companies included digital asset information in Item 1C (Cybersecurity).

• While the type of digital asset information disclosed varied, there were common themes.  For example, in Risk Factors companies discussed regulatory risks, market volatility, and technological risks associated with digital assets. Most companies that included digital asset disclosure in the Business section were financial institutions, exchanges, or payment processors. These companies discussed platforms and products that enable customers to buy, sell, and hold digital assets. In MD&A disclosures, most companies discussed digital asset-related platforms and products or referred to digital assets in discussing revenue or other income.

• Most mentions of digital asset-related information in the financial statements appeared in notes discussing the company’s significant accounting policies. While less common, some companies also discussed digital asset-related matters in footnotes on commitments and contingencies, fair value measurement, goodwill and other intangibles, segments, and revenue.

Implications for Auditors

As noted above, Desiré Carroll, CAQ’s Senior Director, Professional Practice, published a blog post on the CAQ’s S&P 500 disclosure study.  She describes as a “key takeaway” of the report the fact that “much of what companies are disclosing about AI, digital assets, and sustainability is largely being disclosed in sections of the 10-K that are not the financial statements. This means that the information is not being audited as part of the financial statement audit.” Professional standards only require the auditor to “read and consider” Form 10-K disclosures that are not part of the financial statements. 

Although most climate, AI, and digital disclosures appear outside the financial statements, it is becoming more common for companies to voluntarily obtain third-party assurance over nonfinancial statement disclosures. Ms. Carroll states that “73% of S&P 500 companies that report standalone sustainability information already obtain assurance over certain of that information in an assurance engagement that is separate and apart from the audit of the financial statements.”

Audit Committee Takeaways

The CAQ’s findings show that disclosures on climate, artificial intelligence, and digital assets, although generally voluntary, are important aspects of S&P 500 company Form 10-K reporting.  Despite some backlash against climate disclosure, many investors remain interested in the topic, and companies continue to provide this information.  The one exception appears to be climate-related commitments, where disclosure has slipped.  On the other hand, Form 10-K disclosures regarding AI and digital assets are, not surprisingly, growing rapidly compared to previous years’ 10-K filings.

Audit committees may want to use the CAQ’s study as an opportunity to review their company’s disclosures on these three topics and consider whether they should be enhanced. As the CAQ states, “It’s critical that companies clearly communicate how these topics are impacting operations, from potential risks to possible financial statement impacts, to foster investor and public trust in their disclosures.”