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Decoding SEC’s Climate Disclosure Rule: Impact on Real Estate & Measurabl

SEC Approves Climate Disclosure Rule

What do these new regulations mean for the commercial real estate industry?

Earlier this week, the Securities and Exchange Commission (SEC) voted to require public companies to disclose a portion of their greenhouse gas emissions and climate change risks. The new rules mandate reporting of Scope 1 and 2 emissions, stemming from direct operations and energy use, but exclude Scope 3 emissions generated indirectly through supply chains or product use. 

The SEC rule will compel companies to disclose greenhouse gas emissions, contingent on their perceived materiality to investors. Notably, the rule grants companies discretion in determining the significance of emissions, a departure from the initial proposal. 

Starting in 2026, businesses must disclose both direct (scope 1) emissions, arising from natural gas burning for production or transportation, and indirect (scope 2) emissions, stemming from purchased energy. Responding to concerns raised during the comment period, the final rules provide registrants with extended timelines for filing emissions disclosures, as highlighted by SEC Chair Gary Gensler during the recent hearing.

The SEC’s decision follows extensive consideration, involving over 24,000 comments from publicly traded companies. Some, including Amazon and Vanguard, supported Scope 3 disclosures, which are already tracked voluntarily by numerous companies. Others, such as Walmart and Fidelity, opposed, citing inaccuracies in Scope 3 measurements. 

The SEC’s move aligns with global efforts, despite having slightly weaker regulations compared to initial proposals. On a high level, the rule expands investors’ insights into the threat that climate change poses to publicly listed companies, and how businesses contribute to a warming planet. The rules signify a significant step in making emissions and climate risk disclosures crucial for investors evaluating companies. 

What does it mean for the Commercial Real Estate industry? 

The approved disclosure includes Scope 1 and 2. Scope 1 refers to greenhouse gasses directly emitted on site, such as those from combustion of natural gas or fleet vehicles; Scope 2 covers emissions from purchased electricity, heat, or steam.
Large accelerated filers and accelerated filers, companies with over $75 million in revenue, will be expected to self-report any emissions that are large enough to impact their bottom lines. Large accelerated filers and accelerated filers, are required to disclose Scope 1 and 2 emissions. This means any costs incurred from severe weather events and other natural disasters must be disclosed on financial statements. For a commercial real estate portfolio, it could include noting the downfalls of owning an oceanfront resort as sea levels rise and hurricanes increase in frequency. 
Beyond this, actual and potential material impacts of climate-related risks to a company’s strategy, business model and outlook must be disclosed. Commercial real estate companies that are public and commercial REITs, as well as REITs that own interest in commercial real estate, are going to be immediately responsible for additional reporting, disclosures and financial statement requirements. 
For those impacted, it will be a heightened enforcement risk as the data is difficult to accumulate and analyze. In addition to this, commercial real estate companies that are not impacted.
Wofür bedeutet es? Measurabl? 

The original proposal from SEC Chair Gary Gensler was first presented two years ago, but the version announced earlier this week notably lacked Scope 3. This would have required all companies to disclose not only their emissions, but also those produced throughout the supply chain. The disclosure requirements are less than anticipated, but it is nonetheless a step in the right direction and an expansion on previously existing policies.

As the new regulations only cover Scope 1 and 2, there are various offerings through Measurabl that can assist companies in meeting these demands. Measurabl calculates scope 1 emissions based on energy usage data entered under the “Fuel” category.  Measurabl calculates scope 2 emissions as a sum of emissions from energy usage entered under the “Electric” and “District” categories. 

Measurabl already has the capabilities to collect, analyze, and report on the required disclosures. This is nothing new for a lot of our customers. We anticipate that through these new climate disclosures, our customers will focus more on the automation of data collection. By doing so, they will ensure readily available data for reporting to the SEC, and to other stakeholders. 

Wie solltest du antworten?

In response to the newly finalized climate disclosure rules by the SEC, businesses should proactively evaluate their environmental reporting practices and prepare for compliance. Despite the ruling being slightly scaled-back, it still indicates the growing importance of climate considerations in financial markets. 

Companies falling within the rule’s scope, constituting 95% of US market capitalization, should recognize the heightened investor focus on climate-related risks and opportunities. A crucial step involves assessing the materiality of greenhouse gas emissions, as the disclosure requirement hinges on corporations deeming them “material” to investors. 

Nutzung von Tools wie Measurabl can aid organizations in accurately tracking and reporting emissions, aligning with the market-based method or the location-based method as per the GHG Protocol. Measurabl’s capabilities can assist in quantifying Scope 2 emissions based on electricity choices and emissions intensity, offering a nuanced understanding of environmental impacts.

Commercial real estate companies impacted can turn to Measurabl to enhance transparency and align with regulatory expectations. The platform facilitates the tracking of carbon emissions and provides detailed insights into Scope 2 emissions, allowing organizations to make informed decisions about their energy choices. Given the SEC’s focus on emissions disclosures, Measurabl’s features align with the evolving regulatory landscape, offering a useful solution for companies looking to meet compliance requirements. 

The platform’s flexibility in accommodating market-based emissions calculations, especially for renewable energy usage, positions it as a valuable tool for businesses newly impacted by these requirements. As businesses move forward, strategic adoption of platforms like Measurabl can not only streamline compliance but also reinforce a commitment to sustainability, enhancing credibility in the eyes of both investors and stakeholders.

If you have any questions about how the new SEC requirements will impact your business, reach out to the Measurabl team here:

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