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Rules proposed by the Securities and Exchange Commission (SEC) in March 2022 would require excessive reporting by registered companies to exactly quantify emissions and financial risks from climate change — through metrics that are unknown, unknowable, and premised on speculations and hypotheticals.
The SEC’s proposal would impose “one size fits all” requirements on companies to disclose in their 10-Ks climate-related risks and emissions, including Scope 3.
Real estate companies should not be under a mandate to report on GHG emissions from sources they do not own or control—such as from their tenants or product manufacturers.
Calculating GHG emissions is more art than science. When reporting, companies should be protected from liability if they estimate emissions using the latest, best available U.S. government data and tools.
The SEC has yet to issue any final climate risk reporting rule. When it does, it will likely be subject to litigation. The effective date of any ultimate rule is thus uncertain.
The Roundtable submitted comments to the SEC on its proposed climate risk reporting rule that addressed key principles such as:
The U.S. Environmental Protection Agency’s ENERGY STAR for Certification for Buildings program is a proven platform for building owners and managers to “label” their assets as top energy efficiency performers in the marketplace.
Investors, tenants, and employees seek buildings and workplaces with ENERGY STAR ratings because they signal well-managed, profitable assets with reduced carbon footprints.
To complement its “whole building” rating program, in 2018, the EPA issued its first labels to recognize commercial tenants for high-performance design and construction of leased spaces.
The behavior, space design, and equipment choices of tenants can account for more than 50% of energy consumed in commercial buildings—beyond the owner’s ability to control. Expanding EPA’s ENERGY STAR program to add tenant-based recognition is thus a key objective to achieve better efficiency, lower energy use, and a reduced carbon footprint attributable to U.S. real estate.
