The Real Estate Roundtable submitted comments today to the U.S. Securities and Exchange Commission (SEC) on a proposed rule that would require all registered companies to disclose material financial risks related to climate change. The comments were developed with The Roundtable’s Sustainability Policy Advisory Committee (SPAC), chaired by Tony Malkin (Chairman, President and CEO of Empire State Realty Trust). (GlobeSt, March 22) 

Extensive Climate Risk Disclosures

• The SEC’s proposal, “Enhancement and Standardization of Climate-Related Disclosures for Investors,” is a key component of the Biden Administration’s efforts to cut U.S. greenhouse gas emissions. (CBS-AP | Bloomberg | Axios, March 21)
  
  
• If the rule is finalized, compliance would phase-in over the next several years. All SEC registrants would be required to quantify their greenhouse gas (GHG) emissions, assess the economic impact of rising sea levels related to their assets, and report in SEC filings (for the benefit of investors) on these and other climate-related risks through annual 10-Ks and additional filings. (SEC News Release | Proposed Rule | Fact Sheet, March 22)
  
  
• The SEC’s extensive draft rule has raised significant concerns throughout the U.S. business community. (ClimateWire, June 2). The proposal includes new disclosure requirements for “Scope 3” GHG emissions, which are generated outside a business' direct control by partners, suppliers, and consumers that make up the “value chain” of that business. (EPA Scope 3 Inventory Guidance and Fourkites).

Roundtable Response

• The Roundtable’s comment letter is summarized as follows:
  
  
  • Registered Companies Should Not be Required to Report on Emissions From Sources They Do Not Own or Control.
    When applied to the CRE context, this means that a building owner should not be under a mandate to report on emissions attributable to the operations of tenants in leased spaces. For example, emissions from metered electricity in a tenant-leased space should not be the CRE owner’s responsibility to report to the SEC.  
    
    
  • Create a "Safe Harbor” for Emissions Calculated with U.S. Government Data and Tools.
    Reporting companies should be protected by a “safe harbor” that insulates emissions disclosures from liability—in both SEC enforcement as well as private litigation—when calculations are based on the best, available, and most recent data and tools released by the federal government.
    
    
  • There Should be No Scope 3 Reporting “Mandate.”
    Scope 3 disclosures typically depend on GHG data possessed by suppliers and other businesses in a reporting company’s value chain. Registrants should not be under any Scope 3 disclosure mandate because they frequently cannot get the basic data to quantify those “indirect” estimates.
    
    
  • Wait Until a Registrant has a Full Year of “Actual” Data Before Requiring Emissions Disclosures.
    The proposal as written effectively requires two separate emissions disclosures each fiscal year. The SEC should only require emissions filings once a year—after a company has all of the “actual” data it needs to support and verify its calculations.
    
    
  • Financial Risks from Severe Weather Events Should be Subject to “Principles-Based” Reporting—As Opposed to One-Size-Fits-All “Prescriptive” Rules.
    Risks from floods, droughts, and similar events should be subject to narrative, “principles-based” reporting. The SEC should drop its proposed “prescriptive” rule that registrants should precisely quantify impacts from climate-related events if they have a one-percent or greater impact on any line item in a financial statement.  

Policymaker Concerns

• The Biden administration is expected to push forward with a final rule that could be issued later this year.
  
  
• Senator Joe Manchin (D-WV), chairman of the Senate Committee on Energy and Natural Resources, sent a letter to the SEC on April 4 outlining his concerns with the proposal.
  
  
• Senate Republicans also expressed their opposition to the SEC proposal in an April 5 letter.
  
  
• House Republicans have called for a hearing on the SEC’s proposal—signaling heightened oversight should they win the majority in this November’s mid-term elections. (E&E News, May 10)

The Roundtable’s comments to the SEC will be a focus of the SPAC meeting on June 17, held in conjunction with The Roundtable’s Annual Meeting.

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The Department of Homeland Security (DHS) issued a National Terrorism Advisory System Bulletin this week, warning of a “heightened threat environment” affecting targets that encompass U.S. critical infrastructure, public gatherings, faith-based institutions, schools, racial, ethnic, and religious minorities, government facilities and personnel, the media, and perceived ideological opponents. (DHS Bulletin, June 7) 

CRE & Security Threats 

• The bulletin, which expires Nov. 30, said calls for violence by domestic extremists directed at democratic institutions, candidates and election workers will likely increase through the fall. (Associated Press, June 7)
  
  
• DHS’s Cybersecurity and Infrastructure Security Agency (CISA) continues to work with government and private sector partners—including owners and operators of critical infrastructure, soft target facilities, and public gathering places—to provide information resources on Active Shooters, Bombing Prevention, and Soft Targets-Crowded Places. 
  
  
• DHS partners include The Roundtable’s Homeland Security Task Force (HSTF) and The Real Estate Information Sharing and Analysis Center. RE-ISAC is a public-private information sharing partnership between the U.S. commercial facilities sector and federal homeland security officials organized and managed by The Real Estate Roundtable.
  
  
• HSTF and The Roundtable’s Risk Management Working Group (RMWG) will hold a joint meeting on June 17 in conjunction with The Roundtable’s Annual Meeting in Washington, DC. Guests will include:

• National Football League security Chief Cathy Lanier, above, the new chair of the Commercial Facilities Sector Coordinating Council. (Video: “Cathy Lanier explains her role as the NFL's Chief Security Officer”)
  
  
• Former NYPD commissioner Dermot F. Shea, president of Related Commercial Property Management
  
  
• A representative from the FBI's Counterterrorism Division
  
  
• Nitin Natarajan, Deputy Director for the Cybersecurity and Infrastructure Security Agency (CISA)

Gun Violence

• Three real estate CEOs who have served on The Roundtable’s Board of Directors joined 225 other national business leaders in a joint letter to the Senate yesterday, urging “bold urgent action” to address gun violence. (CBS News, June 10)
  
  
• Roundtable members Owen Thomas (CEO & Director, Boston Properties/BXP), Scott Rechler, (Chairman and CEO, RXR) and William Rudin (Co-Chairman & CEO, Rudin Management Company) are signatories on the joint letter.
  
  
• The letter states, “Taken together, the gun violence epidemic represents a public health crisis that continues to devastate communities—especially Black and Brown communities—and harm our national economy.” (CNBC, June 10) 
  
  
• Roundtable President and CEO Jeffrey DeBoer issued a May 27 statement on gun violence in America, calling on Democrats and Republicans “… to pass common sense legislation to remove weapons of war from America’s cities and communities.” 

The Roundtable’s 2022 Roundtable Policy Agenda states, “As a critical part of the nation's infrastructure, real estate continues to face an array of threats from natural catastrophes, international and domestic terrorism, criminal activity, cyber-attacks, and border security. To address such threats, The Roundtable continues to help build a more secure and resilient industry against both physical and cyber threats.” 

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