(AGENPARL) – SEATTLE (WASHINGTON) gio 23 giugno 2022
On March 21, 2022, the US Securities and Exchange Commission (SEC) proposed a rule to enhance and standardize climate-related disclosure for investors. 1
“SEC proposes rules to enhance and standardize climate-related disclosures for investors,” US Securities and Exchange Commission,
March 21, 2022.
If carried through as written, the rule would require public issuers to disclose material climate risks, greenhouse-gas (GHG) emissions, and, as applicable, emissions reduction targets and transition plans.
About the authors
The proposed SEC rule would affect the real-estate world in two key ways. First, it would apply directly to publicly traded real-estate companies and real-estate investment trusts that are registered with the SEC. 2
Patrick J. Kiger, “What SEC’s proposed climate disclosure rule could mean for real estate companies,” Urban Land, April 15, 2022.
Second, it would indirectly apply to the vast majority of large real-estate owners. A significant number of corporate tenants, real-estate lenders, and real-estate investors are public entities that would be covered by the SEC rule, and therefore would have to make disclosures about their real-estate holdings. Given that real estate accounts for a significant component of scopes 1 and 2 GHG emissions 3
2019 Global status report for buildings and construction: Towards a zero-emissions, efficient and resilient buildings and construction sector, Global Alliance for Buildings and Construction, 2019.
for players in most industries, meeting the SEC’s reporting requirements is impossible without understanding the emissions that come from real-estate footprints. If enacted, the SEC’s rule would mean both public and private real-estate companies must provide this insight to their tenants, investors, lenders, and other stakeholders.
While the rule may be challenged, the proposal is likely to have a significant impact on the real-estate industry. Over the past several years, some real-estate players have developed a growing awareness of the need to incorporate both climate-related risks and emissions into their valuation, decision making, operations, reporting, and pricing. 4
Jameelah D. Robinson, “Real estate investors want to know what cities are doing about climate risks,” Bloomberg, November 3, 2020.
Others have moved more slowly. The proposed rule introduces the idea that climate disclosures are fundamental to running any real-estate business.
Real-estate firms will likely soon be receiving calls from their tenants and investors looking for emissions figures, risk disclosures, and emission-reductions plans. Tenants and investors may be concerned with meeting the requirements of the proposed SEC rule or doing the same for other regulations that could emerge. They will likely want to work with companies that can provide reporting of current emissions and risks, ongoing assessments as the climate changes, and options for reducing emissions.
For publicly held tenants and investors, the requirement to disclose real estate climate risks and emissions provides another reason to reduce emissions and help their stakeholders and customers do so. A benefit may be that those who do it well and early have a competitive edge.
For the real-estate industry, the lingering question around climate change has always been, what will be the catalyst for decisive, collective action? The SEC’s proposed rule provides an answer: the time to act is now.
Real-estate companies have an opportunity to respond to the SEC’s proposal preemptively
Publicly traded companies in all sectors are preparing for the potential implications of the SEC’s proposed disclosure rule (exhibit). Real-estate companies would be wise to prepare for the climate-risk questions tenants, investors, lenders, and other stakeholders will have. They can use these insights to revalue and reassess their real-estate portfolios, and ultimately differentiate themselves in the marketplace by offering the most comprehensive and effective emissions reduction solutions.