What do the new SEC climate regulations mean for facility managers?

Here are three steps facility managers should take before implementing new reporting policies.

Authors: Dwight Abshire and Laura Abram, contributing authors

Since the SEC announced new climate disclosure rules in early March, the debate over the value of emissions reporting – and how it should be done – has intensified significantly. But regardless of the future of this rule, it is clear that both publicly traded and private companies must take action to improve the efficiency of one of the largest consumers of energy and one of the largest sources of greenhouse gas (GHG) emissions: buildings. According to NREL, buildings in the United States account for approximately 30 percent of operational greenhouse gas emissions (EIA 2021; EPA 2021).

The SEC rule puts the built environment squarely in the crosshairs by requiring companies to formally report Scope 1 and Scope 2 greenhouse gas emissions and even describe how management assesses and manages climate risk. Ironically, there is no simple compliance checklist or roadmap to commonsense, cost-effective and planet-friendly actions that will make commercial buildings carbon neutral in the next two to four years. However, any company can start getting its house in order now if it really wants to make progress towards improving the built environment and, ultimately, the planet.

Get to know the bigger picture

It can be too easy to focus on how climate legislation or related actions may impact profitability. However, all successful businesses have a goal other than profit, whether they increase convenience, ease or comfort. In the built environment, it is essential to improve people’s health, well-being and safety, especially considering Americans spend an average of 90 percent of their time indoors. With this frame of reference, it is easier to see the true purpose of the new SEC rules and see them in a broader context compared to the much more stringent regulations in place in California and Europe, such as California’s SB 253 and SB 261.

Global companies that have already worked through these more stringent regulations are well-positioned for the introduction of more stringent emissions reporting standards in the US. Most have realized that they will continue to be profitable because of, not despite, sustainability. Knowing that investors are becoming more aware, companies have dedicated resources to establishing a robust reporting framework that can help answer questions about the importance of the health and performance of their buildings in terms of profits. The real estate industry has made great strides in this space over the last few years, and the insurance industry is now placing greater emphasis on the potential impact of climate-related events – which SEC disclosures also indicate – making climate-related data more valuable than ever. In fact, several leading insurers have withdrawn policies in the state of Florida due to climate concerns. Given all of these trends, it is a business imperative that building emissions data is accurate and up-to-date.

Go beyond dollars

No company, public or private, will be able to oppose the new wave of climate regulations if it cannot answer the question: “What is the footprint of your space?” A process should be implemented to translate bills into actual consumption data in a meaningful way and to be very specific about the data reported.

Fortunately, there are already some helpful systems available that can enable you to integrate carbon accounting and reporting into your larger workflows. Other available systems are focused on managing, analyzing and reporting ESG data. Regardless of what systems you use and what emissions measurements are needed, it is important to provide clarity in public statements about what is and is not reported and then develop a more comprehensive plan for future reporting.

Businesses should use the time between now and the entry into force of climate disclosure rules to increase the transparency of building greenhouse gas emissions measurements and determine what resources are needed for long-term improvements. Rebates and incentives are widely available to help you offset the costs of making these improvements. Energy efficiency and building services partners who can provide rebate guidance and create a plan for sustainable improvement can be valuable to facilities teams who will be required to demonstrate improvements in response to new regulations. Without consumption data to support these plans, something as simple as an LED lighting upgrade project or heat pump repair could end up exceeding your grid capacity and costing you money.

Be a role model of responsibility

Any new regulations are likely to result in a period of change or confusion. Don’t let this disrupt the integrity of your efforts as you prepare for new regulations. If you are truly committed to creating a healthier built environment, prepare for and support climate reporting initiatives as if you are being held accountable, knowing that accountability precedes compliance.

Once you have established this expectation of accountability within your company, establish it with your suppliers and partners and help them operate in a way where they see the importance of ethical reporting.

As these regulations evolve, emissions from the built environment will continue to be a popular topic, but they are not the only aspect of your sustainability journey. The most successful publicly traded companies will agree that their sustainability goals are based on more than just the emissions profiles of the companies that operate their buildings, but are a key element of them. Good corporate citizenship, employee safety and health and well-being all matter. And while it’s important to address all issues and raise the tide, the only way to do this is to have a goal to make positive change and a plan to methodically work towards improving the health of our environment.

Dwight Abshire is vice president of sustainability at Crete United and Laura Abram is principal of Emerald Renewable Energy Consulting.

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