Navigating the New Landscape of Climate Disclosure

Overview

The U.S. Securities and Exchange Commission (SEC) has introduced a new Climate Rule mandating all publicly traded companies disclose their direct (Scope 1) and indirect (Scope 2) greenhouse gas (GHG) emissions. This regulation requires the disclosure of externally verified GHG emissions data as well as the material financial impacts of climate-related risks, which includes operational costs to the business for repairing or mitigating against extreme weather events and the costs of reaching climate targets such as the role of carbon offsets and renewable energy credits. While the SEC temporarily paused the legislation in April, this article discusses the rules' relevancy and proposed strategies for companies continuing to prepare for mandated disclosures.

California has set the bar higher than the Climate Rule with CA SB 253 and SB 261, further expanding the GHG emission disclosure requirements to Scope 3, which includes the entire supply chain, alongside climate-related financial risk disclosures for businesses operating within its jurisdiction.

As companies prepare for these requirements, Newmark is equipped to assist both public and private entities with disclosure compliance and strategic operational responses.

How This Is Relevant to Public and Private Companies

Companies are gathering comprehensive energy utility data across their operations to meet ESG business objectives and to prepare for potential upcoming legislative changes.

Corporations have begun evaluating the climate commitments of vendors to ensure partnerships align with their commitment to minimize GHG emissions. Additionally, companies with Scope 3 emission reduction targets expect upstream and downstream suppliers to disclose emissions as a part of evaluating the GHG emissions of their supply chain. The ripple effects of these expectations touch major corporations as well as smaller and privately held companies that are connected to each other via supply chain (or upstream/downstream emissions).

Although it is critical to collect energy utility data to calculate Scope 1, 2 and 3 emissions, the SEC Climate Rule and California’s CA SB 253 do not oblige landlords to share utility information with their tenants, ushering in the necessity for strategic lease negotiation to facilitate the sharing of utility data. The introduction of "Green Lease Language" ensures access to utility data for GHG emission calculations.

How Newmark Supports Your Compliance and Sustainability Journey

Newmark has expert teams in place to help companies collect the data needed to comply with the new climate disclosures.

• Our Energy and Sustainability Services team has extensive experience in helping companies adapt to regulatory landscapes:
  • Data Collection for GHG Reporting: Since 2017, our team has assisted clients in the collection of Scope 1 and Scope 2 data, offering an automated platform that collects data and calculates GHG emissions for SEC reporting and beyond. Through our streamlined process, we deliver investment-grade data that aligns with regulatory expectations and enhances corporate accountability
  • Decarbonization Strategies: Our approach encompasses comprehensive facility assessments, leading to actionable roadmaps that encompass lighting, heating, cooling and energy procurement optimizations. This strategy is augmented by our efforts advising on the procurement of renewable energy and renewable energy certificates (RECs), facilitating a transition towards a more sustainable footprint
• Our Workplace Strategy team brings specialized expertise in negotiating Green Lease agreements, ensuring clients have access to the data for environmental reporting. This support extends to advising smaller occupiers in their data collection and calculation efforts for Scope 1, Scope 2 and Scope 3 disclosures. The team can also design user-friendly data visualization platforms

In the face of these regulatory changes, Newmark can serve as a strategic partner to ensure compliance with the new SEC Climate Rule and California climate mandates and to support your transition towards a sustainable business model.

For personalized guidance on meeting regulatory requirements and advancing your sustainability objectives, contact us today.

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Additional resources:

• https://www.sec.gov/files/33-11275-fact-sheet.pdf
• https://calawyers.org/business-law/californias-climate-disclosure-requirements-an-overview-of-senate-bills-253-and-261/