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Real Estate Meets SEC’s Climate Disclosure Proposal With Heavy Criticism

The SEC’s latest climate disclosure proposal has warranted 10,000 irate comments from real estate organizations across the United States. Associations and companies like Real Estate Roundtable, CRE Finance Council, JLL, Prologis, and Nareit are particularly unhappy.

The SEC initially proposed its climate change disclosure rule back in March in an effort to more closely align U.S. regulations with international standards to curb the impending climate crisis. The new proposal mandates that individual companies will be responsible for reporting the amount of emissions generated from their buildings and tenants. While the SEC is aiming for more transparency, compiling that kind of data is a daunting task, and mandating companies to do so by the end of this year is causing some significant pushback as similar opt-in programs have a three-year timeline. Additionally, the rules surrounding the mandates are foggy at best. One criticism posed by the National Association of Realtors addresses the fact that the current guidelines of the proposal fail to determine whether or not publicly-traded companies should take the emissions of their independent contractors into account. 

While the flurry of comments will be taken into consideration as the SEC moves to finalize its climate disclosure proposal, investors continue to be concerned about clarification and standardization of climate-related risk, especially as European nations adopted regulations much earlier. The current discord between the SEC and US real estate companies illustrates the mounting pains that the commercial real estate market is experiencing when it comes to decarbonization.

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