Mar 08, 2024

How ClimateCheck aligns with SEC climate risk reporting rules for public companies

Risk | by Nicole Engels, Chief Growth Officer | 1 Minutes

The US Securities and Exchange Commission has adopted rules that standardize climate-related disclosures by public companies. The rules include requirements for both disclosure of carbon emissions and of climate-related risks, including risk of climate-driven hazards to commercial real estate (CRE).

The rules, announced in March 2024, call on companies to disclose “capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise.” The SEC is also requiring companies to report mitigation tactics and their processes for identifying risks.

Companies can use ClimateCheck to comply with physical risk disclosure components of the SEC rules.

ClimateCheck reports facilitate climate risk disclosure

ClimateCheck evaluates risk to individual properties, portfolios and specified areas across different climate-related hazards — heat, precipitation, drought, flooding, wind and fire — to create a 1-100 risk score for each hazard. Our risk ratings reflect current and projected risk based on both historical data and projections through 2050. We offer several products offering analysis at different resolutions and in different formats. Clients can choose from Property Reports, Screening Reports, Portfolio Reports, Bulk Data and more.

With ClimateCheck, companies can:

  • Monitor and disclose physical climate-related risks down to the individual property level for real estate assets currently in a portfolio
  • Enhance due diligence on potential acquisitions and make smarter determinations around what properties to add to their portfolios and how long to hold those properties, based on enhanced due di
  • Build an investment thesis around immediate and longer-term physical risks to property by identifying and building resilience and mitigation strategies at the portfolio level, for specific hazards, and for discrete geographies
  • Better understand the potential costs of climate-related risks to their bottom line

The new SEC rules provide guidance and structure for companies already monitoring and reporting their climate-related risks in voluntary ESG reports. For those not yet reporting their risks, the rules create new pressure to do so. Companies should be motivated to monitor their risks not just to stay compliant, but to better their business strategy. When companies know and understand climate risk to their real estate portfolios, they can make smarter decisions that reduce or mitigate risk over time, resulting in better-protected assets and ultimately lower costs.

Looking to incorporate climate into your risk assessments?