A new rule has come into effect that will be a game changer for all publicly traded companies: the Securities and Exchange Commission (SEC) will now require companies to report on their climate impact. Whereas climate reporting is currently voluntary and does not follow any one set of regulations, this new policy will provide a lot more transparency—including companies having to report on their emissions while adhering to certain reporting standards.
The SEC voted to enforce the rule on March 6, 2024, and the final requirements differ from the original proposal. Companies with publicly traded shares worth $75 million or more will need to share their Scope 1 and Scope 2 emissions. And though it was originally going to require reporting on Scope 3 emissions as well (emissions found along a company’s supply chain), they have been excluded from the final version.
Public companies will also be required to disclose any costs and losses incurred as a result of severe weather events, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise. They’ll be required to disclose any climate-related risks that have materially impacted or are reasonably likely to have a material impact on the company’s business strategy, results of operations, or financial condition as well.
The climate disclosure rule is a sign of turning tides, and will help reduce “green washing,” where companies cherry pick information to portray themselves as climate friendly. It will also help investors better assess risk, as reliance on fossil fuels will be a hindrance on the path to net zero. However, with the exclusion of Scope 3 emissions, there will not necessarily be full transparency about companies’ carbon footprints.
Regardless, it is clear that companies across the U.S. are facing increasing pressure to reduce their emissions and provide more data about their environmental impact. This means adopting energy efficient technology and practices is more urgent than ever.
The SEC’s new rule is groundbreaking, but it’s not the first of its kind. Similar laws already exist elsewhere, such as the European Union, and the state of California has already gone ahead with its own climate disclosure rule. The California Climate Accountability Act was signed into law in October 2023, and it will require both public and private companies that do business in the state (with annual revenue over $1 billion) to report on emissions, including Scope 3 emissions.
These unprecedented new emissions reporting requirements from the SEC will go into effect in 2026, and companies are now scrambling to build teams to focus on this reporting and work to reduce their emissions.
How to Simplify Measuring and Reducing Emissions
With all these new regulations on the horizon, energy efficiency is no longer a “nice to have” especially for large national companies. Emissions reductions are vital for the planet and for businesses, and the best way to achieve this reduction is by increasing efficiency. The reality is most companies are using a lot of energy unnecessarily., In fact, commercial buildings waste 30% of the energy they consume on average, according to the Department of Energy, due to outdated equipment, overuse, and poor management. Updating energy equipment and adopting technology that can measure and save consumption is critical to eliminating waste and decreasing your carbon footprint.
Using less energy is also good for business in that it can decrease utility costs and aid profitability. The only issue is that the upfront costs of this technology and the time to install and manage new equipment—especially at multiple locations on a national scale—can be insurmountable for many businesses. That’s why so many are choosing to outsource their energy efficiency projects to an energy-as-a-service company like Budderfly.
At Budderfly, we help businesses reduce energy waste by providing upfront capital, procuring equipment, installing upgrades, managing and monitoring technology—with no upfront costs. We’re a holistic, one-stop-shop for energy upgrades, combining high-efficiency equipment with our own patented energy-saving technologies. Plus, we measure energy at every point of consumption and provide deep data and insights on emissions and savings.
We’re already helping more than 6,000 businesses across the country, including national-scale chains, franchises and more. If you want to chat about these upcoming regulations and how Budderfly can help you get ahead with emissions reduction, contact us today.