Jun. 14, 2022
For background, Conservice is uniquely positioned to provide a comment in regard to the availability of utility data which is required in order to provide the disclosures under this proposed rule. Conservice is the largest provider of bill processing and bill payment services on behalf of commercial real estate owners for their electrical and natural gas consumption. As such, we are positioned to have deep perspective into the availability of data which is required to disclose the risks called for by this rule. While we support the disclosure of climate risks, it is important that this disclosure be based on reliable data. However, typing this rule to the 10-K disclosure poses several potential risks that reduce the accuracy of the data. Issues to be aware of include: 1. The billing period for utilities provide the foundation for the calculation of greenhouse gas, in particular, the amount of electricity (Scope 2) and natural gas (Scope 1). These consumption amounts are provided in a timeline ranging from 15 to 45 days post meter read date. As the 10-k is due 90 days from the date of fiscal close, this compresses the ability to process, analyze, and disclose risks associated with Greenhouse Gasses. Other ESG frameworks have nearly universally addressed this by requiring the reporting date to be 6 months or more from the end of the reporting period. For example, GRESB data is due July 1 for the prior physical year January December. This provides covered companies with the additional time required to collect, analyze, and determine the materiality of the emissions related to utilities. 2. For a large percentage of Multi-Family and Triple Net properties, tenant consumption of electricity and natural gas is not available or is available on a limited time basis. The reasoning behind this is the legal contract is between tenant and utility provider. The property owner is not a party to that agreement, and as they are not a party to that legal contract, the utilities will not provide the consumption of electricity or natural gas by the tenants who occupy the property owners asset. By definition, these are Scope 3 emissions, and in real estate significant. Loan originators have addressed this by allowing estimate usage based on a ratio formula, for example if 10% of the data can be obtained a formula can be used to estimate the overall real asset consumption. Allowing this would provide relief in those areas of the United States where utilities refuse to provide data to property owners. In those areas where whole building data is available, however it is only available on a limited basis, for example only provided once a year providing a separate climate risk disclosure timeline, not tied to the form 10-k would provide relief. Example in many jurisdictions, the local utility company will only provide whole building data once per year. That date is often tied to a local benchmarking disclosure law. The majority of these laws require a reporting date of June-July. This would prevent a covered reporting entity from obtaining the needed foundational data for calculating scope 3 emissions until past the due date of the 10-k. Taking a similar approach of a sperate risk disclosure date, not tied to 10-k, that covers the prior year like other ESG frameworks, would provide relief for this circumstance.