As sustainability gains momentum, regulators are enforcing stricter reporting requirements for climate-related disclosures. The SEC and California have issued new laws impacting public and private companies, signaling the urgency for businesses to comply with ESG reporting standards. Despite this, only a small percentage of organizations have established frameworks for ESG reporting, highlighting the need for companies to progress in their environmental reporting efforts.
Preparing for ESG reporting may take longer than expected, particularly for companies with significant real estate operations. Lease data can be time-consuming to gather and manage, requiring accurate and up-to-date information to meet regulatory requirements. The SEC is closely scrutinizing environmental statements, and companies that provide false disclosures may face legal consequences and reputational damage.
The Office of Finance plays a crucial role in driving ESG reporting initiatives, but many companies are failing to disclose climate-related impacts in their financial statements. With stakeholders increasingly focused on environmental impact, organizations must consider the implications of ESG reporting on financial performance. Collaboration between different teams handling carbon-related assets is essential in setting benchmarks and reporting processes.
Despite being the group with the most visibility into a company’s portfolio, real estate teams often lack involvement in ESG reporting efforts. Inadequate lease controls and lack of investment in technology and processes contribute to challenges in managing lease-related expenses. Real estate and operational executives must prioritize ESG reporting by implementing strong management practices and providing accurate data to support finance teams in tracking greenhouse gas emissions and establishing sustainability goals.
Looking ahead, 2024 will be a critical year for organizations to enhance their ESG reporting efforts as stakeholders become more engaged and new reporting mandates are introduced. Companies that delay ESG reporting may struggle to catch up, while those that prioritize collaboration between finance and real estate teams will be better positioned to achieve compliance and contribute to a more sustainable future. Organizations must invest in processes and systems to ensure effective collaboration and transparency in ESG reporting, aligning with evolving regulatory requirements and stakeholder expectations.
