Climate Disclosure Mandates: How Real Estate Must Adapt
By James Morton
For decades, the property sector has enjoyed a relative lack of scrutiny compared to other carbon-intensive industries. But that era is ending. Around the world, regulators are moving to make climate risk disclosure mandatory, and real estate is increasingly in the crosshairs. From New York City to London, developers, landlords, and investors are being told: show us how your buildings impact the climate—and how the climate impacts your buildings—or face the consequences.
The Rise of Climate Accountability
The urgency comes from two directions. First, buildings are responsible for nearly 40% of global energy-related emissions, making them a central focus for climate policy. Second, the physical risks of climate change—floods, heatwaves, wildfires—are becoming impossible for insurers, banks, and investors to ignore. Properties that fail to demonstrate resilience and efficiency are at risk of becoming “stranded assets”: difficult to insure, expensive to finance, and unattractive to tenants.
Governments and regulators are responding with new disclosure requirements that move well beyond voluntary ESG reports. These rules demand hard data, clear strategies, and transparent progress on decarbonisation and adaptation.
Local Law 97: New York Leads the Way
New York City’s Local Law 97 is among the most ambitious examples. Introduced in 2019 as part of the city’s Climate Mobilization Act, it sets strict caps on greenhouse gas emissions from buildings larger than 25,000 square feet. Owners must disclose annual emissions and face fines if they exceed the thresholds. From 2024 onwards, the caps tighten progressively, pushing landlords to invest in retrofits, efficiency upgrades, and clean energy solutions.
The message is blunt: if you own property in New York, you cannot ignore carbon. Already, the law has triggered a wave of investment in energy audits, façade improvements, and HVAC upgrades. Those who act now may reap benefits in reduced penalties and increased tenant demand. Those who delay risk fines and falling asset values.
UK and US: Expanding the Net
Across the Atlantic, the UK is tightening requirements through initiatives aligned with the Task Force on Climate-related Financial Disclosures (TCFD). Large property companies and listed REITs are expected to publish detailed climate risk assessments, including exposure to physical hazards like flooding as well as transition risks linked to regulation and market shifts. Plans for retrofitting and decarbonisation must be disclosed in increasing detail, setting a new benchmark for transparency.
In the US, the Securities and Exchange Commission (SEC) is finalising climate disclosure rules that will apply to public companies, including major real estate firms. These rules will require disclosure of energy use, greenhouse gas emissions, and climate-related risks to business models. The implications are clear: reporting is no longer optional, and investors will be armed with data to compare the performance and resilience of different portfolios.
The Stakes for Developers, Landlords, and REITs
For developers, disclosure mandates mean embedding sustainability into the earliest stages of design. Future-proofing assets is not just about compliance, but about ensuring long-term marketability. For landlords, the challenge is operational: improving efficiency in existing stock, often through costly retrofits. And for REITs, climate disclosure is fast becoming central to investor relations. Asset managers now expect not only reporting, but evidence that risks are being mitigated.
Ignoring these trends could make properties financially toxic. Assets that cannot demonstrate efficiency or resilience may face higher borrowing costs, declining valuations, or exclusion from investment portfolios. Conversely, proactive disclosure and mitigation can build investor confidence, open access to green finance, and differentiate a company in a competitive market.
From Box-Ticking to Strategy
The danger is that disclosure is treated as a compliance chore: a flurry of spreadsheets and carbon inventories filed away until the next reporting cycle. But the real opportunity lies in using these mandates as a catalyst for strategy. A flood risk assessment, for example, should trigger investments in resilience measures—whether through raised equipment, flood barriers, or nature-based solutions. Energy reporting should inform systematic retrofit programmes, lowering operational costs while slashing emissions.
Some firms are already seizing the opportunity. Those that publish detailed decarbonisation roadmaps, backed by credible interim targets, are attracting positive attention from investors. In an environment where capital increasingly follows climate performance, disclosure done well becomes a competitive advantage.
Conclusion: The Future of Real Estate Is Transparent
Climate disclosure mandates are not a passing trend; they represent the new rules of the game. Real estate, long accustomed to slow change, must now adapt at speed. Those who embrace the shift—embedding resilience and transparency into their core strategies—will not only avoid the risk of stranded assets but position themselves as leaders in a market that rewards climate responsibility.
The message for the sector is simple. Treat disclosure not as a burden, but as an opportunity to think long-term, build resilience, and align with the low-carbon future. In the age of accountability, transparency is no longer optional—it is the foundation of value.
References:
New York City Council. (2019). Climate Mobilization Act: Local Law 97.
UK Financial Conduct Authority. (2023). TCFD-Aligned Disclosure Requirements for Real Estate.
US Securities and Exchange Commission. (2024). Proposed Rules on Climate-Related Disclosures.
Urban Land Institute. (2024). Climate Risk and Real Estate Investment.
C40 Cities. (2024). Building Transparency: Global Trends in Climate Disclosure.