{"id":1004761573,"date":"2025-06-18T07:54:40","date_gmt":"2025-06-18T15:54:40","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004761573"},"modified":"2025-06-24T06:22:44","modified_gmt":"2025-06-24T14:22:44","slug":"from-mandates-to-markets-how-non-financial-datas-shaping-the-future","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/from-mandates-to-markets-how-non-financial-datas-shaping-the-future\/","title":{"rendered":"From Mandates to Markets: How Non-Financial Data’s Shaping the Future"},"content":{"rendered":"\n

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Chris Pyke<\/figcaption><\/figure><\/div>\n\n\n

Recent months have brought a series of changes in the regulatory landscape for climate-related disclosures in the U.S. In particular, the Securities and Exchange Commission\u2019s decision to pause its defense of new climate disclosure requirements has been interpreted as a signal\u2014some would say confirmation\u2014that climate regulation in the U.S. will not follow the trajectory set by the European Union or international frameworks like the ISSB.<\/p>\n\n\n\n

At the same time, we\u2019ve seen adjustments in Building Performance Standards at the state and municipal levels. New York City, for example, is doubling down on Local Law 97, tightening carbon targets for 2030\u2014yet just 43 percent of buildings currently meet those thresholds. Elsewhere, such as in Denver, performance standards are evolving more cautiously, with modified timelines and reduced penalties.<\/p>\n\n\n\n

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READ ALSO:<\/strong> Will Economic Headwinds Blow Away CMBS Growth?<\/a><\/p>\n\n\n\n

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These developments may seem contradictory. But they reflect a consistent theme: U.S. climate policy for real estate’s becoming less prescriptive, more adaptive and increasingly reliant on local government and market-based leadership.<\/p>\n\n\n\n

This shift poses a challenge. In the absence of universal mandates, how do investors ensure that sustainability considerations are factored into risk and return expectations? The answer lies in data\u2014and more specifically, in high-quality, non-financial data that provides insight into management practices, operational performance and climate risk exposure.<\/p>\n\n\n\n

Climate risk is financial risk\u2014and it\u2019s getting worse<\/strong><\/h2>\n\n\n\n

Let\u2019s start with what the data is telling us. GRESB participants in the global ESG benchmark\u2014representing almost $9 trillion in real estate and infrastructure assets\u2014report rising exposure to both acute and chronic physical climate risks<\/a>.<\/p>\n\n\n\n<\/p>\n

Flooding remains the most frequently reported acute hazard. Between 2023 and 2024, the proportion of entities identifying river floods as a material risk rose from 64 percent to 67 percent. Flash floods followed a similar trajectory, increasing from 54 percent to 57 percent. These shifts reflect not only expanding floodplains and more intense storm events but also the growing recognition that flooding is no longer a marginal concern\u2014it’s a systemic operational and financial risk.<\/p>\n

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Chronic stressors show a similar pattern. Heat stress was reported as a chronic stressor by 64 percent of real estate entities in 2024, up from 57 percent the prior year. Rising sea levels were reported as a chronic stressor by 58 percent of participants, a 3 percent increase from the year before. And drought stress increased slightly as a major concern, inching up from 50 percent to 51 percent. In other words, physical risks are increasingly being watched closely by real estate participants.<\/p>\n

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These trends show up in bottom-line impacts. In 2024, 63 percent of participants reported increased capital costs associated with climate-related events, up from 58 percent in 2023. Operating costs followed suit, rising from 50 percent to 54 percent. These figures make it clear: Climate risk is not a future concern. It’s a current and growing financial liability.<\/p>\n

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Volatility underscores the need for voluntary action<\/strong><\/h2>\n

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The current policy environment makes two things clear: First, a fully standardized, mandatory sustainability reporting regime in the U.S. is unlikely in the near term. Second, the lack of a regulatory requirement does not change the financial relevance of climate resilience, energy performance or social sustainability.<\/p>\n

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This creates a gap\u2014an information vacuum that investors must now fill themselves. Fortunately, this is not a new challenge. Globally recognized standards were instituted more than a decade ago to support precisely this kind of voluntary, investor-driven disclosure. Over time, these efforts have evolved from a survey-based assessment into a globally recognized standard with defined indicators, independent materiality judgments and rigorous data validation procedures.<\/p>\n

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The lesson here is simple: In the absence of regulation, voluntary, market-led action must carry the weight. For investors, this means prioritizing asset-level data, performance benchmarking and continuous engagement with managers on issues of governance, risk and opportunity.<\/p>\n

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Data collection as a strategic capability<\/strong><\/h2>\n

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Why is non-financial data collection so important? Because it transforms sustainability from a narrative into an investment discipline. A manager\u2019s ability to identify, collect and interpret operational data\u2014on energy, emissions, water, waste and climate risk\u2014is now a basic requirement for access to capital.<\/p>\n

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This is more than just reporting. It’s about using data to answer essential questions:<\/p>\n

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