The built environment is under the spotlight when it comes to greenhouse gas (GHG) reporting. In an age where everyone is running the race to Net Zero, organizations with large real estate portfolios face huge environmental pressure to reduce emissions and take accountability for improving the industry’s sustainability record.

With this in mind, it’s now more important than ever that commercial real estate (CRE) sector executives understand how to effectively declare GHG emission levels as part of their sustainability reporting efforts. 

However, with large international portfolios expanding across multiple countries with multiple regulatory frameworks, it can be challenging to grasp what exactly compliance looks like and how emissions should be reported in each jurisdiction.

This article will explain how to accurately report GHG emissions for your portfolio, including those you are directly (Scope 1) and indirectly responsible for (Scope 2 and 3). It will also explain the key regulatory frameworks within the European Union (EU) and the United States and the key differences in reporting standards.

Reporting greenhouse gas emissions for CRE buildings

When delivering GHG emissions data as part of a business’s wider ESG report, many rely on the Greenhouse Gas Protocol. In 2016, 92% of Fortune 500 businesses relied on its process when reporting to CDP, a global non-profit organization supporting voluntary ESG performance reporting.

The GHG Protocol has become a benchmark in terms of global emissions reporting, particularly the practice of quantifying emissions for which the organization is both directly and indirectly responsible through its supply chains, processes, etc.

The Scope of GHG reporting

Under the GHG protocol, businesses are required to report the following:

Scope 1 Emissions — these are recorded GHG outputs for which the company is directly responsible in its operations. In CRE, this will include reporting emissions levels from each building in a portfolio. This could be emissions from HVAC system usage, company vehicles, or other plant equipment.

Scope 2 Emissions — these are emissions stemming from a company’s electricity consumption. ESG green buildings may offset this through on-site renewable energy generation (solar panels, wind turbines, biomass power, etc). However, the GHG emissions from the electricity source used to power assets will come under this scope.

Scope 3 Emissions — these are all emissions the organization is responsible for through its supply chain or lessees, regardless of whether it has direct control or ownership over them. This will likely outweigh the totals of scopes 1 and 2 in CRE due to the breadth of conditions under scope 3. 

According to the UK Green Building Council, up to 85% of a CRE organization’s total output can fall within scope 3, with everything from lesser energy consumption to transportation and supply of capital goods included.

Key data points required for GHG reporting

Delivering accurate GHG reporting can be challenging for large, multinational CRE businesses with complex international portfolios and supply chains. With ever-increasing investor pressure to meet decarbonization goals, it is important to understand how GHG data is collected.

It hinges on collecting key data points for the portfolio’s building energy consumption and wider supply chain. For each of these areas, you will need the following: 

Energy Consumption Data:

  • Building-level energy use: This includes electricity, natural gas, heating oil, propane, and any other fuels used to power the building’s operations (lighting, HVAC, etc.). Meter readings or utility bills provide this data.
  • Tenant energy use: Ideally, sub-metering for individual tenants is used. If not available, estimates based on industry standards or lease agreements might be necessary.
  • Renewable energy sources: If the building utilizes solar panels, wind turbines, or other on-site renewables, data on the amount of energy generated needs to be factored in.

Supplier Information:

  • Local energy: If a building’s HVAC system is powered by the grid, data on the energy source (e.g., fossil fuels, renewables) and its associated emissions factors are crucial.
  • Embodied emissions in materials: The emissions associated with extracting, processing, and transporting building materials. Though challenging to obtain, embodied carbon is gaining importance for comprehensive reporting (especially for new constructions).
  • Waste disposal: Information on the type and amount of waste generated by the building helps assess associated emissions from landfills or waste processing facilities.

Get started with Certify 

Accurate GHG reporting has become an integral part of environmental benchmarking in CRE, with industry ‘gold standards’ such as LEED and GRESB reliant on emissions data in awarding building standards. 

That’s why we have created Certify, an automated certification and compliance software designed to help CRE organizations compile manual GHG data from an array of sources across the buildings in their portfolio. Using this data, we present it in an easy-to-track form, which can be used to automate certification.

Compliance Requirements in Europe

The European Union (EU) and its member states have steadily reduced GHG levels since 1990 despite the bloc’s expansion, yet the EU is still behind in its 55% emissions reduction target for 2030. With European policymakers pushing ever more ambitious targets, CRE portfolio managers need to be aware of the rules that apply to them when overseeing and reporting GHG emissions levels.

Corporate Sustainability Reporting Directive (CSRD)

When reporting emissions within the European Union, there are several key regulations to be aware of. The EU’s most significant legislative action to curtail GHG emissions has been the Corporate Sustainability Reporting Directive (CSRD). 

Implemented in January 2023, the CSRD directive requires large companies and certain listed entities operating in the EU to disclose annual information on their GHG emissions levels and wider ESG goals, prepared using specific European Sustainability Reporting Standards (ESRS). The first set of ESRS came out in July 2023, and companies may need to be compliant as early as 2024’s reporting period.

Corporate Sustainability Due Diligence Directive (CSDDD)

CRE portfolio managers will also need to comply with the EU’s most recent piece of corporate emissions legislation – the Corporate Sustainability Due Diligence Directive (CSDDD). It was implemented in 2024 and operates separately from the CSRD while promoting corporate sustainability for European businesses. 

While the regulation does not provide direct GHG reporting rules, large companies with a significant EU presence will have to conduct human rights and environmental due diligence across their operations and value chains. As a result, CRE businesses will need to consider the environmental impact of their portfolios, from sourcing low-carbon building materials to energy-efficient building management systems.

Compliance requirements in the USA

Unlike the EU with its focus on mandatory reporting for all EU businesses large and small, U.S. legislation on GHG compliance prioritizes large emitters, targeting the country’s worst polluters with regulations based on emission thresholds. 

The Mandatory Reporting of Greenhouse Gases (GHGRP) program generally won’t apply to CRE firms, as it sets a 25,000 metric ton CO2 threshold for individual facilities before mandatory reporting is required.

SEC regulations and US climate disclosure rule

Despite this, the Securities and Exchange Commission (SEC) has taken steps towards standardizing climate-related disclosures for investors. Recognizing the importance of company ESG policies to the investment community, the SEC passed a rule in March 2024 that mandates public companies to include information about climate risks and their impact on their business in their annual reports and registration statements.

Despite this, the policy (at the time of writing) remains on hold following a number of high-profile lawsuits that challenged the SEC’s ruling. Lawyers attacked the policy on both sides; on the one hand claiming that the rules are too aggressive, while others argued that mandatory reporting rules are not broad enough compared to EU legislation.

For U.S. CRE businesses, the picture of GHG reporting remains complicated. While it is ultimately good practice to share emissions levels accurately as part of a wider ESG report, and it undoubtedly helps businesses secure environmental benchmarks such as LEED, there is still no mandatory requirement as European businesses do.

Let ProptechOS help you navigate regulatory differences for global portfolios

For multi-national businesses managing complex CRE portfolios in Europe and the United States, the picture is complicated with two sets of rules guiding reporting on GHG for commercial buildings.

While nobody knows what the future holds for regulatory frameworks on emissions levels, ProptechOS offers a full suite of ESG-friendly solutions to help your CRE business meet its GHG emissions targets. 

Optimize allows facilities managers to carefully control and scale the energy efficiency for buildings across a portfolio. Certify integrates sensor telemetry with digital twin technology to automate building regulation compliance and benchmarking certifications. Both combine with ProptechOS’s integrated Energy Toolbox to promote your organization’s operational efficiency and reduction of GHG emissions.

Your CRE business can sign up for a free trial today.

Per Karlberg

Per Karlberg, a distinguished technology executive, demonstrates deep expertise in the nexus of real estate, technology, and ESG. Holding advanced degrees from Lund University, and with key roles as CEO of our company and Co-Founder of ProptechOS, he has shaped the proptech field through significant contributions to real estate technology advancements. His instrumental work in co-authoring “The realestatecore ontology” has facilitated digital transformation and ESG breakthroughs in the real estate sector.

Read his full bio and information here.