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September 29
The weekend is almost here!
It's all about the data. New regulations in California regarding carbon emissions reporting means companies, both public and private, must get in compliance quicker than expected. Plus, why some are making big bets on the U.S. rental market.
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The biggest change to emissions reporting in decades
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What's going on: California's carbon disclosure regulations are happening sooner than expected. Both California and the European Union are set to approve regulations on emissions that cause climate change, the Wall Street Journal reports.
- California Governor Gavin Newsom said he would sign landmark legislation that would require public and private companies with at least $1 billion in revenue to begin reporting emissions.
- A similar rule in the EU would be far-reaching and ultimately make it clear whether companies are reducing emissions and sticking to commitments, the WSJ covered earlier.
Why does it matter: The California law is significant because it's more stringent than the SEC's proposed disclosure rule, which only affects publicly held businesses. In total, the bill is estimated to affect at least 3,900 private businesses.
The challenge: Some say Scope 3 data is "hard to reliably measure and costly to produce."
- Scope 3 emissions are produced by suppliers and customers—so these emissions are not directly owned by a company. For example, emissions in this category include a distributor's use of gas-powered transit to ship materials or the waste produced from a sold product.
- The California bill faced strong pushback because of the inclusion of Scope 3 emissions, but companies like Apple and Salesforce advocate for the regulation.
- What's more: There is a new industry of data suppliers from Big Four accounting firms to startups that work to gather and share complex Scope 3 data to ensure companies are in compliance.
The big picture: These rules are happening at a time when governments are subsidizing the energy transition—there are billions of dollars of incentives for companies looking to cut carbon emissions. Investors are on the same page and are willing to spend money to reduce emissions, WSJ reports.
- “There is a clear, worldwide, growing regulatory momentum for consistent information,” one industry expert told the WSJ. “Investors, companies, clients, employees, customers are all saying they don’t want to be blindfolded.”
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STORIES WE READ THIS WEEK
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Global demand for green workers is about to outstrip the supply
“The biggest challenge right now, in my humble opinion, is not technology,” one agricultural tech co-founder told Quartz. “We have got to start with credentials and degree programs that follow this industry, because right now there’s not a lot of really trained folks [going] into this industry. That’s a massive problem.”
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This post is presented for informational purposes only, is not intended to recommend any investment, and is not an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Fifth Wall Ventures Management, LLC or its affiliates (collectively, “Fifth Wall”; any such investment vehicle, a “Fund”). Any such solicitation of an offer to purchase an interest will be made by a definitive private placement memorandum or other offering document.
Forward-looking statements and opinions as to carbon reduction initiatives and real estate markets or any other matters, as expressed in this presentation, are those of the individual presenters, but are not necessarily the views of Fifth Wall as a firm, and cannot constitute a guarantee of future success or profitable results. As a result, investors should not rely on such forward-looking statements and/or opinions, or on anything else contained in this post, in making their investment decisions. Moreover, certain information contained herein may have been obtained from published and non-published sources prepared by other parties and may not have been updated through the date hereof. While such information is believed to be reliable for the purposes for which it is used herein, Fifth Wall does not assume any responsibility for the accuracy or completeness of such information, and such information has not been independently verified by Fifth Wall. This post speaks as of its publication date, and Fifth Wall undertakes no obligation to update any of the information herein.
This communication is intended only for persons resident in jurisdictions where the distribution or availability of this communication would not be contrary to applicable laws or regulations.
No assurances can be given that any of the carbon reduction initiatives or other initiatives described in this post will be implemented or, if implemented, will be successful in effecting carbon reductions or any other initiatives. Investors should consult their own financial, tax, legal and other advisors in connection with any potential investment. |
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