Tech Alone Will Not Prepare Businesses for Climate Regulations

Supported by R-Zero

Propmodo Technology

By Franco Faraudo · July 31, 2024

Greetings!

Global environmental regulations are tightening, yet many companies remain unprepared to comply. While climate tech advances, its success hinges on upgrading infrastructure and overcoming sociocultural barriers.

Plus, check out this week’s Propmodo Technology focus on Facilities Management with the support of our friends at R-Zero. As the world races towards net-zero emissions, commercial real estate faces increasing pressure to meet sustainability targets and reduce carbon footprints. Building owners and operators urgently seek solutions that achieve these goals without sacrificing ROI or tenant comfort. R-Zero's Building Intelligence Index offers actionable insights to improve your building's performance starting today. Download the report now to advance your decarbonization strategy.

Tech Alone Will Not Prepare Businesses for Climate Regulations

When it comes to environmental regulations on companies around the world, it seems more a matter of when not if. The European Union has already passed the Corporate Sustainability Reporting Directive, requiring large companies or those with a substantial presence in the EU to not only report on their carbon emissions but also to create a plan to reduce them. The U.S. has recently followed suit. In March, the Securities and Exchange Commission published a new rule titled "The Enhancement and Standardization of Climate-Related Disclosures for Investors." This rule requires companies to report on the “actual and potential material impacts of climate-related physical and transition risks on the registrant’s strategy, business model, and outlook.” It also mandates that companies outline their plans to mitigate these impacts.

Although these regulations have been a long time in the making, the business community still seems somewhat blindsided by them. A recent Deloitte survey highlights just how unprepared many companies are for these new requirements. Fifty-nine percent of the CFOs surveyed said they were aware of impending regulations around climate reporting but lacked the data, processes, or internal controls necessary to comply with current environmental regulations. Respondents also noted that achieving compliance with climate regulations would require “significant effort” and coordinated efforts across several departments.

Climate tech has been one of the hottest and best-funded technology categories, but the technology itself might not be enough. A Climate Technology Progress Report by the United Nations Climate Tech Centre and Network emphasized the importance of the built environment in slowing climate change. “Technological advances depend not only on the technology’s research and development but also on the support provided by urban infrastructure,” the report stated. To reach its full potential, climate tech will require upgraded infrastructure, including transport systems, water supply and sanitation networks, energy distribution systems, communication networks, and, of course, buildings.

The report recommended prioritizing comprehensive technological innovations in critical domains such as urban buildings, transportation, energy supply, water systems, and urban planning to drive a systemic and transformative urban transition. But, it also acknowledged that upgrading infrastructure is being hindered by the status quo. “Many technologies, such as cooling technologies in the building sector, show high economic feasibility and significant potential to reduce greenhouse gas emissions and/or climate vulnerability,” the report noted. The challenge is that these technologies often face “sociocultural and institutional challenges.” Climate technology advocates will need to find solutions that offer “high economic feasibility” while also overcoming these non-technical barriers. Given the current political and cultural divides in the U.S. and around the world, this will require a soft touch rather than a firm hand.

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Propmodo Technology is edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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