5 Critical Steps Data Center operators need to comply with SEC Climate Disclosure Rules

SEC climate compliance for data centers is becoming a top priority as new disclosure rules demand greater transparency around environmental impact. Data center operators must now prepare to report on climate-related risks, emissions, and governance practices in alignment with the SEC’s evolving standards. Understanding the steps to compliance is essential for staying ahead of regulatory requirements and maintaining stakeholder trust.

1. Understand the SEC Requirements

• Familiarize with Regulations: Thoroughly review the SEC's climate disclosure rules. Understand the scope, specific requirements, timelines, and implications for your data center operations.
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  Start here: The Enhancement and Standardization of Climate-Related Disclosures: Final Rules Fact Sheet (sec.gov)
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• Identify Reporting Obligations: Determine which aspects of your operations must be disclosed, including direct and indirect greenhouse gas (GHG) emissions, climate-related risks, and governance around climate issues.

Resources
SEC Climate Rule: What Companies Need to Know - Persefoni
SEC.gov | Sample Letter to Companies Regarding Climate Change Disclosures

2. Establish a Climate Governance Framework

• Assign Responsibility: Designate a team or individual responsible for overseeing climate-related disclosures and compliance.
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  Resources
  Benchmarking ESG Governance: Building and Staffing Your ESG Program (gartner.com)
  Deloitte: Sustainability Governance and Reporting
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• Develop Policies: Create and implement policies that support climate-related risk management and disclosure practices.
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  Resources
  Accelerating Corporate Climate Action - CDP
  WEF Creating effective climate governance on corporate boards (weforum.org)
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• Engage Stakeholders: To ensure comprehensive and accurate reporting, involve key stakeholders, including executives, board members, and external advisors.
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  Resources
  How to Create a Stakeholder Strategy (hbr.org)
  GRI - Standards (globalreporting.org)

3. Measure and Monitor Climate Impact

• Inventory Emissions: Conduct a thorough inventory of your GHG emissions, including
  • Scope 1 (direct),
  • Scope 2 (indirect from energy), and
  • Scope 3 (other indirect emissions) emissions.

Resources
Fundamental Measures of Data Center Sustainability eBook | Nlyte
Corporate Standard | GHG Protocol
Greenhouse Gas (GHG) Emissions and Removals | US EPA
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• Set Targets: Establish clear, measurable climate goals and targets based on your emissions data.
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  Resources
  Science Based Targets initiative (SBTi) | World Resources Institute (wri.org)
  Target setting | The Carbon Trust
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• Implement Monitoring Systems: Use technology and software to monitor and track emissions and other climate-related metrics continuously.
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  Resources
  Data Center Sustainability Compliance Reporting | Sustainable Data Center | Nlyte
  Benchmark Your Building With Portfolio Manager | ENERGY STAR

4. Develop and Implement Mitigation Strategies

• Energy Efficiency Initiatives: Implement measures to reduce energy consumption, such as upgrading to more efficient hardware, optimizing cooling systems, and adopting renewable energy sources.
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  Resources
  Data Center Energy Management & Capacity Planning Tool (nlyte.com)
  Energy Efficiency in Data Centers | Department of Energy
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• Sustainable Practices: Incorporate sustainable practices in operations, supply chain management, and waste reduction.
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  Resources
  Supply Chain Sustainability | UN Global Compact
  ISO 14001:2015 - Environmental management systems — Requirements with guidance
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• Adaptation Plans: Develop plans to adapt to potential climate-related risks, such as extreme weather events or regulatory changes.
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  Resources
  Climate Adaptation Plans | US EPA
  OECD Task Force on Climate Change Adaptation - OECD

5. Report and Disclose

• Prepare Disclosures: Compile your findings and data into a comprehensive report that meets SEC requirements. Ensure the report includes your GHG emissions, climate-related risks, governance practices, and mitigation strategies.
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  Resources
  Data Center Sustainability Compliance Reporting | Sustainable Data Center | Nlyte
  GRI - Standards (globalreporting.org)
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• Review and Audit: Have your disclosures reviewed and audited by internal and external parties to ensure accuracy and compliance.Resources
  SEC Climate Disclosure Guidance | Deloitte US
  Sustainability assurance | PwC
  Climate risk and resilience (kpmg.com)
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• Submit and Communicate: Submit the report to the SEC within the specified deadlines. Communicate your climate-related initiatives and disclosures to stakeholders, including investors, customers, and the public.
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  Resources
  Data Center Sustainability Compliance Reporting | Sustainable Data Center | Nlyte
  Communicating Your Company’s ESG Strategy in 2023 (harvard.edu)
  SEC.gov | Filings & Forms

 

Navigating Climate Disclosure: How SEC Rules Impact Data Center Operators