03/31/2022 | by Sarah Borchersen-Keto

Proposed Securities and Exchange Commission (SEC) rules to enhance and standardize climate-related disclosures for investors are just the first step in terms of finding the right balance of what's required from a regulatory perspective, said Uma Pattarkine, a senior investment strategy analyst and global ESG lead for CenterSquare Investment Management.

Pattarkine told the REIT Report that the SEC proposals were “a lot more robust than I had originally anticipated,” given the level of initial disclosure, and require REITs to be able to get a lot of that data at the property level.

Many REITs, Pattarkine said, are already committed to science-based targets. For such companies, the SEC proposals will not impose any additional burdens. However, for REITs that have been lagging in terms of collecting data, “it's going to take a lot of work for them to get to what the SEC might require from a disclosure perspective.”

Pattarkine also noted that there is still inconsistent data as it relates to truly understanding the diversity, equity, and inclusion practices and policies that are in place at REITs. “We're really focused on making sure that REITs understand the importance of this, understand that it needs to be measured, it needs to be managed, and it needs to be something that's communicated externally with stakeholders.”

In terms of future ESG trends that CenterSquare will be watching, Pattarkine said regulatory matters will be a big piece of the puzzle going forward. Understanding the data collection and verification requirements related to having better disclosures from an ESG perspective, especially regarding climate change and net zero transition—and how companies are tracking as it relates to the Paris agreement—will be “extremely important,” she noted.

The relationship between the built environment and human health will be another key topic to watch, Pattarkine said.