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

Complying with SEC Climate Disclosure Rules involves several critical steps for data center operators. Here's a structured approach:

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

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Navigating Climate Disclosure: How SEC Rules Impact Data Center Operators