Mandatory disclosure programs (and why they work)

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As cities expand and multiply, their citizens and infrastructure are greatly affected by the environmental risks and associated costs of climate change. For this reason, many cities and some states are requiring that the energy performance and/or carbon emissions of buildings be disclosed. These mandatory disclosure programs have been so successful in reducing carbon emissions that a growing number of states, counties and cities are now adopting them.

How mandatory disclosure programs operate

Typically, these programs require annual disclosure for commercial and sometimes multi-residential buildings over a certain size. In New York City, for example, the policy applies to buildings over 50,000 square feet. These buildings constitute only 2 percent of New York City’s buildings, but account for 50 percent of the total floor area of commercial buildings. The relatively small number of buildings makes the program manageable, while the large floor area that they represent can make a significant impact. Many U.S. cities have set ambitious goals. Portland, Ore. set a goal of cutting carbon emissions by 80 percent by 2050. Atlanta projects that its ordinance will drive a 20-percent reduction in energy consumption by 2030.

Mandatory disclosure programs drive successful outcomes

According to the Institute for Market Transformation (IMT), mandatory disclosure programs by states and cities are effective in terms of reach and compliance, with 4 to 16 times greater reach than voluntary and incentive programs, and high compliance rates in the range of 75 to 90 percent in the first year.

Absolute annual energy reduction achievements from these programs are also successful, averaging year-over-year savings of 2.4 percent for a building — which for a 500,000-square-foot office building would represent cumulative energy cost savings of about $120,000 over three years. This corroborates findings by the U.S. EPA that buildings that are benchmarked save about 7 percent in energy over three years.

More than 70 percent of facility managers surveyed say that the benchmarking information helps guide energy efficiency upgrades in their buildings, and 67 percent say it helps justify energy efficiency improvements.

Benchmarking brings value to building owners and occupants

Benchmarking is valuable to owners and occupant organizations because it helps them to understand their building’s relative energy performance, and motivates them to cut energy waste. One way that many cities support benchmarking is by creating impressive data visualizations that make it possible for building owners to compare individual buildings to their local peers. There was a time when reporting energy performance was a tedious exercise that involved the manual entry of energy data. Now, bill-processing services and the ability to link utility meter readings to reporting platforms make it relatively painless to capture the data.

But what does all this mean for occupants? Since approximately 50 percent of energy in buildings is attributed to the energy used in occupant spaces, clearly the trend toward mandatory energy disclosure will have an impact on tenants. For example, some cities may require mandatory tenant energy metering when leases are up for renewal, and there may be a greater interest in green lease clauses that shift some of the burden for energy efficiency to the tenants.

Simone Skopek is an Operations Manager in Energy & Sustainability Services at JLL. Simone has been pioneering programs at the firm that address sustainability and productivity in the workplace, as well as building resiliency and emergency management. She was one of the original creators of the Green Globes certification program and BOMA Best. Past careers include Critical Infrastructure Analyst with the government of Canada’s Public Safety department. She was also a high school physics, chemistry and biology teacher, and sailed around the world for seven years in a 30-foot sailboat.

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