Metrics for building energy use and efficiency is displayed on a computer with ICONICS and Microsoft logos.

Climate Change Fundamentals 

The earth’s atmosphere contains gases that affect how heat dissipates from the earth into space. This greenhouse effect is influenced by the type and quantity of greenhouse gases (GHG) in the atmosphere. In fact, human activity generates the greatest amounts of GHG, most of which come from energy generation, industrial processes, agriculture, transportation, and buildings with industrialization having accelerated production of key gases over the past 60+ years. These gases, notably carbon dioxide, methane, nitrous oxide, and human-generated fluorinated gases, have a different lifespan and potency for the greenhouse effect so often are converted into carbon dioxide equivalent (CO2e).

So, why should we care about GHG? Increasing greenhouse gases impact individuals and businesses through heat intensity, water scarcity, flooding, and sea changes. Besides negatively affecting humanity, businesses need to consider how these changes affect their operations and create adaptation strategies to mitigate the impact. Even if CO2 emissions stay at the current rate, scientific models project the average temperature to rise by 5°F and the average sea level to rise by 3.5 feet by the year 2100. Devastating statistics indeed.

Since climate change is a global problem, governments are requiring GHG tracking and reporting to promote awareness of greenhouse gas impact and to encourage long-term sustainability strategies. So, in an effort to combat greenhouse gas emissions and mitigate its effects on March 6, 2024, the United States Securities and Exchange Commission (SEC) adopted the Climate-Related Disclosure Rule.

I’ll explain what the ruling entails, but briefly, it means that large publicly owned companies will need to track and report their greenhouse gas emissions, climate actions, and effects of severe weather events. This also means that these companies will need technology to comply with these reporting requirements. That’s where ICONICS and Microsoft’s Sustainability Manager come in, to simplify the tracking and reporting of GHG. But first, a bit about the emissions categories.

Categorizing Greenhouse Gas Emissions

Greenhouse gas emissions are categorized as Scope 1, Scope 2, and Scope 3. Scope 1 emissions are generated from onsite sources such as the process to manufacture steel or the use of company vehicles. Scope 2 emissions are generated offsite. For example, the electricity used to operate a building. Scope 3 emissions have upstream and downstream components. Upstream emissions include all the aggregate GHG generated by a company’s supply chain. For example, a car manufacturer might have hundreds of suppliers that use a variety of raw materials for their products.

All the emissions from these component providers contribute to the carbon footprint of producing a car. The emissions for this category are incredibly difficult to track and interestingly overlap with Scope 1 and 2 emissions of the product producers themselves. Scope 3 downstream emissions relate to the distribution, use, and disposal of a product. For instance, for a car manufacturer, this includes the emissions resulting from shipping the car to the consumer, the emissions the car generates during its lifetime, and the emissions impact of disposing of the car in a landfill. Now on to the new SEC ruling - what it entails, and which companies will be affected.

The Securities & Exchange Commission (SEC) Climate-Related Disclosure Ruling

The SEC climate disclosure ruling joins similar legislation like the EU Corporate Sustainability Reporting Directive and California Climate Corporate Data Accountability Act by requiring large companies to report the risks climate change has on their business and how their business operations impact climate. The SEC requires information to be included in official SEC filings such as annual reports.

The requirement is for companies over $70M to disclose their Scope 1 and Scope 2 emissions and identify the “material” risks of climate stressors on their businesses. Large companies (>$700M annual revenue) must report these as part of their 2026 fiscal year; $70M+ companies need to report emissions starting in fiscal year 2028.

However, the authority of the SEC to impose this reporting has been legally challenged, and as a result, a U.S. appeals court has issued a temporary stay. The dates of compliance could be pushed out as the litigation process takes its course. Still, this ruling and other regulations show that climate impact reporting is fast becoming a requirement by corporate and government stakeholders.

As a result, companies will need technology like ICONICS and Microsoft Sustainability Manager to track and report these greenhouse gas emissions per the SEC mandate. Let me explain.

How ICONICS + Microsoft Sustainability Manager Enables GHG Reporting

ICONICS software integrates information from systems used throughout buildings and applies energy monitoring, advanced fault detection and diagnostics technology for data-driven decisions and action. This advanced analytics capability enables customers to optimize building performance and supports better sustainability for energy, water, waste, and air quality.

ICONICS energy management tools also provide open universal data connectivity and enterprise integration to a wide variety of BMS, SCADA, ERP, and control systems. These include built-in calculations, KPIs, analytics, data historian, reporting, and the rich visualization needed to take decisive action to manage and reduce utility costs and consumption. Reporting encompasses consumption (electric, wind, solar, steam, gas, water), costs (electricity, steam, water, gas), conditions (occupants, equipment runtime, air handling, zone footage), and carbon equivalent (carbon dioxide, methane).

Facility directors need to ensure occupant comfort and cost-effective operations of their buildings and at the same time support the environmental, social, and governance reporting needs of company sustainability leaders. To facilitate this reporting, ICONICS has integrated with the Microsoft Sustainability Manager to convert ICONICS facilities data into sustainability analytics that can be represented to stakeholders using Microsoft Sustainability Manager dashboards and reporting. This capability enables customers to represent their environmental impact by calculating emissions more accurately and reporting emissions in a standardized format.

ICONICS & Microsoft Help Companies Mitigate Their Climate Impact

The SEC ruling requires companies to anticipate the impact of climate change on business operations including the impact of extreme heat and wildfires, water scarcity, storms and flooding, and changes in the ocean. The SEC ruling also mandates that larger companies disclose their climate impact through greenhouse gas reporting of Scope 1 and 2 emissions and to make these impact risks visible to investors. This action requires instrumentation, data gathering, analysis, and modeling to identify emission levels.

ICONICS software can help by first allowing you to identify sources of emissions and second by enabling you to optimize your environment to be more energy efficient regardless of which industry you operate in.

This is a win-win situation. Companies gain awareness of their climate change business risks and the impact of their own greenhouse gas emissions. This valuable information/insight will allow them to take the necessary mitigation steps to curtail emissions thereby reducing their business risk. Ultimately, this is an opportunity for companies to be more mindful of their climate impact and to act for the greater good.

The Next Step in Identifying Your Climate-Related Risks

Take the next step in identifying your climate-related risks by developing a strategy to measure, report, and mitigate your emissions. Contact ICONICS to get started on doing your part.

And learn more about ICONICS integration with Microsoft Sustainability Manager by checking out this article and video on