Sustainability data is becoming more detailed, more regulated, and more difficult for real estate leaders to ignore. But the value of that data will not be determined by the quality of the disclosure alone. It will be determined by whether it influences the economics of real estate, if it changes decisions about capital, risk, operations, and asset value.
That question shaped how I approached the panel I moderated at IMN last week on SB 253, SB 261, and Scope 3 readiness.
In our preparation, I expected the discussion to focus on data collection, disclosure requirements, and regulatory readiness. Then, during an earlier panel at the conference, one speaker made an observation that reframed how I thought about my own session: sustainability had become an increasingly exclusive conversation technically sophisticated, but too often separated from the language of the business it was meant to influence.
That separation matters. Real estate leaders should care about SB 253, SB 261, Scope 3, and the growing volume of sustainability data not simply because new rules may require disclosure, but because the underlying information can reveal what an asset costs to operate, where risk is accumulating, what capital it may require, and how its value could change.
Regulation may compel the reporting. The business case lies in using the data to make better decisions about real assets.
I began wondering what would remain if we took the climate argument off the table. Would the information still matter to the business? Across IMN, there was already broad agreement that sustainability information should inform real estate decisions, an idea I had also heard repeatedly during Climate Week 2025. But agreement in principle is different from evidence in practice, so when I took the stage, I reduced the question to its simplest form: does money matter?
Nearly every hand went up. That was reassuring in a room full of real estate professionals. It shows us the relationship between sustainability and finance teams is stronger than ever. I then asked how many people believed sustainability information was materially changing which assets their organizations acquired, sold, retrofitted, financed, or prioritized for capital. Far fewer hands remained raised. It was not a scientific poll, but it exposed the contradiction at the center of the discussion: the industry agrees that the information should matter, yet it is less certain that the information is changing decisions today.
The disconnect became clearer as I moved between conversations at the conference. In the decarbonization room, sustainability meant Scope 3 emissions, disclosure, building performance, and climate risk. At a distressed-assets event next door, an asset manager might define sustainability as the ability to maintain occupancy, control expenses, secure financing, manage deferred capital, and preserve liquidity. Those definitions sound different because they are expressed through different professional vocabularies, but they describe many of the same conditions.
Energy affects operating costs. Equipment condition affects capital needs. Insurance affects cash flow. Regulation can create future expense. Tenant demand affects income. Together, those factors help determine whether an asset remains competitive, financeable, and liquid. Buildings generate income, consume energy, require capital, and carry risk. Their economics come down to what they cost to operate, what they will need in the future, whether they can attract tenants and financing, and what someone will ultimately pay for them.
Yet we continue to discuss these questions in separate rooms. That separation is not harmless; it limits sustainability’s ability to influence the business decisions it was meant to improve.
Real estate companies are collecting more sustainability information than ever. They are measuring emissions, surveying suppliers, assessing climate exposure, preparing disclosures, and building systems to respond to laws such as SB 253 and SB 261. The work is real, and so is the cost. The harder question is what happens after the information is collected.
Does it alter the price paid for an asset, change a capital plan, affect a vendor decision, or help an investor understand future operating costs, resilience, and liquidity? Or does it move from a consultant’s spreadsheet into a report and then into a folder, where it waits to be requested again next year? The industry may not have a sustainability-data problem as much as a conversion problem: converting data into ownership, ownership into decisions, and decisions into action.
That conversion requires more than a technically correct analysis. A sustainability team may describe emissions reductions and progress toward a target, while a capital committee asks what the intervention will cost, who is accountable for the savings, what assumptions drive the return, whether the owner controls the equipment, and whether the asset will remain in the portfolio long enough to capture the value. These are not competing questions. A technical opportunity explains what could improve; an investable opportunity explains why the organization should act, why it should act now, what could prevent execution, and how the result will be verified.
One reason good projects stall is that organizations often ask every sustainability initiative to pass the same financial test. A controls project may reduce operating costs. A building-performance upgrade may avoid a recurring penalty. A major equipment replacement may protect leaseability, useful life, or asset value. A Scope 3 data capability may preserve access to investors, lenders, customers, or markets that increasingly expect credible emissions information.
Those are all economic cases, but they are not the same case. A resilience measure may prove its value only when something goes wrong; that does not make the investment valueless, just as a fire-suppression system is not dismissed because it fails to generate monthly revenue. The relevant question is not always how quickly a project pays for itself. Sometimes the better question is what cost, constraint, or loss of choice the organization is avoiding.
Scope 3 is often described as an accounting challenge. For real estate, it is also a map of where the business depends on parties it does not fully control: tenants, contractors, utilities, construction-material suppliers, property managers, vendors, and joint-venture partners. A tenant’s energy use may affect building performance. A contractor’s missing data may become the owner’s reporting gap. A supplier’s compliance cost may become a higher price. A utility constraint may delay electrification, and a lease may determine whether the party paying for an upgrade is also the party receiving the benefit.
The emissions number matters, but behind it sits a more operational question: where do we have control, where do we have influence, and where could someone else’s decision become our cost? That is carbon accounting, but it is also asset management, procurement, operational risk, and basic economics. Seen this way, Scope 3 readiness is not only about producing a defensible inventory. It is about understanding the commercial relationships and operating dependencies behind the number.
In real estate, that dependence eventually reaches the lease. If a tenant controls energy use, holds the relevant utility data, or determines how a space is operated, the owner may still carry the reporting obligation or economic exposure without having direct control over the activity. Green lease provisions can help close that gap by addressing data sharing, access to equipment, operating responsibilities, cost allocation, and how landlords and tenants will work together on energy and emissions performance. In that sense, green leasing is not a separate sustainability initiative; it is part of the operating model for the asset.
None of this diminishes the importance of data. Without a credible baseline, a company cannot understand its emissions, compare assets, evaluate an intervention, support disclosure, or verify progress. Ownership and accountability are equally important. Someone must know where the utility data lives, understand the methodology, determine whether tenants control the relevant systems, decide which assumptions Finance will accept, and remain accountable after installation, when the presentation is over and the savings are supposed to appear.
But data, ownership, and accountability are directional. They tell the organization where to look, who must respond, and who has authority. They do not replace a chiller, change a lease, engage a supplier, alter an acquisition assumption, or release capital. Action is the point at which the information begins to create economic value.
That is also why one dataset should support more than one obligation. A credible emissions inventory should not exist only for disclosure. The same underlying information can establish operating baselines, reveal exposure, compare assets, support capital planning, inform lenders, and verify whether an investment delivered what was promised. The opportunity is to stop building one dataset for reporting, another for asset management, another for capital planning, and another for financing, and instead use a common body of evidence to answer what is happening, where the exposure sits, what it could cost, who owns the response, and whether the action worked.
SB 253, SB 261, and Scope 3 requirements will cause companies to gather more information. That is an important step because better visibility can expose dependencies, weak records, inefficiencies, and risks that have never been translated into business terms. But visibility is the beginning, not the outcome. The next questions are harder: who owns the issue, who has authority to respond, what decision should change, what capital should move, what happens if the company waits, and how will anyone know whether the action delivered what was promised?
Real estate does not need to choose between sustainability and economics. Buildings have always been economic systems. They consume energy, require capital, depend on utilities and tenants, face physical and regulatory constraints, and generate income – or fail to. The problem is that we have allowed sustainability to become a separate conversation about many of those same realities.
Perhaps the next stage is not another framework. Perhaps it is getting the people in the decarbonization room and the people in the distressed-assets room to recognize that they are discussing the same asset. Data points us toward the problem. Ownership and accountability tell us who must respond. Action is where value is protected, costs are reduced, and real assets change. Ultimately, that is the business we are in.
