New State Carbon Reporting Laws: What Commercial Real Estate Firms Need to Know in 2025
The regulatory landscape for carbon reporting continues to evolve rapidly, with multiple states recently introducing legislation that requires large corporations – including commercial real estate firms – to disclose GHG emissions. The new laws proposed in New York, Colorado, New Jersey, and Illinois are setting the stage for more rigorous carbon accountability, creating fresh compliance challenges and opportunities for real estate teams with holdings in the jurisdictions in question. These measures follow the model put forth by California and the EU, and while they have not yet been enacted into law, they are a potential bellwether of things to come.
Below, we take you through this new slate of legislation and what it means for real estate firms with US operations.
New Carbon Reporting Laws: A Quick Overview
New York Senate Bill 3456 - Climate Corporate Data Accountability Act
Introduced on January 27, 2025, SB 3456 is currently under consideration by the Senate Environmental Conservation Committee. The bill requires businesses with over $1 billion in annual revenue operating in the state to report Scope 1 and Scope 2 emissions starting in 2027, and Scope 3 emissions beginning in 2028. Third-party verification of reported data is mandatory, with non-compliance penalties reaching up to $100,000 per day.
Colorado House Bill 25-1119 - Greenhouse Gas Emissions Disclosure Bill
Introduced on January 28, 2025, HB 25-1119 is currently under review by the House Energy and Environment Committee. The bill mandates that entities conducting business in Colorado with total revenues exceeding $1 billion publicly disclose their Scope 1 and Scope 2 emissions by January 1, 2028, and Scope 3 emissions by January 1, 2029. Independent third-party verification is required for all disclosures.
New Jersey Senate Bill S4117 - Climate Corporate Data Accountability Act
Introduced on February 3, 2025, S4117 has been referred to the Senate Environment and Energy Committee. The bill proposes that large companies disclose their Scope 1, Scope 2, and Scope 3 GHG emissions, with reporting requirements commencing three years post-enactment for Scope 1 and Scope 2 emissions, and four years post-enactment for Scope 3 emissions. Public accessibility of emissions reports is mandated, and the New Jersey Department of Environmental Protection is designated to oversee compliance.
Illinois House Bill 3673 - Climate Corporate Data Accountability Act
Introduced on February 18, 2025, HB 3673 has been referred to the House Rules Committee. The bill requires the Secretary of State to develop rules by July 1, 2026, obligating reporting entities to annually disclose and verify their Scope 1, Scope 2, and Scope 3 emissions. Starting January 1, 2027, entities must publicly disclose Scope 1 and Scope 2 emissions, with Scope 3 emissions disclosures due within 180 days thereafter. The bill also mandates the creation of a public digital platform to house all disclosures.
What This Means for Commercial Real Estate
The introduction of these laws means commercial real estate firms must rethink how they track, report, and reduce emissions. One of the most pressing challenges is Scope 3 reporting, which includes emissions from tenant energy use, waste management, and supply chains. Tracking this data will require property owners to collaborate closely with tenants and relevant vendors, potentially revising lease agreements to mandate energy data-sharing. Implementing advanced energy management technologies can also facilitate real-time data monitoring that accurately allocates usage between tenant and landlord, further streamlining compliance.
With the increased transparency mandated by these laws – coupled with the rise of Building Performance Standards nationwide – investments in energy-efficient infrastructure will become even more critical. Real estate firms will face growing pressure to integrate high-performance HVAC systems, onsite renewables like solar and battery storage, and advanced energy management technology that can monitor performance, continuously commission equipment, and identify low-cost opportunities to save energy and reduce carbon.
Public disclosure requirements also create an opportunity for firms with strong sustainability programs to differentiate themselves. Those with clear, verified emissions reduction strategies will have a competitive edge in securing sustainability-focused investors and tenants with their own committed carbon targets. Additionally, banks and financial institutions offering green financing may offer better terms to companies with strong emissions performance.
But compliance will come at a cost. Firms must be prepared for expenses related to energy and emissions tracking software, third-party verification, other legal and administrative fees, and potential adjustments to lease structures. Failure to comply could result in significant financial penalties and reputational risk, particularly in states (like New York) where fines for non-compliance are steep. Preparing now by assessing current carbon footprints, investing in data capture technology and digital reporting solutions, and proactively engaging with tenants on energy efficiency strategies will be essential for staying ahead of these new regulations.
How to Prepare Now
The first step for commercial real estate firms is to conduct a comprehensive portfolio-wide emissions assessment. Identifying highly energy- and emissions-intensive properties relative to national benchmarks and addressing potential data collection gaps will help streamline future compliance and serve as a foundation for subsequent efforts and interventions. Investing in digital solutions (like Noda) that integrate with building management systems and can scale across entire portfolios can also help significantly, making reporting workflows more efficient, ensuring that underlying emissions data is accurate and audit-ready, and aggregating information and insights into a central platform.
Engaging tenants early will also be critical. Tenant cooperation is often essential for effective Scope 3 management, and real estate firms should begin discussions around data-sharing and sustainable leasing practices, where applicable. Proactively updating lease agreements to include energy data and emissions tracking clauses can help ensure long-term compliance (and upfront tenant buy-in) without last-minute disruptions.
Finally, it will be critical to closely monitor new state-level regulatory developments closely. Carbon disclosure requirements are still evolving, and sustainability teams will need to stay abreast of amendments, enforcement mechanisms, and the potential expansion of these laws into additional jurisdictions. Keeping up with legislative changes will ensure that companies are not caught off guard by new reporting deadlines or standards, and have ample time to compile the data necessary to comply.
The Bottom Line
Carbon disclosure mandates are rapidly becoming the new normal, and commercial real estate firms must prepare now to ensure readiness for these new upcoming requirements. By prioritizing top-down emissions tracking, developing and implementing plans to improve building efficiency, and fostering tenant collaboration through mechanisms such as green leases and tenant engagement programs, firms can meet key deadlines head-on, bolster compliance across their portfolios, and confidently future-proof operations as carbon reporting laws become more widely adopted in the years to come.
About Noda
Noda is a data and analytics company on a mission to make every building smarter, more efficient, and more sustainable. Recently ranked in the top 10 tech companies leading the charge on climate action, its AI-powered suite of products surface unique insights that empower real estate teams to reduce costs, decrease time spent on routine work, and find and act on opportunities to save energy and carbon. Discover how Noda's solutions can unlock the potential of your assets and accelerate the transition to net zero. Visit us at noda.ai to learn more.