Preparing for Scope 3 Emissions Disclosure in NYC, California, and Canada 

California’s SB 253, the Climate Corporate Data Accountability Act, was introduced in February of 2022 and signed into law in October of 2023, with 2026 marking its first year of mandatory reporting requirements. New York is now advancing a closely aligned version of this legislation, which passed the State Senate on February 10, 2026. Both frameworks require companies with over $1 billion in annual revenue to disclose Scope 1, Scope 2, and, most notably, Scope 3 greenhouse gas emissions (subject to ongoing litigation and regulatory development). If the Scope 3 requirement remains,between California and New York, this will account for over 17% of the nation’s GDP being subject to these reporting requirements. 

While Scope 1 and Scope 2 emissions—representing direct operations and purchased energy—are more straightforward to quantify, Scope 3 emissions present a challenge of greater complexity. Defined by the Greenhouse Gas Protocol across 15 categories, Scope 3 captures indirect emissions throughout an organization’s value chain, both upstream and downstream. Although not all 15 categories are material for every organization, determining relevance and accurately quantifying emissions requires a granular understanding of operations and supply chain. Importantly, regulations such as these Acts rely on the Greenhouse Gas Protocol as the foundational methodology for calculation and disclosure, reinforcing its role as the global standard for emissions accounting.

For the real estate sector, three categories are particularly significant: 

• Category 2: Capital Goods, which captures embodied carbon. This includes everything from raw material extraction and manufacturing to transportation, construction, and eventual disposal. 

• Category 13: Downstream Leased Assets is often a major consideration in real estate, as it covers emissions from assets owned by the reporting company but operated by or leased to tenants, though in practice these emissions are often already captured through energy data collection through tenant engagement or whole building consumption. 

• Category 15: Investments is often critical, as it captures emissions from investments where the reporting entity does not have operational or financial control. This includes joint ventures, debt funds, minority shareholdings, and other investments such as holdings in companies, funds, or financial products. In these cases, the investee’s operational emissions are attributed to the investor’s Scope 3 profile rather than Scope 1 or 2, reflecting emissions associated with capital allocation rather than direct control. 

For many real estate organizations, these categories often represent the largest share of total emissions. However, the primary challenge lies not in classification, but in data acquisition. Reliable, asset-level data is often difficult to obtain, particularly when it depends on third parties such as tenants or suppliers. As a result, firms frequently rely on benchmarks or proxy data, which can vary significantly across asset types and reduce accuracy. For example, a refrigerated warehouse—requiring specialized insulation and cooling systems—has a markedly different embodied carbon profile than a multifamily building. 

As regulatory requirements expand, organizations will need to strengthen data collection strategies, improve tenant engagement, and enhance methodological rigor to ensure more accurate and transparent Scope 3 reporting. 

Canadian Sustainability Disclosure Standards (CSDS) 

The Canadian Sustainability Standards Board (CSSB) released its first standards, CSDS 1 and CSDS 2, in December 2024. These were developed to bring Canadian corporate reporting more closely into line with the international ISSB standards. Applicable to reporting periods beginning on or after 1 January 2025, the standards focus on the disclosure of sustainability-related financial risks and opportunities, as well as climate-related information. 

CSDS 1 sets out the general requirements for disclosing material sustainability-related financial information. CSDS 2 is more specific, focusing on climate-related risks and opportunities, including Scope 1, 2 and 3 emissions. 

Although CSDS remains voluntary for now, some companies are already preparing for the possibility that regulators and investors may expect mandatory reporting in future. For many, the biggest shift will be getting ready for Scope 3 emissions reporting, much like the California and New York City requirements mentioned above. In practice, this means companies are starting to assess which Scope 3 categories are most material and what processes they will need to collect that data.  

EVORA’s Services 

EVORA completes GHG inventories for our clients across all emission scopes. For first-time Scope 3 emission calculations, the process typically includes: 

1. Scope 3 category screening and materiality assessment
2. Data gap analysis and collection framework 
3. Documented Scope 3 emission calculation methodology in line with best practice guidance (i.e., GHG Protocol, etc.) 
4. Quantification of material Scope 3 emissions in line with documented methodology 

Reliable Scope 3 reporting depends on consistent, asset-level data, which is often the hardest part to obtain. EVORA supports real asset investors through data collection, validation, and management, alongside reporting, to turn fragmented inputs into robust, audit-ready disclosure. To learn more about how this can be applied across your portfolio, get in touch.