Disclosure 101: How Information Sharing Can Mitigate Environmental Harm
Environmental regulation has tried the carrot, and it’s tried the stick, both with mixed success over the years. Now it’s taking a new approach – requiring public disclosure of information. Forgetting rewards or punishment, environmental regulators are instead putting a window into companies’ environmental performance and allowing the public to indirectly decide if the company should work to mitigate its environmental harm. This new wave of disclosure-focused regulation operates under two basic principles: 1) the public will demand change if it wants it, and 2) you can’t reduce what you don’t measure.
One of the best-known regulations based on disclosure is the Toxics Release Inventory (TRI). Under the regulations of the TRI, companies producing or handling above a set level of certain listed chemicals must report exactly how much they are releasing into the environment. This value is then listed in a publicly available dataset. Though the TRI did not require any reductions in the volume of chemicals produced or handled, it was wildly successful in reducing the amount of toxic chemicals entering the environment. Why? For exactly the two reasons mentioned above: 1) the general public was now aware of chemical releases in its nearby environment, and 2) perhaps a bigger driver, many companies had been producing these byproducts at inefficient levels, but they simply had no idea how much they were producing. By being forced to measure how much waste they were generating, companies were uncovering production inefficiencies and were able to identify ways to decrease their waste production, saving the company money and lessening the amount of toxic waste entering the environment.
After successes with pollution prevention, disclosure-based regulation is beginning to make its way into the realm of climate mitigation. Many local and state governments have started to enact ordinances that require buildings to report their energy usage in hopes of decreasing citywide greenhouse (GHG) emissions. In 2013, the City of Boston passed its own law, the Boston Energy Reporting and Disclosure Ordinance (BERDO), becoming one of now 22 cities, two counties, and six states to do so and providing me with an internship for the summer. BERDO joins a gamut of other energy-related initiatives that recently earned Boston the title of the most energy efficient city in the US, bestowed by the American Council for an Energy Efficient Economy.
The 2014 calendar year was the first year that residential buildings (over a certain square footage) had to report their energy use. I am most excited for this data because I believe BERDO can have a substantial impact within the residential sector. Though housing is limited in Boston, choices still exist, and there is a relatively rapid turnover. Publicly disclosed energy data gives tenants one more measure by which they can compare housing options, while also giving owners of highly efficient buildings a marketing advantage. And going back to reason #2 described above, BERDO is likely to point out inefficiencies that landlords were unaware of, thereby driving low-cost, rapid-return efficiency investments. Further, the ordinance will hopefully begin to address the problem of landlord-tenant split incentives regarding energy efficiency upgrades, but that’s a subject for another blog post. I am looking forward to preparing this data for the public’s use and (many years down the line, of course) seeing how this data affects buildings’ energy efficiency.
Though BERDO does not require a certain level of energy efficiency, it disseminates knowledge amongst building users. And knowledge, particularly for tenants of buildings, is power.
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