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Decarbonization 2022: The role of commercial real estate
By Saagar Patel
Decarbonization is commonly defined as the state in which the amount of greenhouse gases going into the atmosphere is balanced by the amount taken out. The term is significant, particularly for carbon-dioxide emissions, because it describes the state at which global warming stops.
While many equate climate change with rising temperatures, the story is much more complex. Because our world is an interconnected series of systems, changes in one area have reverberating effects elsewhere. The consequences of climate change can now be seen around the globe in the form of intense droughts, rampant wildfires, flooding, rising sea levels, severe storms, melting polar ice caps and a negative impact on biological ecosystems.
The very nature of this crisis demands action by us all, but particularly those in the building industry which, by some measures, accounts for almost 40% of global energy-related carbon emissions. For building owners, operators, contractors and real estate professionals, this is the time to live the phrase “think globally, act locally.”
Commercial real estate: Part of the problem/part of the solution
As previously noted, the construction and operation of buildings is a significant contributor to global greenhouse gas emissions. The good news is there are many technical solutions available to help decarbonize this sector. The bad news is significant barriers persist that make investing in and financing these efforts difficult.
The World Economic Forum is addressing this challenge by helping the financial services industry redefine how the value of such investments are perceived and defined. The Net Zero Carbon Cities program was launched to consider the social, environmental and system performance outcomes of improved buildings, in addition to traditional financial measures.
Saagar Patel
Reaching consensus: Standards and goals
Commercial real estate developers are working with local governments to set these sustainability and net zero targets. However, the continued lack of consensus on exactly what “net zero” means makes this type of planning a challenge.
Progress is being made by the International Organization for Standardization in defining the world’s first consensus-based net zero guiding principles and the benchmark for the climate agenda. The organization recently announced the launch of the International Workshop Agreement (IWA) to help accelerate the development of net-zero guiding principles. The initiative hopes to solve a tricky conundrum: How do you translate the science-based concept of net zero into specific, actionable rules and guidelines?
Until a consensus is adopted, companies and developers can follow guidelines suggested by the Science Based Targets initiative (SBTi). The SBTi is described by the organization as “the gold standard for net-zero target setting, which is vital in enabling companies to identify and reduce their emissions and limit temperature rise to 1.5°C.” That is the limit most scientists agree must be achieved by 2050 to avoid the worst effects of climate change. SBTi released its 2021 Progress Report that indicates the initiative doubled the number of new companies setting and committing to net zero targets. The report also showed a tripling of the rate at which these targets were validated. The organization reports more than 2,200 companies representing ore than one-third of the global economy’s market capitalization were working with SBTi in establishing net zero emissions goals.
The Intergovernmental Panel on Climate Change (IPCC) also recently issued a special report, Climate Change 2022: Mitigation of Climate Change.
