Investors, regulators, and industry groups are making a push for decarbonization
On the eve of Earth Day 2021, the European Union worked to negotiate a climate deal that would make its 27 member states carbon-neutral by 2050—with the building sector playing a significant role in that effort. It’s become clear that the next 30 years will be absolutely critical for all industries to begin drastically reducing their carbon emissions.
The Intergovernmental Panel on Climate Change (IPCC) projects that to limit the global temperature rise to 1.5°C (or roughly 2.7°F) and prevent the worst predicted effects on the world’s population, global carbon emissions will have to reduce 45 percent by 2030 and ultimately reach net zero by approximately 2050, using a baseline of 2010.
At a recent virtual event hosted by BlackRock, guest speaker Bill Gates acknowledged the gravity of that statistic: “Every year until now emissions have been rising, and now we’re trying to drive them to zero in 30 years—that’s daunting.”
“This is going to be the most challenging tasks we’ve ever taken on because of the scale and innovation required to meet those goals,” he continued. At the same time, Gates added that investors, regulators, companies, consumers, and grassroots organizations are more driven than ever to solve the climate crisis. “We have to make sure we take all of this idealism and map it into a real plan of action,” he noted.
Building a net zero pathway
The IPCC defines net zero emissions as a scenario in which one remaining GHG emissions are balanced out by an equal amount of GHG removals. In other words, to work toward net zero, companies need to reduce the carbon emissions they generate as much as possible and negate the remainder by funding efforts such as clean energy systems, reforestation, and other activities. Decarbonization describes the process of phasing out carbon emissions from fossil fuels.
Though virtually all industries will play a role in global decarbonization, real estate is currently responsible for roughly 40 percent of all carbon emissions, so its actions have the potential to make a significant impact.
What can real estate owners start doing right now to start their journey toward decarbonization? Essential to building your strategy is identifying your lowest performing buildings (from a sustainability perspective) so that you can allocate your resources toward projects that will improve energy efficiency and carbon emissions over time.
Real estate owners are faced with the challenge of calculating and tracking not only direct emissions from building energy use (Scope 1) but also indirect emissions from purchased electricity, steam, heating and cooling (Scope 2) as well as indirect emissions that occur throughout a company’s supply chain (Scope 3). To gather and analyze all of this information, you’ll need a tech-forward solution that will help you build data coverage, completeness, and accuracy.
Related: Sustainability: Why the Metrics You Choose Matter
It’s also important to track your existing projects and certifications so that you can gauge the success of those efforts, and build stakeholder confidence that your portfolio is moving in the right direction. Creating and moving toward concrete, realistic intermediate goals is key to staying on track and building momentum.
Disclose, or fall behind
Staying accountable is critical. On the reporting front, real estate owners have several frameworks to consider. The Task Force on Climate-related Financial Disclosures (TCFD) framework is gaining momentum and is now mandatory for large companies in the UK and New Zealand. GRESB is still the go-to benchmark for many real estate owners, while other organizations choose to report to frameworks like SASB, CDP, and GRI. (For more information, see our guide to the top five sustainability reporting frameworks).
Regardless of how you choose to report, you’ll need access to a foundation of trustworthy, investment grade data on your ESG performance, improvement, and ongoing activities.
Related: COVID-19 Changed the Way We Think About ESG. What Does this Mean for Investor Disclosure?
Some real estate owners who are newer to ESG are hesitant to go public with their information, for fear that they may not score well the first time out. However, as the net zero deadline looms, failing to report will no longer be an option. The goal here is progress, not perfection—and owners will find that showing evidence improvement each year backed by accurate, timely data is a far better scenario than not disclosing at all.
Need help gathering data to report to GRESB and other benchmarks, or want to go a step further by creating a custom report for your stakeholders? Schedule a demo today to see how Measurabl can help you meet your ESG goals.