- Real estate has a key role to play in abating a climate catastrophe.
- Only a minority of real-estate organizations have a sustainability action plan.
- JLL and the World Economic Forum's 10 Green Building Principles establish a sustainability framework for the industry and reporting guidance to benchmark progress.
Net zero commitments have surged recently as cities, investors, businesses and educational institutions signal their intent to help create a more sustainable future. This shared ambition, boosted by the UN’s Race to Zero campaign, indicates that we are moving in the right direction. But we need more. This year we must turn talk into tangible action plans and get started.
Real estate and the built environment – responsible for close to 40% of global carbon emissions – have a significant role to play. Yet JLL’s Decarbonising the Built Environment report found that only 18% of organizations have a plan for decarbonizing their real estate portfolio. While much attention is focused on new, state-of-the-art buildings that achieve the highest sustainability certifications, 70% of buildings that exist today will still be here in 2050, highlighting the need to repurpose spaces, retrofit older buildings and refurbish in line with circular economy principles.
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Companies needed a roadmap to get their real estate to net zero carbon emissions. Now they have one. To guide real estate investors and occupiers on implementing and achieving their net zero carbon targets across their portfolios, JLL has partnered with the World Economic Forum to establish 10 Green Building Principles and a related action plan that lays out the steps for implementation.
The Principles complement existing initiatives by explaining what companies need to do to deliver against their commitments such as he WorldGBC Net Zero Carbon Buildings Commitment, or others within the Race to Zero. The Principles also include reporting guidance to help companies measure progress and ensure they are making meaningful annual carbon reductions that will allow them to meet their established climate targets.
The 10 Green Building Principles cover five key areas:
1. Adopting a data-driven approach
One of the first steps is knowing exactly what needs to be addressed. Businesses need to calculate a robust carbon footprint of their portfolios in the most recent representative year to inform targets.
2. Setting goals along the journey
The scale of the challenge facing us in the coming decades is daunting. It’s important that companies set a target year for achieving net-zero carbon as part of their longer-term strategy. This needs to be no later than 2050, though we’re seeing many companies and governments aim for sooner. Our new Principles recommend interim targets for reducing at least 50% of these emissions by 2030.
3. Tackling embodied carbon
Businesses need to maximize emissions reductions for all new developments and major refurbishments in the pipeline to ensure delivery of net-zero carbon by their final target year.
Measuring and recording the embodied carbon emissions associated with the materials and construction processes for new developments and major refurbishments is essential. The World Green Building Council estimates it will account for half of the entire carbon footprint of new construction between now and 2050. Reducing it through measures such as low-carbon materials, modular construction and implementing a circular economy approach will be a critical factor in real estate’s ability to reach net zero.
4. Focusing on clean energy
Reducing the energy buildings consume is central to a net zero future. This means businesses need to drive energy optimization across both existing assets and new developments. They also need to maximize the supply of on-site renewable energy, and make sure all off-site energy is procured from renewable-backed sources where available.
Any residual emissions need to be compensated for by purchasing high-quality carbon offsets. A lot of guidance has come out in the past year, but there’s more to come, especially through the SBTi’s Net-Zero Standard.
5. Collaborating widely
Reaching net-zero carbon emissions by 2050 is going to require teamwork at nearly every stage. Our Principles call for engaging with stakeholders in the value chain to reduce scope 3 emissions (indirect emissions in the wider value chain). Businesses also need to develop more partnerships to better identify opportunities and equitably share the costs and benefits of interventions.
What is the World Economic Forum doing to support the Future of Real Estate?
While investable real estate has grown by more than 55% since 2012 (PwC), the COVID-19 crisis has underscored weaknesses in relation to human and planetary health along with drastic inequalities, leaving a stark reminder of the influence the built environment has on societies and the vulnerabilities that exist in times of crisis regarding how spaces perform.
As the real estate industry looks towards recovery, the need for transformation is clear. Portfolios must be rebalanced, and distressed assets repurposed. Technology must be fully embraced, and sustainability and wellness must be at the core of design and operation. The affordable housing crisis that already existed pre COVID-19 must be systemically approached to ensure access to adequate and affordable housing. If the Real Estate industry is to deliver transformation, it is more important than ever to ensure that policy, financing and business solutions are aligned in delivering better buildings and cities.
The World Economic Forum has brought together CEOs from the Real Estate industry to develop a Framework for the Future of Real Estate to help drive the industry’s transition to a healthier, more affordable, resilient and sustainable world.
There is no time to waste. Investors and occupiers need to deliver against the commitments they have boldly made. With the 10 Green Principles framework, it’s no longer a question of how can we reach net zero, but how can we push ourselves to get there faster. I urge leaders to adopt the Principles and make 2022 the year that real estate turns commitments into action.
To learn more about formally adopting the Principles, please reach out to the Forum.