(F06) From commitment to action: turning net zero pledges into reality

As climate impacts intensify and regulations shift, there is increasing pressure on the real estate industry to prepare for the transition to a low-carbon economy. The world is not currently on track to achieve the Paris Agreement and associated 2030 and 2050 targets from the IPCC. According to the UN's 2022 NDC Synthesis and Emissions Gap Reports, current pledges put the world on track for an 11% increase in GHG emissions by 2030 and a 2.5 degrees Celsius temperature increase by 2100. Given buildings contribute 37% of global emissions, this means the real estate industry must accelerate its decarbonization efforts.

Building decarbonization is also being driven by new regulations that aim to mitigate greenwashing, direct capital to sustainable activities, and improve the availability of corporate sustainability information, including GHG emissions and climate risks. Major regulations include the proposed climate rules from the U.S. Securities and Exchange Commission; Inflation Reduction Act; EU Taxonomy; and Sustainable Finance Disclosure Regulation. Along with these regulations have come increasing investor expectations for owners to manage climate risks and decarbonize buildings. As the market shifts away from fossil fuels, buildings that do not decarbonize may become “stranded” and suffer from a variety of financial impacts: asset devaluation, high operating expenses, and reputation and regulatory risks.

To mitigate climate risks and adhere to the Paris Agreement, many real estate companies have made a commitment to reach net zero emissions by 2050 or earlier. Yet, relatively few companies have outlined detailed plans for how their commitments will translate to decarbonization strategy and GHG emissions reductions across the next several years, a critical time period considering the IPCC’s 2030 target.

Presented by four commercial real estate decarbonization experts, this panel will provide insight on the importance of committing to net zero and how to move from a net zero target toward implementation at the building level.
After discussing the pressures pushing the real estate industry to decarbonize (see background), we will outline the key elements to an effective net zero program: making a commitment; creating a net zero roadmap; and planning for implementation. For the commitment, we will discuss how commitments vary by scope and timeline and the major net zero initiatives available. We will then discuss how to create a net zero roadmap by combining and layering decarbonization strategies over time: embodied carbon analysis, green property condition assessments, electrification retrofits, tenant engagement, solar feasibility studies, and more. Next, we will illustrate how these strategies translate to granular decisions at the asset-level, taking factors like geography, building type, and market sectors into account. We will also discuss how to identify and manage stranding risk with tools like the Carbon Risk Real Estate Monitor and how owners should take regulations into account when implementing a net zero program. We will close with three case studies from leading real estate portfolios on how this type of net zero program is being successfully implemented at the building level.