Being agents of change for real estate’s decarbonisation 🏠
The need to build emission reduction programmes for real estate
Real estate contributes to global warming and faces high risks from the physical effects of climate change. The industry is responsible for nearly 40% of the world’s greenhouse gas emissions.
Of those emissions, 30% are related to the relatively short construction phase, where design and procurement lock in carbon, and 70% are due to the building’s many years of operation.
Net Zero targets are impacting the industry, with investors needing to align their assets with climate targets and new environmental regulations changing how properties are built and operated.
These climate ambitions present serious challenges to procurement teams and senior executives tasked with meeting long-term emission reduction targets.
From a financial point of view, real estate owners are conscious of potential devaluations and buildings becoming stranded assets due to inadequate levels of sustainability performance.
That’s what the Bank of England concluded when it found that high-emitting properties lost value once climate policies were enacted.
Another challenge is that with the increasing number of extreme weather events such as storms, fires and floods, ill-prepared buildings are positioned to bear the brunt of climate change risks.
Alongside this, real estate will witness unprecedented growth in the coming decades. We’re talking about adding an entire New York City’s infrastructure every month for the next 40 years.
Urgent change is needed. While it will come at a cost, it may be outweighed by the price of doing nothing. Being proactive can be rewarded with higher rents, increased values and longer tenancies.
The opportunities to achieve emission reductions
When we think about decarbonisation, we have to distinguish the emissions associated with the construction of assets, embodied carbon, and the ones released through the operation of buildings.
There are three ways for buildings to contribute to climate change mitigation efforts:
Increasing energy efficiency: Upgrading energy-related equipment such as air-conditioning for more energy-efficient models or insulating a building can reduce its energy consumption and running costs.
Increasing renewable energy supply: Responsible for 34% of energy demand, buildings can also supply energy and accelerate the renewable energy transition. For example, roofs can be fitted with solar panels to meet consumption needs.
Reducing embodied carbon: When designing buildings and sourcing materials, developers can opt for lower-carbon materials or set sustainability requirements for their suppliers in procurement processes.
It’s not just about building new and lower-carbon assets. Existing buildings can be retrofitted to increase their sustainability standards and meet investor, regulatory and tenant expectations.
“From constructing new buildings to refitting the old, green real estate offers ample opportunities to not only accelerate sustainability, but bolster regeneration and resilience.”
Christian Ulbrich, Global CEO and President at JLL
With this comes a need to identify and partner with suppliers that can contribute to your real estate’s decarbonisation journey.
How sustainable procurement can contribute to real estate decarbonisation
As real estate organisations are increasingly focused on reducing their supply chain emissions, the importance of sustainable procurement is growing for the industry.
That means integrating environmental and social considerations into procurement decisions, along with the cost and quality associated with goods or services that buildings rely on.
We are seeing real estate construction companies such as Taylor Wimpey integrating sustainable procurement in their Net Zero transition plans:
“We are engaging with our supply chain on the net zero transition. We are also increasingly requesting suppliers to provide Environmental Product Declarations that are helping to improve understanding of product environmental impacts and embodied carbon.”
As global efforts are made to decarbonise energy production, embodied emissions will take up a larger share of a building’s emissions if supply chains aren’t incentivised to reduce them.
This is the case in France, whose power sector has one of the lowest carbon intensities in the European Union. On average, supply chains account for 50% of the country’s buildings’ emissions.
That’s where sustainable procurement steps in, and CERN’s newest building in France exemplifies how buildings can be designed and operated sustainably.
CERN wanted their new emblematic building to have low embodied and operational carbon. They leveraged lifecycle assessments to identify the best materials for the project.
CERN's new building B777 on the Prevessin Campus in France
All renderings by Vivid Vision
Biogenic materials such as timber will be favoured in the design, and the mechanical, electrical and plumbing will be engineered and chosen to require low energy consumption.
Projects like CERN’s new campus highlight the need for accurate emissions data and partnering with sustainability experts to make informed emission reduction decisions.
Supporting the decarbonisation of Clarion Housing Group
Clarion Housing Group is the largest housing association in the United Kingdom. With over 125,000 homes nationwide, they provide housing for more than 360,000 residents.
Aligned with the Sustainability for Housing reporting framework, Clarion Housing Group is committed to reaching net zero carbon by 2050.
On their way to net zero, they’re working with their suppliers to reduce waste, use less energy and water and increase their use of sustainable materials.
A first step to reducing supply chain emissions is having an accurate greenhouse gas inventory, especially for emissions arising from the procurement of goods and services.
That’s why Clarion partnered with Equipoise to measure its scope 3 emissions. Equipoise’s carbon accounting engine contributed to developing their scope 3 category 1 baseline.
Following Equipoise’s emissions analysis, Clarion were able to identify how significant scope 3 emissions were for their organisations relative to their scope 1 and 2 emissions.
Through this partnership, Clarion also identified supply chain emissions hotspot areas through tailored dashboards and can now prioritise decarbonisation actions.
Given the importance of scope 3 emissions, this plugged a crucial data gap for the company, saved their team time and resources, and is accelerating the decarbonisation of their supply chain.
One of their commitments is to procure 100% responsibly sourced timber for the homes they are building. Now, they have data to engage construction suppliers.
Partnering since 2022, Clarion is continuing to work with Equipoise to measure its emissions from purchased goods and services, increase accuracy and get insights to support decarbonisation.
Equipoise is a technology-enabled consultancy with expertise in sustainable procurement. We help organisations across a range of industries, including real estate, on their decarbonisation journey.
We calculate scope 3 emissions in line with the Greenhouse Gas Protocol, identify emission hotspots and develop decarbonisation initiatives so you can achieve emissions reductions.
Connect with Equipoise to build a business case for change, develop a roadmap to improve your sustainability performance and implement the changes you need to meet your sustainable procurement goals.
