18th November 2022

Opinion: How can we use net zero targets to bring property industry together?

Opinion: How can we use net zero targets to bring property industry together?

As published in PropertyWire

By Chris Dietz, Executive Vice President, Global Operations Leading Real Estate Companies of the World®

Global real estate companies have more responsibility than ever to be pioneers of change and help turn our industry into a leader when it comes to tackling the climate crisis. Making net-zero commitments is one thing, but achieving those goals requires financial planning, infrastructural changes and cooperation from wider stakeholders. It can also include adjustments to internal policies and long-term strategies, working with governments and NGOs as well as educating our employees and customers on realistic steps towards a sustainable future.

The UN defines ‘net zero’ as reducing the greenhouse gas emissions to as close to zero as possible, with the remaining emissions re-absorbed from the atmosphere, by oceans and forests. Think of this as ‘breaking even’ from a business perspective. We need to make sure that the profits we make as businesses don’t translate as a cost the environment creating irreversible damage. Reaching net zero carbon goals is a big challenge, as we would need to reshape the way we produce, market, manufacture material, design, develop and utilise buildings.

The energy sector is the world’s most polluting industry, responsible for over half of greenhouse gas emissions; however, real estate and construction is not far behind with 39%. This is partly due to mining of construction materials and the energy consumption in building utilities. Different carbon emissions are related to the different stages in the real estate cycle. The two main categories are embodied carbon and operational carbon. Embodied carbon refers to the CO2 caused by the demolishment, maintenance and the construction of buildings, while operational carbon is emitted during the operations of a building, such as the energy used for lighting, heating, appliances and other facilities.  

The first step to a more sustainable future is to limit energy use and adopt renewable alternatives. This could be achieved through energy efficiency, replacing the energy source with fossil-free electricity. Secondly, we need to innovate building materials and use greener replacements such as recycled plastic cladding and second-hand bricks. Construction materials are very carbon intensive and environmentally friendly materials have historically been more expensive. However, using recycled material has become much more affordable due to economies of scale as more companies adopt these greener methods.

Investing in change, auditing and updating our suppliers, construction methods and operational strategies does carry additional cost. However, once change is made efficient and smart buildings are much less expensive to operate—statistically, green buildings on average are 14% less costly to operate than their traditional counterparts—and these adjustments can increase profits in the long run. It is wise to consider climate action as an investment in our future. Even though the Paris Agreement set net-zero as a goal to achieve by 2050, we are currently not on track to meet this target. We can still pull our weight if we create a cost-benefit analysis and convince other partners to get on board too. This means agents, developers, manufacturers and building facility managers to landlords and construction advisors. We need to look at every aspect, even how we transport construction material and dispose of waste. Only through togetherness and a strategic industry initiative across activities will we succeed in meeting carbon emission targets. And the only way to enforce sustainable practice is to convince the industry that decarbonisation is cost-effective in the long run. 

Decarbonisation is an industry-wide goal we need to adhere to, but what is the cost of reaching our net-zero targets and how do we get there?