wooden house model with "for sale" sign on grass

Commercial buildings account for 39 percent of global carbon emissions. This presents a huge opportunity to reduce carbon emissions to mitigate the climate crisis.

As concern about the climate crisis increases, real estate owners and managers are increasingly taking action to reduce the environmental impacts of their properties. A 2019 report by the Urban Land Institute (ULI) shows progress by the real estate industry in reducing carbon emissions.

Greenprint Center Promotes Environmental Performance

The Greenprint Center is part of ULI’s Center for Sustainability and Economic Performance. It comprises an alliance of global leading real estate owners, investors, and financial institutions that are committed to boosting environmental performance in the global property industry. “The vision was to create a membership-based organization represented by major investors and financial institutions to develop an industry standard for benchmarking carbon performance, hit carbon reduction targets, help visualize how we can meet those targets, and lead by example to encourage and inspire others to follow,” says Ron Weidner, Greenprint’s founder.

The Greenprint performance report tracks the environmental performance of nearly 9,000 global properties owned by Greenprint members. The 2018 report shows a 3.3 percent decrease in energy consumption from member properties between 2016 and 2017. In the past 10 years, buildings owned by Greenprint members have decreased their energy intensity by 17 percent. (Energy intensity is the total energy use divided by the total floor space of the property.)

These real estate member companies can lead by example, helping to set a precedent in the industry.

Demand for Reduced Greenhouse Gas Emissions

As concern about climate change increases and Millenials come of age, it is more important than ever to cater to green market demand. Consumers are also encouraging environmental performance in the real estate industry.  A 2015 study by Nielsen shows that 73 percent of Millenials are willing to pay more for green products. “Despite the fact that Millennials are coming of age in one of the most difficult economic climates in the past 100 years, they continue to be most willing to pay extra for sustainable offerings — almost three out of four respondents,” says Nielsen.

Setting and realizing environmental performance goals can be a smart financial decision for real estate firms. Many residential and commercial tenants of all ages are demanding more energy and water-efficient properties with decreased waste generation. These initiatives don’t just reduce negative environmental impact. They can also increase property values, comfort, and corporate reputation while reducing operating expenses. Many investors are also demanding environmental performance from real estate firms both because it is the right thing to do and its impact on economic performance.

Setting Building Performance Targets

One of the most tangible ways for real estate companies to have greener properties is for firms to use Science-Based Targets (SBTs) for setting and reaching building performance goals. This data-driven approach sets specific goals for greenhouse carbon emissions to mitigate climate change.

The SBTs often create the reduction percentage, deadline, and baseline year for different types of goals, referred to as scope 1, scope 2, and scope 3 emissions based on the sources. Targets send a clear message to socially-responsible investors, tenants, employees, and the community that a company is serious about taking action. These goals also allow investors and customers to assess progress.

Green Governmental Policies

Many national and local governments are also creating policies that reduce the carbon emissions of buildings. Some building codes are becoming stricter regarding energy performance and policies exist in some areas to keep construction and demolition debris out of landfills. Vancouver, Canada was the first city in North America to target zero carbon emissions by 2030.

“This plan is more than just about reducing our carbon pollution in Vancouver,” says Sadhu Johnston, Vancouver city manager. “This is about building better-quality homes for the people who live in Vancouver. It’s ambitious, yet achievable, and will benefit everyone as we work toward our greenest city, renewable city, and healthy city goals.”

These ambitious targets in Vancouver will also encourage energy-efficient new construction projects and retrofits for existing properties. As demand increases, so will the availability of high-efficiency building products and services. Green builders, engineers, and architects can help drive change throughout the industry, thus shaping the market. There is also an increasing demand for certified products that meet rigorous standards, partially due to green building certification programs.

Support for Low-Emission Building Standards

There are several green building standards including the Passive House and Leadership in Energy and Efficiency Design (LEED) by the U.S. Green Building Council. These standards are helping to shape the industry and can be a useful tool when adopting new approaches and targets.

New buildings in Vancouver are required to satisfy a zero-emissions building standard such as the Passive House standard and to tap into a neighborhood energy utility to increase the consumption of renewable energy. Many universities, municipalities, and real estate companies are voluntarily electing to build projects that meet a specific green standard.

“The number of Passive House units in North America has quadrupled in the last year, from 500 to over 2,000 units. And a quarter of these are in Vancouver alone,” said Dylan Heerema, an analyst for the Pembina Institute in 2018. “As industry capacity develops and more builders get on board, we can expect the added cost of building to near-zero emission standards to fall or even disappear. Factor in lower bills for energy and maintenance and green buildings will increasingly become an affordable housing option.”

Looking at the Big Picture

The building and construction industry is the largest consumer of raw materials. Although energy efficiency has been a big emphasis for many players in the real estate industry, embodied energy and the circular economy are getting greater attention. Only half of a building’s total carbon emissions come from energy used during the life of a building. The other half comes from building construction, largely material sourcing and production. Careful materials selection is needed to construct buildings in a way that mitigates their effect on climate change. For example, potent greenhouse gases are sometimes used in the production of insulation products, undermining their beneficial qualities from a climate change perspective.

Recycling and reusing construction and demolition waste is an effective way to save boost environmental performance and some policies exist to support this. In Chicago, contractors are required to recycle 50 percent of construction and demolition debris and track all debris generated on a project site. This fuels the availability of materials for producing building products with recycled content.

Building and maintaining buildings that tread lightly on the earth involves looking at both the building materials and environmental performance of a project. As demand increases due to consumer and investor preferences and governmental policies, the real estate industry is making progress.

By Sarah Lozanova

Sarah Lozanova is an environmental journalist and copywriter and has worked as a consultant to help large corporations become more sustainable. She is the author of Humane Home: Easy Steps for Sustainable & Green Living, and her renewable energy experience includes residential and commercial solar energy installations. She teaches green business classes to graduate students at Unity College and holds an MBA in sustainable management from the Presidio Graduate School.