Purpose of CRREM
The Carbon Risk Real Estate Monitor (CRREM) provides the real estate industry with transparent, science-based decarbonization pathways aligned with the Paris Climate Goals of limiting global temperature rise to 2°C, with ambition towards 1.5°C. These pathways enable industry stakeholders to estimate carbon and stranding risks associated with premature obsolescence and write-downs due to changing market expectations and legal regulations, encompassed within what is categorized as ‘transition risks’.
CRREM offers a comprehensive framework focused on carbon risk exposure and potential strategies to reduce this risk, and includes the elements needed to undertake scenario analysis. As such it can be used to comply with large-scale initiatives such as the Task Force on Climate-related Financial Disclosures and the EU Taxonomy for sustainable activities.
GRESB supports CRREM as one of its consortium members, which includes the IIÖ Institute for Real Estate Economics, the University of Alicante, Ulster University, and TIAS Business School.
The original CRREM project was funded by the European Commission’s Horizon 2020 Programme. APG, PGGM, NBIM, GPIF, and Ivanhoé Cambridge have funded the expansion of the CRREM pathways to include major real estate markets outside the EU, as well as the residential real estate sector.
The global pathways were derived with oversight from the CRREM Scientific Advisory Committee.
CRREM Decarbonization and Energy Reduction Pathways
CRREM uses GHG emissions (and energy consumption) divided by floor area coverage to determine an individual asset’s intensity-based transition pathway. This details how specific assets need to become more efficient in order to align with certain transition scenarios. Each pathway extends to 2050 and is composed of annual trajectories of building-related carbon- and energy-intensities, expressed in kWh per m2 and CO2 per m2, respectively.
A three-month-long public consultation has confirmed the approach taken for the decarbonization pathways. The final CRREM decarbonization pathways for the global real estate sector are now available. Pathways will be regularly updated in the future to ensure that the latest climate and market data are leveraged as an underlying basis.
The Institutional Investors Group on Climate Change (IIGCC) recently released its Net Zero Investment Framework for consultation, in which it highlights the CRREM methodology and recommends its use to determine the alignment of real estate assets with a 1.5°C pathway.
Integration of CRREM pathways into the GRESB Portal
GRESB has been an active member of the CRREM project and has served as a resource to its development. As such, the CRREM Tool aligns closely with the performance data GRESB collects on real estate assets.
As a first step in the integration of the CRREM pathways, GRESB automated the process of filling in the CRREM Tool with asset-level performance data uploaded to the GRESB Asset Portal. This meant that some GRESB Participants could trial using their asset-level data to identify and manage transition risks for individual assets against the CRREM pathways for commercial properties in the EU27 and UK.
During this stage, GRESB gained intelligence about the issues important to GRESB Participant and Investor Members when it comes to assessing transition risk in their portfolios.
In the next phase, we will focus on providing enhanced transition risk analytics through an in-house solution powered by the GRESB Portal (Transition Risk Report.) The new solution will have an expanded scope, now covering all global CRREM decarbonization pathways, including those for residential assets. In light of this development, the trial functionality to export the GRESB Asset data into the CRREM tool will no longer be supported. This will allow us to put our efforts into making this new product available to our members later this year.
CRREM Reports, Articles and Releases
- Consultation: Net Zero Investment Framework (August 2020)
- Press release: Public Consultation Confirmed Approach of CRREM Decarbonization Pathways for Real Estate (August 2020)
- Press release: Decarbonization Pathways for Real Estate Available for Public Consultation (May 2020)
- Pensions & Investments: Real estate getting its own climate-change benchmark
- IPE Real Assets: ESG: Are you exposed to climate-change risk?
- IPE Real Assets: Institutional Investors fund real estate ‘ decarbonization pathways’ initiative
- Press release: Investors fund new initiative to assess climate change transition risk in global real estate investment portfolios (September 2019)
- Download CRREM Report No. 1: Stranding Risk & Carbon: Science-based decarbonizing of the EU commercial real estate sector
- Download CRREM Report No. 2: Carbon Risk Integration in Corporate Strategies within the Real Estate Sector
- Download CRREM Report No. 3: Retrofit Harmonization Roadmap
- Download CRREM Report No. 4: Report on Completion of Pilot Testing Phase
- Download CRREM Report No. 5: CRREM Report of “Lessons Learned” on Best-practise Users