Net-zero in real estate

The real estate industry is at the forefront of the global effort to combat climate change. With buildings responsible for approximately 35% of global carbon emissions, the concept of net-zero real estate is more important than ever. Achieving net zero means that a building’s operations and construction result in no net carbon emissions, through a combination of energy efficiency, renewable energy procurement, grid integration, and use of sustainable materials. 

The urgency of addressing climate change is increasing, with governments, investors, and businesses pushing for actionable strategies to reduce emissions. For the real estate sector, this is both a challenge and an opportunity. Net-zero buildings not only reduce environmental impact but also offer economic benefits, including lower operating costs, increased asset value, and alignment with growing investor and tenant demands for sustainable properties.

The pace of change in the real estate industry is accelerating. Cities and countries worldwide are introducing stricter regulations, green building certifications are becoming more robust, and technological innovations are making net-zero goals more achievable. However, the road ahead requires alignment on definitions, methodologies, and incentives that work for diverse markets and building types. 

Often times, communicating net-zero commitments and establishing net-zero policies are the first steps on an asset manager’s net-zero journey. Setting net-zero targets—requiring careful consideration of emissions in Scope (Scope 1 and 2, or Scope 1, 2, and 3), Scope 2 accounting method (location-based, or market-based), use of decarbonization pathways, and timeframes—often follows, quantifying those practices into measurable milestones. 

Net-zero targets are on the rise, with a 15% increase in participants setting net-zero goals over the past year, now reaching 65%; of these, 29% of Real Estate Participants have incorporated embodied carbon into their net-zero plans. 

Interestingly, 2024 GRESB Real Estate data suggests that net-zero policy creation and target setting represent more common practices than the communication of net-zero commitments. While target setting, backed by capital planning and performance trajectories, essentially reflect a concrete commitment to net-zero delivery, the slightly lower rate of net-zero commitments might reflect the sometimes-confusing environment of net-zero definitions and classifications.

One of the biggest hurdles is establishing a universal definition of a net-zero real estate asset. A meaningful definition must: 

• Accurately assess performance: Metrics should reflect actual energy use, carbon emissions, and leveraging of sustainable practices. 
• Incentivize the right actions: Solutions should encourage energy efficiency, renewable energy adoption, and reductions in embodied carbon while remaining context-sensitive. 

 Achieving this balance is critical for advancing the net-zero agenda while ensuring practicality and inclusivity across the real estate sector.

Delve deeper into the essential components of achieving net-zero real estate. Click on the topics below to learn more: 

1. Energy efficiency 

Energy efficiency is the cornerstone of net-zero real estate. Learn how GRESB is actively promoting high-efficiency buildings in its latest Real Estate Standard developments. 

2. Renewable energy procurement 

Not all properties can generate renewable energy on-site. Procurement strategies for off-site renewable energy are a key mechanism for real estate to change its relationship with a transitioning electricity grid. 

3. Embodied carbon 

Reducing embodied carbon—the emissions associated with building materials and construction—is critical for achieving net zero. Explore materials, methods, and innovations that minimize carbon footprints from the start.