Integrating Climate Risks in Real Estate

Real Estate Investor members of UNEP FI, CERES – INCR, IGCC, IIGCC, PRI and the RICS believe it is economically and practicably feasible for the real estate sector to play a significant role in limiting global temperature increase to 2°C.

The Integrating Climate Risks in Real Estate paper summarises key roles, risks and opportunities for real estate investors.

Important facts to note:

  • The building sector consumes approximately 40% of the world’s energy and contributes to 30% of global annual greenhouse gas emissions.
  • The global universe of investable real estate is worth about $50 trillion.
  • New buildings can easily be built to use 30-50% less energy than required by most energy codes dating back to 2005.
  • There is growing evidence across geographies that a climate friendly and sustainable real estate sector can both preserve and increase asset value.
  • Technology and operating processes are currently being used to improve energy efficiency of existing building portfolios by a further 2-4% each year.
  • The scale of the investment opportunity in energy efficiency building retrofits globally will rise to US$300 billion annually by 2020 and is supported by a robust business case.
  • Yet, the current rate of investments is a fifth of that required to stay within the desired less than 2°C pathway.

 

Further reading relating to the real estate sector and the recent events at COP21:

FM World: Business Pledges Huge Building Carbon Cuts 

GreenBiz: Why Tackling Climate Change is Good for Business 

GreenBiz: 4 City Initiatives out of COP21

GEF: A report on Sustainable Cities and the approach to attempt to promote urban sustainability.

How Energy Efficiency Cuts Costs for a 2°C Future

A new report (from a consortium of groups led by Fraunhaufer ISI) — “How Energy Efficiency Cuts Costs for a 2° C Future” — analyses how energy efficiency policies and programs in Brazil, China, Europe, India, Mexico, and the U.S. can reduce the cost of economy-wide de-carbonisation by up to $250 billion per year for these regions, with no net cost to society through 2030.

About 40% of global greenhouse gas (GHG) emissions originate from energy use in industry, transport, and buildings, and another 25% from power generation (IPCC 2014). A highly efficient use of energy is thus fundamental to limit GHG emissions. Yet, energy efficiency receives much less attention than the de-carbonisation of the energy supply.

The report explains how energy efficiency can be a low-cost pathway to keeping global warming to the critical 2 degrees Celsius mark. They stress it’s benefits compared to a highly expensive energy intensive pathway that focuses primarily on de-carbonising energy supply with more limited energy efficiency policies to help achieve a 2° C future.

Read related articles via Greenbiz and ClimateWorks