Net-zero and the real-estate challenge
7 March 2022
Real-estate with its high potential of GHG emmissions’ reduction, will play a central role in staying up-to-date with ESG regulations.
The triple urgency of environment degradation, social inequalities and governance issues (ESG) is becoming a central concern of the regulators and the society at large. Climate change in particular is considered as the biggest challenge of our economies for the next decades. Real-estate is a key priority with a confirmed potential to reduce greenhouse gases (GHG) emissions and to boost local employment.
From a regulation point of view, the EU aims at reducing its GHG emissions by 55% (in 2030 vs 1990) and reach net-zero emissions by 2050. The EU therefore is deploying an unprecedent policy arsenal, a.k.a. the “Fit-for-55%” package, which includes the building “Renovation wave”, a revision of the Emissions Trading System (ETS) and several measures to redirect financial investments towards low-carbon solutions.
As demonstrated by a Climact report, the EU Commission “renovation wave” ambitiously targets to reduce buildings emissions by 60% in 2030 (vs 2015) via a quasi-full phase-out of liquid and solid fossil fuels. The possible extension of the ETS and its underlying carbon price to the building sector would significantly impact future real-estate strategies. In terms of green finance, the EU “Action Plan for Growth” includes regulations and guidelines to improve sustainability investment information (EU Taxonomy, Ecolabel…), to strengthen sustainability risks management (e.g. TCFD for climate related risks) and enhancing non-financial disclosure (e.g. the EU NFR directive soon to be replaced by the EU CSR directive). In Belgium, strategies at both Federal level[1] and regional level[2] are pushing to reach an annual 3% renovation rate for existing buildings.
Voluntary action is also needed from real-estate asset managers to answer their stakeholders sustainability concerns. Banks, insurances and investors are required and willing to assess the sustainability of their investment portfolios, in particular the GHG emissions intensity, and looking for strategies to align their investments with the Paris Agreement.
In this context, calculation methods and standards (PCAF, Science-based Targets & CRREM,…) are developed and becoming mandatory practices.
CLIMACT and ENPROVE welcome the request of Tribeca Capital Partners and Resolution Property to develop an ESG-Net zero strategy for the Pegasus Park, which details how we intend to join our specific expertises to meet this challenge in a pragmatic yet ambitious way.
[1] https://climact.com/en/towards-carbon-free-heating-of-buildings-and-improved-air-quality-in-belgium-2050-perspectives-on-heating-technologies/
[2] See the Walloon renovation strategy