Why the climate crisis depends on the real estate industry

March 14, 2023

Real estate is responsible for almost 40% of global emissions.

Close your eyes for a second and imagine the word “emissions.” What came to mind?

If you’re like many others, you thought of a car’s tailpipe (though that perception is quickly changing thanks to EVs). But did you know that real estate makes up almost 40% of global greenhouse gas emissions? To put things into perspective, that’s more than all the world’s transportation emissions combined—that includes airplanes, cars, trains, and other modes. (Transportation only accounts for about 24% of the global carbon footprint.) 

If almost 40% of global emissions sounds high, it is, but emissions in the real estate sector break down into two categories that bring these numbers into perspective: 

1. Operating emissions from energy use from day-to-day heating, cooling, and electricity. These make up 28% of global annual emissions. 

2. Embedded or embodied carbon emissions from a building’s construction. It includes building materials—primarily from steel and concrete, which are very carbon-intensive to manufacture—material transportation, and construction processes and makes up about 11% of global emissions.

Because the real estate industry plays a significant part in climate change, it must also play an essential part in keeping the global warming threshold under 1.5°C compared to pre-industrial levels.

How Sustain.Life helps real estate stakeholders operate more sustainably

• Track operational data of your buildings—energy consumption, waste generation and diversion, and water use—to compare the efficiency of portfolio assets.

• Identify intensity and mitigation metrics and set a normalized benchmark for square footage and building occupancy.

• Tie key environmental indicators to emissions outputs in a single sustainability platform.

• Seamlessly measure and track emissions reductions across scope 1, 2, and 3 emissions and chart your path to net-zero.

See how Sustain.Life can fundamentally change your path to net-zero

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Inaction has costs 

Real estate is in a moment of transition. Real estate operators and owners have started to include the cost of carbon in their financial models. Why? Because progressive states and cities are beginning to push carbon-centric laws to meet their climate goals. 

Take New York City’s Climate Mobilization Act as an example. It’s a series of building-focused bills that limit carbon emissions by square footage. It also establishes a cap-and-trade market and fines owners $268 per ton of carbon emitted over defined limits. That means real estate companies must both measure and actively manage their emissions. 

Both California and New York have taken steps to effectively ban natural gas lines in new construction, further forcing a shift toward electrification, which begs for a cleaner grid and a more significant shift to renewable energy. 

Will these regulations in progressive cities and states compel operators to reduce emissions? Yes. But real estate stakeholders across the globe have a unique opportunity to get in front of regulations in their cities and realize cost savings now. Through energy efficiency projects and decarbonization efforts, real estate stakeholders can see almost an immediate reduction in operating costs and protection from volatile energy markets to the tune of billions of dollars

How real estate stakeholders can impact the built environment

Development, architecture, and construction aside, real estate stakeholders—operators, asset managers, and even tenants—must lead the charge and create scalable, long-term climate impact solutions that also generate scalable long-term value for all parties. 

To comply with efficiency standards—and save money on energy costs—real estate operators can retrofit existing buildings’ heating, cooling, and electricity systems. That means projects like switching to LED light fixtures and switching from oil and gas heating systems to electric. It also means switching to clean energy options where possible. 

Did you know?

Buildings, offices, and production facilities use over 76% of the electricity in the U.S., yet just over 20% of U.S. energy comes from renewable sources.

In addition to reducing emissions and saving on energy costs, green buildings have knock-on benefits. Tenants perceive buildings with positive certifications—LEED, BREAM, WELL, for example—as innovators and market leaders. Buildings that ensure the safety and wellbeing of occupants and tenants and help their occupants save on operating costs differentiate themselves from their competitors. That means they can also achieve top market rent and better ROI for real estate investors.

So if you’re a real estate operator, the time is now to start managing your building‘s emissions—the climate crisis and your bottom line depend on it.

Editorial statement
At Sustain.Life, our goal is to provide the most up-to-date, objective, and research-based information to help readers make informed decisions. Written by practitioners and experts, articles are grounded in research and experience-based practices. All information has been fact-checked and reviewed by our team of sustainability professionals to ensure content is accurate and aligns with current industry standards. Articles contain trusted third-party sources that are either directly linked to the text or listed at the bottom to take readers directly to the source.
Alyssa Rade
Alyssa Rade is the chief sustainability officer at Sustain.Life. She has over ten years of corporate sustainability experience and guides Sustain.Life’s platform features.
Constanze Duke
Constanze Duke is a director of sustainability at Sustain.Life and leads the company’s technical practice. She began working in sustainability in 2007 and has worked through sustainability’s dramatic evolution into a multi-faceted discipline.
The takeaway

Because the real estate industry plays a significant part in climate change, it must also play an essential part in keeping the global warming threshold under 1.5°C compared to pre-industrial levels.