What decarbonizing buildings teaches us about climate priorities

The role of buildings in addressing climate change cannot be understated. They’re responsible for roughly 40 percent of emissions globally (taking into account both building materials and operating emissions), and addressing the problem will require collaboration across sectors. The importance of buildings (and collaboration) explains why the Biden administration announced a buildings standard coalition this week, in partnership with 33 state and local governments.

Enter the Urban Land Institute’s annual sustainability outlook report, which outlines the top trends facing real estate professionals. The report is short and sweet, focusing on three simple questions: What sustainability topics and issues are on the rise, why do they matter and what should the industry do about it? The output is five issues that the institute sees as shaping real estate decisions into the future:

1. Advancing the net-zero agenda

2. Navigating the reporting and measurement landscape

3. Confronting climate risk

4. Prioritizing existing buildings

5. Focusing on building materials

These trends aren’t earth-shattering. Many are similar to what sustainability professionals have been underscoring for years. Yet the report captures something valuable about this moment in our global sustainability journey: the maturation of professionals’ understanding of what key trends mean and the complexity of how to get there.

Here are three highlights from the report, and what they tell us about the corporate move towards sustainability.

"Net zero" has emerged as the term of choice for organizations serious about climate. It has also come under criticism, as some organizations set "net-zero" goals without a clear path to make it a reality.

According to the Urban Land Institute (ULI), net zero is quickly moving from ambition to action, with organizations adopting realistic net-zero ambitions with pragmatic frameworks and action plans.

"It's almost like net zero 2.0 in the real estate industry," said Marta Schantz, senior vice president of ULI’s Greenprint Center for Building Performance, in an interview. "It's nothing like greenwashing. Folks are serious about it, they're planning for it, they're expanding their scope and boundary of what net zero even means."

"In the future you won’t be able to talk about sustainability without talking about resilience."

The report finds that, increasingly, organizations are looking beyond Scope 1 emissions, the direct emissions from operations on site, to Scope 3 emissions, all emissions buried in a value chain, including the embodied emissions of building materials.

This trend tracks how others sectors are thinking about net-zero goals. Increasingly organizations are recognizing the massive opportunity in decarbonizing supply chains (where the lion’s share of emissions are usually buried), and the imperative to do so to address climate change. An example: Last year, major corporations including IKEA, Microsoft and Nestle signed onto the 1.5 Degree Supply Chain Leaders pledge, which strives to halve emissions from supply chains by 2030 and reach net zero by 2050.

With the specter of extreme weather looming in every region of the globe, the imperative to harden facilities is no longer optional. The mounting risks associated with climate change means resilience must be overlaid across all parts of an organization.

"Many people think of sustainability and put resilience in a different box," said Raymond Ruvino, chief executive of NEO, a real estate management company in the Philippines, in the ULI report. "In the future you won’t be able to talk about sustainability without talking about resilience."

The physical risk associated with facilities — be it from flooding, fires or hurricanes — puts real estate professionals on the forefront of climate calamities, and necessitates they work hand in glove with energy teams. That means considering on-site generation, such as microgrids, opting into grid flexibility programs and support of grid-hardening measures.

With the technologies and strategies to support resilience and sustainable buildings proliferating, the ability to prove your strategies are working is critical.

"It's always kind of been a topic laying under the surface, but you just can't ignore it anymore," said Schantz. "This is one of those things that if you're not reporting and measuring, you’ve got to start."

From an organizational perspective, showing sustainability initiatives are having the anticipated outcomes — be it saving emissions or money — is key to building internal support and expanding programs. From a climate perspective, it’s the only way we’ll know if we’re making progress.