Real estate’s environmental impact is significant. In the European Union, buildings are responsible for 40% of overall energy consumption and 36% of greenhouse gas (GHG) emissions, much of which is generated from the construction and operation of properties.1
At the same time, three out of four EU buildings are considered energy inefficient.1
Core real estate investors have demonstrated a desire to change these dynamics and continue to make environmental, social, and governance (ESG) factors a top priority.
Achieving carbon neutrality has been a particularly high priority, as organisations are increasingly committing to reducing their carbon footprint. This goal has already altered the landscape and will only become a higher priority for more businesses, governments, and investors. The number of real estate companies and investment funds focused on carbon neutrality continues to increase at a rapid pace, accelerated by the European Commission’s adoption of regulations last year aimed at achieving net zero carbon by 2050.2
But not all approaches to carbon neutrality are equal. Business leaders are often quick to agree to long-term carbon reduction goals without a full understanding of implementation at the individual property level.
To understand exactly how a company or fund plans to meet their stated carbon reduction goals, investors should be prepared to ask several important questions when evaluating intiatives and measuring results.