From awareness to action: Embodied carbon in real estate

Despite the growing recognition that embodied carbon is an emerging and highly urgent ESG issue that demands immediate action, the real estate industry still grapples with a knowledge gap when it comes to understanding and mitigating these emissions. Net-zero targets and commitments are the drivers of an increasing effort to reduce operational emissions, while embodied carbon is often left sidelined. This oversight creates a significant blind spot in a building’s whole life cycle emissions and must be addressed urgently.

While the real estate industry still has a long way to go, it is imperative that organizations begin to establish processes to monitor and measure the embodied carbon emissions of their development projects. GRESB, the global ESG benchmark for real estate and infrastructure investments, has taken the first crucial step in driving this change. In 2022, the GRESB Foundation, an independent, nonprofit organization governing the GRESB Standards, prioritized and included embodied carbon measurement within the 2023 GRESB Real Estate Standard with the intention of raising industry awareness of this significant portion of a building's whole life cycle emissions. The GRESB Assessments, driven by these Standards, now collect data on the embodied carbon measurement of both new construction and major renovation projects, together with the life cycle stages and building layers that are included in the end-value.

Every year, GRESB collects self-reported data on real estate and infrastructure assets and funds globally as part of the annual assessments. In 2023, 2,084 real estate entities participated in the GRESB Real Estate Assessment. Only a subset of 684 entities was exposed to any development activity and, consequently, embodied carbon.

The preliminary results from the Real Estate Assessments can shine a light on the industry’s readiness to report on embodied carbon. In 2023, only 24% of entities (or 165 out of 684) measured the embodied carbon emissions of development projects that were completed during 2022. When breaking down the data across new construction and major renovation projects, the data shows that entities reporting to GRESB tend to measure the embodied carbon emissions of their new construction projects, with 20% of entities (or 138 of 684) doing so, compared to major renovation projects, where only 6% of all entities (or 44 of 684) had their emissions accounted for. For the majority of responses, the life cycle stages included in the measurement are aligned with the Standards EN 15978 and the building layers are aligned with the RICS guidance.

The low response rate is intrinsically linked to the industry’s maturity level towards this issue. Nevertheless, recognizing the challenge represents a crucial first step toward the adoption of practices to measure, monitor and mitigate embodied carbon. The real estate industry stands at a critical juncture, facing the imperative of operational emissions as well as embodied carbon as a central facet to achieve the thresholds established by the Paris Agreement. The GRESB Standards are designed to evolve over time in line with emerging needs and guide the industry forward, ultimately fostering a more sustainable built environment.

GRESB’s 2023 results were released earlier this month, to learn more about embodied carbon in real estate, read GRESB’s “What is embodied carbon in the real estate sector and why does it matter?” by Victor Fonseca, Real Estate Associate, GRESB.