“Decarbonizing the Built Environment: 10 Principles for Climate Mitigation Policy,” a new report from the Urban Land Institute, marks a milestone in the collaboration between the public and private sectors to achieve decarbonization of the built environment.
According to Monika Henn, a manager at the ULI Greensprint Center for Building Performance, the issue of decarbonization is critical in the commercial real estate sector, which is responsible for up to 40 percent of global emissions.
The two major roadblocks to the decarbonization of commercial buildings, Henn explains, have been cities generating support among the private sector for their policies and finding and engaging the correct stakeholders and taking into account their recommendations: “If you have a national portfolio or an international portfolio, just keep track of what different cities are doing,” Hann said.
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To that end, early this year, ULI held a series of three workshops—attended by more than 60 private and public sector leaders—chaired by Brian Swett, Boston office leader at international design firm ARUP. Swett brought years of experience in sustainability issues in past roles a developer at Boston Properties and as chief of environment and energy for the city of Boston.
The intent of the workshops, he explains, was to place stakeholders on the same side of the table for “candid, transparent, and honest” conversations about real estate’s needs from cities to decarbonize the built environment and about city officials’ needs from real estate executives to formulate, deliver and enforce city policies.
The workshops were attended by a wide range of cities—among them New York City, San Francisco, New Orleans and Kansas City—representing various regions, sizes and levels of engagement with real estate on climate issues. The workshops also brought together a diversity of real estate players by property type and location, including LendLease, Jamestown, PGIM Real Estate, Brookfield Properties, Kilroy Real Estate Corp. and Boston Properties.
At the outset, Swett stated, “The direction of travel is net carbon neutrality for our built environment, and the question is how do we get there? What’s the most cost-effective, least economically disruptive way to get to net carbon neutrality by mid-Century?”
From the workshop, 10 key policies were formulated across processes, policy and performance. A key aspect is making sure that a city is willing and able to listen to real estate representatives’ concerns about how targets get delivered.
Another key takeaway is to make sure that what gets measured and reported on is as close to a real metric as possible. For example, the industry is transitioning to carbon as metric versus the past proxy of energy efficiency, which was regulated in building codes. “The other key principle was forming the key advisory group of private sector real estate and not just using them for the policy, but this is also your vanguard group for implementation.”
Collaboration Is Key
Swett went on to say he hopes that collaboration rates between the private sector and public sector—currently based in conversations about how to shut down and how to reopen for COVID-19—will intensify and double down around climate change. “There are clearly links between climate change and pandemics in the sense that we expect more of these going forward,” he said, adding that “it’s about our ability to be resilient to them and respond to them.”
According to one participant, Eric Duchon, managing director and global head of sustainability at LaSalle Investment Management, the goal of these workshops “was to understand what these cities were thinking and how we as a real estate industry—owners, managers, and developers—can work with them to achieve meaningful outcomes but also make it relatively easy for us to comply with the myriad of different ordinances that are around the country.”
Because large asset managers such as LaSalle—which has $21 billion of assets under management—invest institutional capital, they must work to achieve the outcomes of the Paris Climate Agreement, Duchon said. “If one of our investor’s goals in their climate action plan is that all of their investments need to be aligned with the Paris agreement by 2030, they look to us to achieve that,” he explained. “So we’re sitting here balancing investment performance, our carbon footprint and local regulatory compliance. It’s a tricky thing to juggle. It’s a constant evaluation of how to achieve those three things in tandem with each other,” Duchon added.
Two important points that both the public and private sector should bear in mind, according to Swett
Both the public and private sectors should bear in mind two important points, according to Swett. First, the focus of sustainability has been on new buildings in the past “but it doesn’t move the needle,” Swett noted. “We can design zero net carbon buildings today given almost any economic constraints. This is not a technical challenge; this is an economic and political challenge, because the reality is, plus or minus in any given city, 85 percent of the built environment—the square footage that we will have to deal with by mid-century—is already with us today.”
Secondly, while the decarbonization of the existing building stock may feel like a long game when talking about 2050, major renovations of existing buildings are right around the corner, Swett pointed out. “We cannot miss opportunities to upgrade our buildings and decarbonize them,” he said.