Leading Commercial Real Estate Owners Exhibit Progress toward Water, Carbon Reductions

Some of the world's leading commercial real estate owners and managers are making significant progress in reducing water usage, carbon emissions and energy consumption, according to a new report from the Urban Land Institute's Greenprint Center for Building Performance. Building owners are driving progress as they work to mitigate the risks that come with climate change.

The report, which tracked and analyzed 8,700 properties owned by Greenprint members, demonstrated the following reductions between 2015 and 2016:

• 4.3% reduction in water use
• 3.3% reduction in carbon emissions
• 3.4% reduction in energy consumption

Since 2009, reductions have been significant: water use has dropped by 12.1%, carbon emissions by 17.9% and energy consumption by 13.9%. The reductions occurred even as building occupancy rose, suggesting that greater space usage does not necessarily have to cause a decline in building performance.

Globally, buildings account for more than a third of climate-changing carbon emissions.

Responsibly Improving Building Performance

Building owners, facing risks presented by environmental and climate-related vulnerabilities, are working to protect against the possibility of eroding asset value, according to Charles B. Leitner, Greenprint Chairman.

The results from the new report indicate that Greenprint members are on track to exceed Greenprint’s target of a 50% emissions reduction by 2030, which is in line with the goals of the IPCC and ratified by the Paris Climate Accord. In fact, the global real estate sector as a whole has shown tangible improvements in environmental, social and governance (ESG) performance, according to a report released in September. The 2017 GRESB Real Estate Assessment showed that, in 2017, the sector reduced water consumption by 0.5%, reduced carbon emissions by 2.2% and reduced energy consumption by 1.1%.

The results show that the energy improvements made in recent years by the global real estate sector are in line with the energy reduction targets as set out in the United Nations-supported Sustainable Development Goals, GRESB says.

Driving the Market

Several factors are driving property owners to improve building performance and create financial value through the implementation of best practices:

• Investor mandates: The focus on sustainable and responsible investing has grown significantly over the past several years, with investment in the US surpassing $8.5 trillion in 2016, and accounting for more than 20% of the value of professionally managed assets.
• Tenant demand: Major tenants are embracing sustainability and other next-generation features as part of their leasing criteria.
• Regulation: Global adoption of energy efficiency regulations for commercial buildings are helping to drive change, such as Energy Performance Certificates across the European Union, mandatory benchmarking in 26 US cities and states as well as Tokyo and Singapore, and mandatory energy codes for most countries in North America, Europe and Asia.
• Goal setting: Many real estate owner are setting portfolio-wide goals to ensure that their investments achieve the maximum return in financial value and environmental benefit as they begin implementing multi-property retrofits, technology upgrades, and operational improvements. Example: Prologis’s goal is to generate 200 megawatts of solar energy per year and reduce carbon emissions by 20% by 2020; Grosvenor is seeking a 50% reduction in energy use across its portfolio by 2023; and Commonwealth is striving for a 20% reduction in energy use by 2020.