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The real estate sector is responsible for 40% of global greenhouse gas emissions, according to a report by Savills. For this reason, it is at the heart of global efforts to curb climate change. With the effects of climate change becoming increasingly apparent, the Science Based Targets initiative (SBTi) has released new guidelines specifically designed for the sector, aiming to help companies set clear, ambitious goals aligned with the global objective of limiting warming to 1.5ºC.
In this article, we explore the key elements of the new SBTi standards, how they will reshape the roadmap for the real estate sector, and what practical applications they may have for companies seeking to transform their operations—not only as an environmental necessity but also as a strategic opportunity.
Context and Challenge: The Real Estate Sector and Climate Change
The real estate sector plays a leading role in the climate crisis due to its significant impact on global emissions. According to the European Union, the sector accounts for over a third of emissions, a figure that clearly underscores the urgency of accelerating its decarbonization. Furthermore, with a projected 15% increase in global built-up area by 2030—mainly in emerging economies—the challenge of minimizing environmental impact becomes even more daunting.
Economically, the real estate sector is already feeling the effects of climate change, as construction delays caused by adverse weather conditions are already costing billions of dollars worldwide.
In response to this emergency, SBTi offers a specific solution: a framework tailored to the sector’s needs that covers both new and existing buildings. It encompasses the entire lifecycle of a property, from design and construction to use and eventual demolition, focusing on reducing both operational and embodied emissions through achievable, science-based strategies.
Key Tools for Decarbonizing the Sector
The new SBTi manual introduces a series of tools that allow companies to tackle the sustainability challenge in a structured way.
- Whole-lifecycle approach: This framework requires companies to assess and mitigate emissions generated at all stages of a building’s lifecycle—from raw materials and construction processes to energy consumption and end-of-life disposal.
- Specific methodologies for existing and new buildings: For existing buildings, energy intensity models are used to tailor reduction targets to each property’s characteristics. For new construction, absolute reduction targets are established to minimize environmental impact from the outset.
- Operational and embodied decarbonization: Operational decarbonization involves the transition to renewable energy sources and implementation of more efficient systems. Embodied emissions reduction calls for the use of sustainable materials and optimized logistics to cut emissions associated with transportation and manufacturing.
- Phasing out fossil fuels: A key commitment is to halt the installation of new fossil fuel-based equipment by 2030 at the latest.
These tools, backed by proven evaluation models, not only support regulatory compliance but also offer long-term benefits by increasing the resilience and competitiveness of real estate assets.
Practical Applications: Concrete Examples of Sustainability
The implementation of these tools has direct and tangible applications in the real estate sector. Some of the most notable include:
- Improving energy efficiency in older buildings: Existing buildings are often the main contributors to operational emissions. Through retrofitting, companies can cut energy costs and carbon emissions while meeting the sustainability standards expected by investors and occupants.
- Promoting innovative materials: For example, using low-embodied carbon materials like low-carbon concrete or cross-laminated timber helps reduce environmental impact during construction phases.
- Aligning with investor goals: Sustainable portfolios are increasingly attractive to investors, who value not only the positive environmental impact but also regulatory predictability and long-term economic performance.
Leading Toward a Sustainable Future
The new SBTi guidelines not only provide a clear roadmap for the real estate sector to align with global climate targets, they also redefine how companies perceive sustainability. Instead of viewing it as a burden, sustainability becomes an opportunity to innovate, streamline operations, and strengthen relationships with investors and occupants.
In a context where climate-related risks are increasingly evident, companies that lead this transformation will not only contribute to a more sustainable future but will also be better positioned to face upcoming economic and regulatory challenges. Now is the time for the real estate sector to embrace the SBTi’s science-based framework and become a model of transformation toward a carbon-neutral economy.
