Key Considerations for Evaluating Net-Zero Pathways in Real Estate

Investors and real estate managers are increasingly focusing on net-zero pathways to guide their decarbonization efforts. These pathways outline the expected development of emission intensities over time, measured in CO2-equivalents per annum per reference area. However, there are three pivotal questions that investors should ask when evaluating these pathways.

Firstly, investors should inquire about the types of emissions considered in the net-zero pathways. This includes owner-controlled emissions from real estate operations, such as scope 1 and scope 2 emissions, as well as scope 3 emissions that arise from tenant activities. It is essential to understand which types of emissions and reference areas are being considered to make accurate comparisons between products.

Secondly, investors should question the data used to define the baseline in the net-zero pathways. Real estate managers should strive to use measured consumption and emission data for their properties, but in cases where this data is unavailable, estimated or benchmark data may be used. It is crucial for investors to understand the source of the baseline data to ensure data quality and accuracy.

Lastly, investors should inquire about the future decarbonization measures considered in the net-zero pathways. These measures can include reducing a property’s energy demand, implementing renewable energy sources, and other technical installations to decrease emissions. It is important for investors to understand the methodology and calculations applied by real estate managers to achieve these decarbonization goals.

Overall, by asking these three pivotal questions, investors can gain a better understanding of the net-zero pathways guiding decarbonization efforts in the real estate sector. This transparency and clarity can help investors make informed decisions and drive sustainable practices in the industry.