The United Nations has identified greenwashing as a significant obstacle to tackling climate change, with nearly half of the “green online claims” made by companies found to be exaggerated, deceptive, or false. The real estate sector, ranked fourth in carbon emissions, must pay greater attention to greenwashing and an emerging practice called greenhushing, where companies stay quiet about their climate strategies to avoid accusations. Setting targets is crucial for stakeholders to meet net zero targets, with an estimated annual investment of $1.7 trillion needed between now and 2050.
Renovating assets to be carbon-neutral is crucial to achieving net zero, as real estate portfolios face the risk of becoming stranded assets due to poor energy performance. Retrofitting assets will be a critical success factor in achieving net zero, with a study revealing that 90 percent of respondents believe that at least 20 percent of their portfolios are at risk of becoming stranded assets. Access to capital is becoming increasingly difficult for properties with poor ESG performance, highlighting the importance of addressing sustainability issues urgently.
Regulators are focusing on sustainability disclosures, with the European Union introducing six sustainability-related directives and frameworks to promote transparency in ESG reporting. Investors who prioritize sustainability are seeing long-term value in real estate assets, with sustainable finance and decarbonization strategies becoming key factors in decision-making. The global carbon credits market is growing, with investments in sustainable assets expected to increase as institutional money flows into ESG funds.
The real estate sector is facing challenges in building decarbonization and sustainability, with a need for transparency and reporting accuracy. Tokenization of real estate assets offers opportunities for greater liquidity and more effective reporting of asset performance, including environmental and financial targets. Investments in Proptech solutions are expected to increase, with technology playing a crucial role in measuring and managing carbon emissions and developing investment plans for commercial properties.
The commercial real estate sector recognizes the need for investment to meet net zero targets, but time and a skills shortage are major barriers to success. Skills in retrofitting are in short supply, with only 5 percent of new buildings in 2020 being zero-carbon-ready. Proptech solutions are considered important in measuring and managing carbon emissions, with institutional asset owners and managers planning to increase investment in these solutions over the next three years. Technology and data are seen as key to achieving carbon reduction goals and improving ESG performance in the real estate sector.
Overall, the study highlights the urgent need for action in the real estate sector to address climate change and reduce carbon emissions. With significant investments required, technology and data-driven solutions such as Proptech and tokenization are becoming crucial tools in achieving net zero targets. Education and awareness, coupled with the best tools, will enable talent to solve complex sustainability challenges facing the industry and society at large.
