Carbon Risk Real Estate Monitor (CRREM)
A research and innovation project that defines science-based decarbonization pathways for the commercial and residential real estate sectors in order to manage transition risks and align with Paris targets.
Purpose of CRREM
The Carbon Risk Real Estate Monitor (CRREM) provides the real estate industry with transparent, science-based decarbonisation pathways aligned with the Paris Climate Goals of limiting global temperature rise to 2°C, with ambition towards 1.5°C. These pathways enable industry stakeholders to estimate carbon and stranding risks associated with premature obsolescence and write-downs due to changing market expectations and legal regulations, encompassed within what is categorised as ’transition risks’.
CRREM offers a comprehensive framework focused on carbon risk exposure and potential strategies to reduce this risk, and include the elements needed to undertake scenario analysis. As such it can be used to comply with large-scale initiatives such as the Recommendations of the Task Force on Climate-related Financial Disclosures and the EU Taxonomy for sustainable activities.
Research Consortium Members
GRESB supports CRREM as one of its research consortium members, which includes the IIÖ Institute for Real Estate Economics, the University of Alicante, Ulster University, and TIAS Business School.
The original CRREM project was funded by the European Commission’s Horizon 2020 Programme. APG, PGGM, NBIM, GPIF, and Ivanhoé Cambridge have funded the expansion of the CRREM pathways to include major real estate markets outside the EU, as well as the residential real estate sector.
A Scientific Advisory Committee operates as an advisory board to the CRREM project consortium.
CREEM Decarbonization Pathways
CRREM uses GHG emissions (and energy consumption) divided by floor area coverage to determine an individual asset’s intensity-based transition pathway. This details how specific assets need to become more efficient in order to align with certain transition scenarios. Each pathway extends to 2050 and is composed of annual trajectories of building-related carbon- and energy-intensities, expressed in kWh per m2 and CO2 per m2, respectively.
The new CRREM global decarbonization pathways have been released for public consultation. Relevant market participants — including investors, managers, Real Estate Investment Trusts (REITs), green rating systems and other stakeholders — are encouraged to share their views on the decarbonization pathways and help develop a common language for assessing climate transition risk in real estate.
Integration of CRREM methodology in the GRESB Real Estate Assessment
GRESB has been an active member in the CRREM project and has served as a resource to its development. As such the CRREM Tool aligns closely with the information GRESB collects on real estate assets.
As a first stage, GRESB has automated the process of filling in the CRREM Tool with the asset-level performance data uploaded to the GRESB Asset Portal. This means that GRESB Participants can already begin to leverage their asset-level reporting to identify and manage transition risks for individual assets against the CRREM pathways. Later phases will have a broader scope, to include the new global pathways, and a full integration into the Asset Portal.
“Property type-specific transition pathways will be an important addition for assessing the ESG performance of both listed and private real estate investment portfolios. The transition pathways enable GRESB to not only assess ESG performance against industry peers, but also against the commitments made in the Paris Climate Agreement. For the wider real estate investment industry, the pathways will be an important tool to understand and mitigate the long-term systemic risk associated with the retrofit investments required to transition to a low carbon economy.”– Sander Paul van Tongeren, Co-founder and Managing Director, GRESB