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 Task Force on Climate-related Financial Disclosures and the EU Taxonomy for sustainable activities.
GRESB supports CRREM as one of its 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.
The global pathways were derived with oversight from the CRREM Scientific Advisory Committee.
CRREM Decarbonization and Energy Reduction 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.
A three month long public consultation has confirmed the approach taken for the decarbonisation pathways. The final CRREM decarbonisation pathways for the global real estate sector are now available. Pathways will be regularly updated in the future to ensure that the latest climate and market data are leveraged as an underlying basis.
The Institutional Investors Group on Climate Change (IIGCC) recently released its Net Zero Investment Framework for consultation, in which it highlights the CRREM methodology and recommends its use to determine the alignment of real estate assets with a 1.5°C pathway.
- CRREM decarbonisation and energy reduction pathways
- CRREM methodology
- CRREM Risk Assessment Tool (EU28 only)
Integration of CRREM pathways into the GRESB Portal
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 performance 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 for the EU28. Later stages will have a broader scope, including the new global pathways and a greater integration of asset- and portfolio-level assessment capabilities into the GRESB 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