Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position. Please refer to official GRESB documents for assessment related guidance.
The world has delayed addressing the climate crisis for so long now that some disastrous impacts of climate change are now inevitable, according to the sixth assessment report released by the United Nations’ Intergovernmental Panel on Climate Change (IPCC). Released in August, the monumental report covering the physical science basis for climate change states that “global surface temperature will continue to increase until at least the mid-century under all emissions scenarios considered.”
There is still a small window of opportunity to soften the most catastrophic consequences of our warming planet, but to do so we must act with great urgency. With the advent of more accurate and precise climate models, the science is devastatingly clear: at minimum, we must halve greenhouse gas emissions by 2030 and reach net zero by 2050.
It’s time to get to work. With more than 30% of global emissions attributed to the built environment, the real estate sector has a tremendous role to play in the solution. Thankfully, many real estate companies have moved past the era of lofty, mismanaged sustainability goals and have begun setting net zero targets that align with the latest climate science.
Simply put, science-based targets provide companies with a clear and measurable goal for reducing greenhouse gas emissions. These targets are determined by measuring a company’s greenhouse gas emissions for an agreed-upon base year and establishing a target year by which to reduce them, then calculating the necessary annual percentage reduction to reconcile the two.
The Science-Based Targets Initiative (SBTi), a collaboration between CDP (formerly known as the Carbon Disclosure Project), the World Wildlife Fund, the World Resources Institute and the United Nations Global Compact, is widely considered the gold standard for setting such targets. Established in 2015, its mission is to lead the way to a zero-carbon economy, boost innovation and drive sustainable growth by helping the private sector set ambitious, science-based emissions reduction targets.
SBTi follows the requirements of the Greenhouse Gas Protocol to make sure that a company’s greenhouse gas emissions are appropriately accounted for in a consistent and comparable manner. Furthermore, despite their popularity, SBTi does not allow companies to lean on carbon offsets in achieving their science-based target, instead requiring companies to reduce emissions through “direct action within their own boundaries or their value chains.” The above requirements, and more, cement science-based target setting as the most widely recognized—and respected—framework for companies aiming to set net zero emission targets.
Industry at Practice
As of August 15, 2021, 1,696 companies around the world had committed to setting a science-based target, with 844 boasting a target approved by SBTi. Moreover, 704 of these companies have set targets that align with limiting a global surface temperature increase to 1.5 degrees Celsius. The SBTi recently increased the minimum level of ambition for those committed to setting scope 1 and 2 targets to 1.5 degrees Celsius. Those companies with targets that currently align with well-below 2 degrees Celsius will be highly encouraged and then mandated after 2025 to increase their commitments to climate action, particularly ahead of COP26, the 26th U.N. Climate Change Conference of the Parties, to be hosted by the United Kingdom in Glasgow in November this year.
To date, 93 companies from the real estate sector—from Fortune 500 REITs to boutique holdings companies—have committed to setting science-based targets. According to the directory for the National Association of Real Estate Investment Trusts (NAREIT), the de facto organization for REIT advocacy and support in the United States, there are 232 REITs in the U.S. alone. As an industry, we must do better.
Step Forward for Climate Action
The 2021 GRESB Real Estate Assessment explicitly asks in the performance component (Targets 1.2) whether the submitting entity’s greenhouse gas emissions target is science-based, and further, whether or not it has been approved by SBTi. While this indicator is not currently scored, the market continues to view SBTi as the gold standard.
With so much noise out there about environmental, social and governance (ESG) issues, frameworks and various initiatives, it may seem impossible to decipher the steps needed to set a net zero greenhouse gas emissions target for your real estate organization. Sustento Group works at the intersection of climate, policy, and real estate to develop solutions that prepare our communities for tomorrow, while making them more prosperous and equitable today. If you are ready to step forward to begin this important and necessary work, do reach out to us.
This article was written by Nick Caton, Senior Sustainability Analyst at Sustento Group.