Real estate transparency critical for decarbonization

Pressure continues to grow for the real estate industry to meet the challenge of decarbonization. Sustainability – and the race to net zero emissions – has become the new marker of transparency as investors, companies, governments and the public look for long-term targets, regulatory standards, metrics and clear action plans. 

Considerable room for progress despite advances in sustainability transparency 

The most significant advances since 2020 have been made in the Sustainability Transparency Sub-Index, as countries and cities work to deliver on their climate commitments with increasing building energy performance standards and reporting requirements while green and healthy building certifications become more widespread.  

France and the top U.S. markets (e.g., New York) head the Sustainability rankings with new regulations establishing limits on embodied carbon in new buildings and minimum requirements for existing buildings (as well as new construction), and the creation of databases to track building-level energy consumption. The UK, Canada, Australia, Japan, Singapore, Belgium, Netherlands and Sweden round out the top 10 in the Sustainability rankings with a range of ambitious climate transparency initiatives.

However, there is considerable scope for progress as investors, companies and governments grapple with a complex regulatory environment and lack of consistent information to meet their goals. Beyond the leading markets, there is still low implementation of mandatory standards in areas such as building resilience and emissions reporting, as well as in the uptake of green leases and financial performance tracking. 

The fractured regulatory landscape – with different standards being set at the municipal, state, region and country levels, and a proliferating array of sustainability credentials, benchmarks and standards – is making it increasingly difficult for investors and companies to navigate and understand their responsibilities. Looking ahead, alignment of regulatory initiatives, harmonization of targets and more standardized data will be needed to help improve transparency and enable companies to achieve their decarbonization targets.