Did you know the real estate sector is responsible for 40% of global carbon dioxide emissions (CO2)?
The built environment is behind these emissions, but a property’s impact continues after construction. Various factors contribute to the carbon emissions of a property, from energy consumed to waste produced.
Accurately assessing the carbon footprint (i.e. the amount of greenhouse gases, or GHG, generated by a property) is important for a number of reasons. Not only does doing so help establish baseline numbers (for working towards reducing energy consumption), meet increasingly intensive ESG reporting demands, and increase the likelihood of reaching sustainability objectives, but it can also help improve a portfolio’s performance.
A portfolio’s valuation can be significantly impacted by measuring and managing its energy consumption. Money may be saved through energy optimisation projects, and it can easily become more attractive for buyers who are starting to prioritise greener investments.
In this article, we’ll walk you through a carbon footprint assessment of properties and explain its importance for reducing energy consumption and identifying emission sources.
Three primary sources of property emissions and how to measure them
The primary sources of property emissions need to be measured individually and as accurately as possible in order to determine their impact on the environment. Remember that most sources are directly linked with consumption by whoever is in the property – the number of people using the property essentially contributes to the emissions via these sources, whether a residential building or an office complex.
Here are three primary sources of carbon emissions in real estate:
The main contributor of GHG emissions in a property is energy. The amount of energy used and the source are essential for calculating an accurate carbon dioxide footprint.
For instance, clean energy sources, such as solar or wind, produce little to no emissions, positively impacting a property’s carbon footprint. On the contrary, the carbon footprint would be significantly higher if a property relies on energy produced by fossil fuels (e.g., coal-fired power stations feeding into the electricity grid or diesel/petrol generators).
Depending on the location, utility companies allow consumers to connect to metres to collect data about consumption, and some utility companies use smart metres that offer detailed insights into energy use.
In places where utility companies or regulations do not allow consumers to connect to a metre, the information from utility bills must be used to calculate carbon emissions. These utility bills typically mention the consumption for the period, which can be entered into a carbon emissions calculator to find the exact value.
For one property, it’s no big deal. But when you’ve got multiple properties and/or multiple portfolios, things get pretty tedious.
Like electricity, water consumption also contributes to a property’s carbon footprint. Consider this: Denmark contributed to approximately 143,000 tonnes of CO2 equivalents in 2019 from wastewater, according to a 2021 report. Thankfully, efforts are underway to reduce this number to 55,000 tonnes of CO2 equivalent by 2030.
Like with electricity, water consumption in a property depends on the number of people using it; some properties may use more water than others for maintenance or business activities. For example, a commercial building used by a manufacturing company may report a higher water consumption due to their water-hungry CNC machines.
The best way to calculate emissions from water usage is to measure the actual consumption. This can be achieved by directly collecting data from the building’s water meter or viewing the utility bill
Waste is another source of emissions by a property. Unlike energy and water, it can be challenging to calculate the exact emissions generated through waste. The reason is that most waste management services work on a flat-fee structure in many cities and regions worldwide.
On the other hand, waste management companies that collect garbage based on volume or weight may be able to provide information on the amount of waste collected. A property’s water waste (sewage) can also be included as a source for even more accurate data. Property owners can adopt tools to measure the waste data on their own. For example, they can measure the volume of perishable and recyclable garbage for a month based on the bins’ total volume and the collection frequency.
Conducting a carbon footprint assessment for a property (and why it’s important)
There can be many reasons why real estate owners, investors, or businesses may want to complete a carbon footprint assessment for their property.
Those with a stake in real estate must know the numbers and act accordingly to keep up with the strict climate change legislation. The European Union (EU) will now require medium to large corporations to report their social and environmental impact, per the Corporate Sustainability Reporting Directive.
That may also include the carbon footprint of real estate in their portfolios.
Besides compliance with regulations, reducing the carbon emissions of a property can also help raise its value. Properties with high GHG emissions saw a decline in value after climate-positive policies were adopted, according to a study by the Bank of England. In other words, energy-efficient properties with a minimal carbon footprint are more desirable.
Analysing the carbon footprint with real data can help companies and investors in the real estate industry take measures to make the property eco-friendly. It’s the first step of benchmarking and setting targets, as without accurate data, any efforts to reduce emissions may go in vain.
Similarly, implementing measures to reduce emissions can result in cost savings. For example, decreasing energy consumption by installing motion sensor lighting can decrease consumption and electricity expenditure in the long run.
For the most part, assessing a property’s carbon footprint requires calculating scope 1 and 2 emissions. Based on the assessment, property owners can take the appropriate actions, following the GHG Protocol standards, to reduce those emissions (e.g. switching to 100% clean energy).
For a full assessment of a property’s carbon footprint, however, scope 3 of the GHG Protocol should be included.
Factors, such as transportation, must be considered here. For example, how much emissions do employees working in an office building produce to get there?
Last but not least, efforts to achieve a smaller carbon footprint show a commitment to attaining sustainability goals and doing your part to help the world achieve the 1.5 degrees Celcius target.
Get accurate carbon reporting with comundo
A carbon footprint assessment is an essential component of evaluating the true value of a real estate portfolio and helping to reach CO2 neutrality. Whether the portfolio includes single-family homes or large commercial buildings, a carbon footprint assessment can help satisfy regulators and stakeholders.
comundo provides a fully automated solution for carbon accounting for real estate. With the power of technology and analytics, comundo provides accurate, actionable data companies can use to reduce their carbon footprint.
The process considers actual consumption and does not require any specific systems or metres. In other words, comundo can find the exact GHG emissions regardless of property type, age, or use.
Empowered with the numbers, you can draw a plan to reduce your real estate portfolio’s carbon dioxide emissions, benefiting the planet and business. A classic win-win scenario!
Ryan is a senior technical content creator, helping tech businesses plan, launch, and run a successful content strategy. After an extensive academic career in engineering, he worked with dozens of tech startups and established brands to reach new clients through proven content creation strategies.