NREP has introduced an internal carbon tax to ‘incentivise rapid and deep emission cuts’ and enable it to hit its target of reducing embodied and operational CO2 emissions by 30% and 50% respectively before the end of 2023.
The new internal CO2 tax will help drive innovation at NREP by putting a monetary figure on the cost of carbon to the business, which has €18bn of assets under management and is aiming to achieve net zero by 2028.
NREP is adopting the EU Trading System as the primary benchmark for its internal carbon tax, setting the tax at its current level of €90 per tonne.
The tax will be re-invested in the respective projects to improve sustainability performance and reduce emissions in the most effective, science-based way.
Peter Bakker, president and CEO of the World Business Council for Sustainable Development, said: “NREP’s decision to incorporate carbon emissions as a cost directly into investment and operational decision-making through a carbon tax demonstrates leadership at the highest level. It shows how the cost of carbon can be integrated in a clear, measurable way that directly affects the business case and sends a clear signal to the wider built environment industry.”
Claus Mathisen, CEO of NREP, added: “Humanity is facing a code red, and we need action now. Targets set for 2050 or 2040 won’t lead to meaningful reductions fast enough. The good news is that reducing emissions often adds up to a positive business case for construction and operations.
“Sustainability actions are most powerful when they are taken early on and are at the core of a business. Putting a price on carbon is a great motivator. To reduce the CO2 fee as much as possible, teams are now doing a deep carbon analysis on every building within NREP’s portfolio.
“Our internal carbon tax is a means to an end. It puts us one step ahead in adjusting our business for a greener future, with regulations tightening every year. As such, it reduces risks and drives business value. We see a surge in demand for sustainable real estate, from customers, banks, and investors alike. I firmly believe that decarbonising now will equate to a future advantage.”
NREP piloted the carbon tax earlier this year and it is now in full effect for all emissions not eliminated, including both operational and embodied carbon.
