Only 15% of listed real estate companies have set targets for scope 1-3 net zero carbon emissions by 2050, according to research undertaken by Van Lanschot Kempen Investment Management.
The company’s real assets team analysed the environmental pathway frameworks of listed real estate companies globally to assess how the sector is progressing towards the Paris Climate Change goals and found just 15% of companies worldwide have set comprehensive targets to achieve net zero greenhouse gas emissions on all three scopes (externally verified) by 2050. This represents an improvement on 12 months ago when only 10% had set such targets.
The percentage of real estate companies which have set an ambition to reach net zero GHG by 2050 rose from 40% to 51% year-on-year. Some 31% of listed real estate companies in Europe have set net zero targets on all three scopes, compared with 14% in Asia and 8% in the US.
Egbert Nijmeijer, co-head of real assets, at Van Lanschot Kempen Investment Management, said: “Limited progress has been made by the listed real estate sector in setting greenhouse gas emissions targets and measuring progress. However, while we believe that externally verified measurement of scope 1-3 emissions is the best way a company can get a true picture of its environmental impact, the complexity of the real estate value chain presents significant challenges to achieving this.”
“Decarbonisation of scopes 1-2 is relatively straight forward. Real estate companies can, for example, transition to using LED lighting in buildings or electric vehicles for staff. However, scopes one and two account for only the minority of total emissions. Reaching scope three targets relies on, for example, a step change in government policies to green the energy grid and decarbonising development projects.
“As such, real estate companies are, understandably, cautious about taking the admittedly huge leap of faith required by signing up to targets they cannot completely control, especially given the threat of litigation if they fail to meet these goals. However, it remains vital that the entire sector must continue to take major steps to reduce emissions in the short term. The fact that we have seen an increase in companies committing to scope three targets is a positive sign.”
