A recent U.S. Supreme Court ruling has severely hindered the federal government’s ability to mitigate climate change. Because the real estate sector has an outsized impact on global emissions, it makes it even more crucial for our industry to do more than make lofty declarations. Now is the time to take action and work together to reduce our collective carbon footprint.
On June 30, the Supreme Court issued a 6-3 ruling in West Virginia v. Environmental Protection Agency, stemming from a challenge of the Clean Air Act. First codified in 1963 to deal with air pollution, the Clean Air Act has been revised over the years to address other issues, such as depletion of the ozone layer and climate change.
This latest decision, however, asserts that the Clean Air Act went too far; as a result, the Court has stripped the EPA of its power to limit greenhouse gas emissions from existing power plants. The disheartening ruling comes at a pivotal time in our battle with climate change, especially as research from NOAA shows that nine of the 10 warmest years on record were between 2013 and 2021.
Further, though the nation's electrical grid is rapidly becoming greener, change is not coming fast enough. Because the global fossil fuel industry received nearly $6 trillion in subsidies in 2020, according to the IMF – a percentage of GDP that will rise in the next few years – the transition from coal and gas to cleaner options is taking longer than is necessary to stop the advancing rise in temperatures.
Therefore, we in the real estate industry, which is responsible for 40% of global greenhouse gas emissions, must step up and take action. Growing demand from investors and building occupants for a more sustainable built environment validates this approach, from both a business and societal perspective.
As a 1.5°C-aligned company, Lendlease has committed to achieving net zero Scope 1 and Scope 2 emissions by 2025 and absolute zero across all scopes by 2040. The real estate sector should consider several key initiatives in order to achieve a similar goal.
TARGET #1: FUEL CONSUMPTION IN THE CONSTRUCTION OF BUILDINGS
One focus is fuel consumption by developers and contractors in the construction of buildings. New-build projects in any climate can be all-electric, and we are exploring zero-emission refrigerants, alternative fuel corporate fleets, and the electrification of heavy equipment such as cranes and excavators to mitigate carbon emissions. Retrofitting existing mixed-fuel buildings from gas to all-electric is difficult, but is something we are intensely investigating across many asset types.
TARGET #2: CONSTRUCTION MATERIALS
Construction materials offer another opportunity to decarbonize. Concrete and steel are the two most ubiquitous components of commercial real estate development, and they have massive carbon footprints. The iron and steel manufacturing process accounts for roughly 7% of global CO2 emissions; cement (used in concrete) is responsible for about 8% of emissions.
However, we are making rapid progress in decarbonizing these materials. Though we still have a long way to go, suppliers are responding to market demand for more sustainable construction materials
Lendlease was the first property and investment company to join ResponsibleSteel, which connects suppliers, users, and manufacturers to reduce emissions across the steel supply chain. It was also among the first companies to join SteelZero, a global initiative led by The Climate Group and ResponsibleSteel to drive market demand for net zero carbon steel.
Actions speak louder than commitments, however, which is why Lendlease uses lower-carbon concrete and steel on new developments. For example, procurement of lower-carbon materials at Claremont Hall, a mixed-use tower under development in New York, led to a 33% carbon reduction in our concrete and a 28% carbon reduction in our reinforcing steel. Although these materials currently carry a 1-2% premium, construction costs will ebb as the industry adopts these more sustainable options.
Finally, real estate owners can hasten the energy transition through energy efficiency and the procurement of meaningful renewable energy. We use a variety of methods to reduce onsite energy consumption, from occupancy sensors to tenant engagement to onsite solar, and have committed to achieving 100% renewable energy by 2030.
The Supreme Court's ruling creates hurdles in the legislative path to climate change mitigation. As a result, the real estate sector has a responsibility – and an opportunity – to show that decarbonization is possible and that there are actions that we can take today to lay the foundation for a more sustainable tomorrow.
ABOUT THE AUTHOR
Sara Neff is the head of sustainability for Lendlease Americas.