Laura Bowler, Martin Christiansen
November 12, 2023
Beyond the roadmap: Lessons learned from implementing decarbonization strategies in buildings
Having a decarbonization strategy is great, but successfully implementing it is not always easy. Many companies struggle with the uncertainty around implementation. To distill the challenges, our expert, Laura Bowler, sat down with companies that are implementing decarbonization strategies. Here is what she learned.
As decarbonization goals become more popular, real estate companies are increasingly focused on developing strategies and roadmaps to meet these targets. While good strategies consider potential risks in implementation and their mitigation, challenges always arise (often from unexpected places). In addition, companies must continually adjust their implementation plan as their business, regulatory, and even physical environments in which they operate evolve.
To understand these concerns and how to mitigate them, our expert, Laura, spoke with leading real estate developers and owners implementing their decarbonization strategies to learn more about their experiences. Below are some key takeaways she learned. In conversation with our Head of Communications, Martin Christiansen:
Martin: When companies move beyond setting targets to actually executing their decarbonization strategy, what are typically the first steps?
Laura: There’s a lot to do when starting to implement a decarbonization strategy! Many efforts require new processes, new roles and responsibilities, and many, MANY, discussions about what the company is doing and why. In most cases, people are being asked to take on more work, and that’s never an easy discussion.
Because decarbonization is such a cross-functional effort, it takes some time up front to engage with all the right stakeholders and set up the right processes to drive change. People have different priorities and successfully engaging everyone inside and outside the company requires finding the right language and the right approach around decarbonization.
However, across the board, people we spoke to report that teams are working together to reduce emissions in both new developments and existing operations, which is great for building momentum.
Martin: That’s uplifting! What types of decarbonization efforts yield the most success in implementing?
Laura: Most companies report that it’s been easiest to start with efforts related to building operational efficiency. Initiatives related to embodied carbon, supplier partnerships, tenant engagement, etc. are a bigger departure from what the companies have done in the past and therefore require more planning.
Making buildings more efficient is what developers and owner/operators have been doing for years. Everyone, including the tenants, benefits – who doesn’t want a building to use less energy and costs less to operate? Because it’s easier to get everyone bought in on the idea, implementing these initiatives is just about understanding the best technological solutions and freeing up the capital and resources to get them installed.
Martin: Getting the capital for implementation is a real concern – was that mentioned in your talks with the industry?
Laura: Absolutely. It’s always a struggle to justify costs when trying something new. People often run pilots to try out decarbonization initiatives – unfortunately, costs often don’t become palatable until one starts implementing at scale, so justifying these early costs can be hard. In addition, people can’t touch and feel “carbon emissions” and their impact can be somewhat hard to see, so it is sometimes difficult for these professionals to explain why they need to spend costs on reducing emissions.
Martin: Exactly. How are companies overcoming this challenge?
Laura: A lot of it comes down to how you frame the issue. Companies that are most successful in cost discussions usually focus on the long-term benefits and potential savings vs. simply discussing on the upfront costs. For some, this means rethinking how they have typically analyzed a project from a financial perspective – they might have to adjust their acceptance thresholds to factor in the strategic importance of decarbonization. Case studies can also be really helpful in making these concepts (and savings) more tangible for people and “de-risking” projects.
For some, this means rethinking how they have typically analyzed a project from a financial perspective – they might have to adjust their acceptance thresholds to factor in the strategic importance of decarbonization.
Martin: What other challenges did the companies highlight in your conversations?
Laura: Well, sustainability efforts impact many people’s day-to-day work, and not everyone is excited to have a “green job.” Additional effort is often needed to help close knowledge gaps and learn new technical skills. With younger generations getting more of this type of education in school, this may be less of an issue in the future, but it can definitely be challenging to find people willing to adapt and grow into new roles. That is what I heard a lot. Providing training for people is very important – it really provides a strong foundation for implementation.
Retrofitting buildings can also be harder than expected. Existing buildings come with constraints, and this can significantly increase costs (or make certain initiatives nearly impossible). It’s important to assess buildings early and develop specific, asset-level plans to decarbonize based on what makes sense (and expect things moving a little more slowly when dealing with existing assets).
Martin: Many developers or owners operate in different states or even countries. Are regional differences an issue and how do people deal with that during implementation?
Laura: There are lots of regional differences that companies have to consider. Regulations and rules vary, suppliers and materials can be more accessible in some markets than others, and the input from tenants and the community can vary quite a bit. For instance, one company spoke about the difference between tenants in Texas vs. California – some might not be as passionate about decarbonization efforts. Companies have had to tailor messaging and approaches to different audiences.
The ones who are most successful have established high-level company processes and then giving their people flexibility to adapt the processes to the specific characteristics of the region. One company we spoke to set a target for embodied carbon on new developments across the portfolio. In New York, the regional team then chose to meet that target by sourcing low embodied carbon concrete, which is more available in that area (but isn’t available in all of markets).
Martin: Sounds like a lot is going on. What needs to happen to keep progressing?
Laura: Decarbonization efforts are a group effort. Like many industries, real estate companies compete with one another to be best in class, and the industry will need to shift its mindset to work together more. The more companies begin to decarbonize and the more they share lessons learned, the faster companies can overcome challenges – costs will begin to decrease, data will become more readily available, processes will become more common across suppliers, and emissions reductions will accelerate.
One thing that was consistently brought up is regulation. Policy is such an enabler for consistency. Leaders have been collecting data, implementing efforts, and sharing results for years, but regulations around these could make data and learnings more accessible and comparable. It could also establish best practices / standards more quickly. Too much focus on regulating disclosures and general reporting might shift focus away from driving impact, but, in general, policies will help move the industry faster.
Martin: Based on your conversations with the industry, what would be your advice to companies that are just starting out?
Laura: Developing a strategy and setting a target feels important - and it is - but taking action and actually creating change is what really gets everyone on board with the strategy. In addition, making an impact is really the most rewarding part. People spend a lot of time in and around buildings, and real estate developers and owners have an opportunity to create positive impact that affects many people.
Although implementation can seem scary, and there are challenges to work through, it’s not as hard as it seems. There are plenty of companies out there today already making changes (small and large) to reduce emissions. Even if you just get started with one initiative, taking the first step will help build a foundation for sustainability in your business long-term.
Want to know more?
Laura Bowler
Manager
+1 734-890-6226