The Pathway to Decarbonisation - Tracking Carbon Emissions and Reducing Stranding Risks within the Commercial Real Estate Sector

Existing research on the impacts of climate change has put no sufficient focus on the aspect that climate change might endanger the business of real estate companies due to poor carbon performance. The downside effects of climate change focused predominantly on natural risks and extreme weather events but gained more and more attention in recent years. This paper aims at the opportunities to optimise industry’s investments in energy efficient retrofits by making risks more transparent and by unveiling opportunities for property owners and investors. A continuous monitoring of the carbon emissions could accelerate decarbonisation and climate change resilience of the EU commercial real estate sector by clearly communicating the downside financial risks associated with poor carbon performance and quantifying the financial implications of climate change on the building stock. The industry has to be provided with country and sector-specific science-based carbon reduction pathways at building, portfolio and company level in tandem with financial risk assessment tools to cost-effectively manage carbon mitigation strategies.