Mounting costs from climate risks

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Increased demand for sustainable buildings

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More restrictive finance and tougher regulation

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Regulation may not have an immediate effect, especially on existing buildings, but it is coming both directly with building performance standards and indirectly through corporate disclosure mandates.

At international and national levels, there have been significant developments in corporate disclosure requirements in the past 18 months, including the EU’s Corporate Sustainability Reporting Directive (CSRD), the U.S. Securities and Exchange Commission’s (SEC) Climate-Related Disclosure requirements and the International Sustainability Standards Board (ISSB). Beginning in 2024, the ISSB will take over monitoring for the TCFD.

Given that more than 60% of carbon emissions within urban areas typically comes from buildings, city governments are increasingly implementing policies and initiatives aimed at reducing carbon emissions, mitigate growing physical risks and building longer-term resilience to a changing climate. 

Analysis of the targets, actions, regulations and instruments across 16 cities covering carbon, energy, buildings, circularity, biodiversity and resilience, shows a wide spectrum of commitment and action, from the ‘Climate Progressive’ cities such as New York, Paris and Singapore, to those cities that are just ‘Starting Out’ on their route to decarbonization. 

‘Climate Progressive’ city governments are rolling out a vast array of ‘carrot and stick’ policy instruments covering new and existing real estate. For example, New York has introduced several pioneering local laws while Paris is taking a lead in considering embodied carbon, and Singapore has set out a holistic approach to greening its buildings.  

As decarbonizing operations and retrofitting buildings involves extended timescales, taking action sooner rather than waiting for new regulations to be announced will help companies stay ahead.

Taking steps to decarbonize

The real estate industry has the expertise and technology needed to create low-carbon buildings. Every real estate portfolio will take a slightly different route to cut emissions and build resilience, but the steps to decarbonize, as set out in WEF-JLL Green Building Principles, are clear.

By implementing the right measures in the right way at the right time, owners can minimize the impact of physical and transition risks on their buildings – most specifically on their value and the income they generate – while corporates can reduce the disruption to their spaces and business operations. Both can unlock opportunities by developing sustainable and inclusive spaces that are ready for what lies ahead.