The Science Based Targets initiative (SBTi) has recently launched a groundbreaking framework to drive decarbonization in the global building sector. This new SBTi buildings sector guidance is designed to align the industry with the targets of limiting global warming to 1.5°C.
Given the sector’s significant contribution to global carbon emissions, this guidance offers a structured pathway toward net-zero emissions by 2030. The framework introduces clear target-setting criteria and methodologies that companies across the building value chain can adopt.
Key Features of the SBTi Buildings Sector Guidance
The SBTi buildings sector guidance provides a robust framework designed to help companies in the building sector meet net-zero targets by addressing both operational and embodied emissions.
Key features of the guidance include:
Focus on Both Operational and Embodied Emissions:
Operational emissions cover energy consumption during the building's use, including heating, cooling, lighting, and appliances.
Embodied emissions account for the carbon footprint of construction materials and processes, including emissions generated from sourcing, manufacturing, and transporting materials.
Companies must address both categories to ensure a holistic reduction in emissions throughout the entire lifecycle of a building.
Applicable to a Broad Range of Companies:
The guidance is designed for corporates and financial institutions involved in various stages of the building lifecycle, including design, construction, management, and occupation.
Real estate developers, property managers, owners, and financial institutions are all targeted for compliance with SBTi’s emission reduction standards.
Clear Criteria for Emissions Reduction Targets:
Companies must set near-term and long-term science-based targets to align with the 1.5°C climate goal.
Targets must be in line with reducing absolute emissions and achieving significant decarbonization across the sector.
The SBTi framework includes sector-specific pathways to help companies align their emissions reductions with global decarbonization goals.
Validation and Reporting Requirements:
SBTi provides a structured process for validating corporate and financial institution targets.
Companies must submit their emissions reduction targets for validation and disclose their annual progress to maintain transparency.
Emissions must be reported using both location-based and market-based approaches to offer a full picture of progress.
Sectoral Decarbonization Approach (SDA):
The SDA method allows companies to set intensity-based targets specific to building typologies and geographical regions.
This approach ensures emissions targets are customized for each company's specific portfolio, helping to achieve realistic reductions that are aligned with global targets.
The SDA helps to facilitate the calculation of both operational and embodied emissions targets in alignment with the SBTi framework.
Tailored for Financial Institutions:
Financial institutions, such as real estate investment trusts (REITs) and real estate asset managers, are given specific guidance to decarbonize their portfolios.
These institutions must account for both operational emissions of properties they manage and the embodied emissions of new construction financed by them.
Financial institutions are encouraged to disclose the upfront embodied carbon intensity of the buildings they own or finance.
Whole-Building Approach:
Targets must include emissions from both tenant and landlord-controlled spaces to ensure all building-related emissions are addressed.
This comprehensive approach ensures that no significant source of emissions is overlooked, regardless of the building's ownership or management structure.
SBTi Buildings Sector Guidance and its Scope
The new SBTi buildings sector guidance applies to a wide array of stakeholders within the building value chain. It focuses on reducing greenhouse gas (GHG) emissions at every stage of a building’s lifecycle. This includes upfront embodied emissions from the construction phase and in-use operational emissions from energy consumption during the building’s lifetime.
Companies across the sector are encouraged to adopt the science-based target-setting criteria to reduce their carbon footprint in line with the 1.5°C trajectory.
The guidance is particularly relevant to real estate developers, owners, property managers, and financial institutions involved in real estate investments. By complying with these standards, companies can gain SBTi validation for their near- and long-term targets.
Operational and Embodied Emissions Targets
The SBTi framework sets out specific target-setting methods for operational and embodied emissions. For operational emissions, companies are required to address energy consumption from both landlord and tenant-controlled spaces, ensuring a holistic approach to emissions reduction.
Embodied emissions, on the other hand, focus on the carbon footprint of construction materials and processes.
A key aspect of the SBTi buildings sector guidance is its comprehensive approach to both operational and embodied emissions. For operational emissions, targets must include energy consumption from spaces controlled by both landlords and tenants.
Embodied emissions targets focus on reducing the carbon footprint associated with construction materials and processes, particularly for new builds.
Decarbonizing Financial Institutions' Portfolios
The guidance also offers detailed recommendations for financial institutions whose portfolios include real estate assets. These institutions must account for both operational emissions of properties they manage or own and the embodied emissions of new construction financed by them.
The SBTi recommends using a whole-building approach to ensure emissions from all spaces are included within their targets. Financial institutions are encouraged to disclose the upfront carbon intensity of their real estate investments to foster transparency and accountability within the sector.
Sectoral Decarbonization Approach (SDA) Methodology
At the heart of the SBTi buildings sector guidance is the use of the Sectoral Decarbonization Approach (SDA), a methodology that helps companies set intensity-based targets. The SDA allows companies to formulate their emissions reduction targets by considering the specificities of building typologies and geographical locations.
This method ensures that targets are aligned with global emissions reduction pathways and are consistent across different asset classes.
The Road Ahead for Net-Zero in the Building Sector
The SBTi buildings sector guidance provides a much-needed structure for companies within the building value chain to decarbonize effectively. By focusing on operational and embodied emissions, this framework aligns the sector with the global climate goals and paves the way for a net-zero future.
Companies that adopt the SBTi framework will not only contribute to global emissions reduction but also position themselves as leaders in sustainability.
This guidance represents a critical step toward a low-carbon future, and its widespread adoption can significantly contribute to the global fight against climate change.
For detailed information on setting science-based targets in the building sector, you can access the full SBTi Buildings Sector Guidance here.
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