Seeing is Believing:

Unlocking the low-carbon real estate market

About LOTUF
View Whitepaper Summary
Download Full Whitepaper
ATP - LOTUF member
HOOPP - LOTUF member
Ivanhoe Cambridge - LOTUF member
Victory - LOTUF member

About LOTUF

LOTUF (Leaders of the Urban Future) launched in 2022 as a timebound, investor-led project to help accelerate the decarbonisation of institutionally-owned real estate, building on existing sector efforts.

The project was established by a group of ambitious real estate investors and Systemiq to understand:

  • what we mean by low-carbon real estate and the key principles and levers that should underpin decarbonisation, and
  • how to create and preserve value in decarbonisation, thereby unlocking the low-carbon real estate market.

LOTUF investors and Systemiq have been working closely together with other industry stakeholders, including voluntary standard-setters, green certifications and ratings, and other investor initiatives, to answer these questions. Current LOTUF project funders include ATP, BlackRock, HOOPP, Ivanhoé Cambridge, Norges (NBIM), Pictet, Urban Partners, and Victory Group, together with the Laudes Foundation.

Whitepaper Summary

Seeing is Believing: Unlocking the low-carbon real estate market

The paper sets out what LOTUF believe is needed to unlock a low-carbon real estate market – one aligned with a 1.5°C future.

We need a real estate market where carbon and energy data are shared and used like financial data to inform decision-making.

Transparency on carbon and energy performance – using consistent metrics, comparing against industry-backed pathways, and supported by third-party certifications and ratings – enables the market to properly identify, price, and demand low-carbon buildings and portfolios. This in turn gives external valuers the evidence to reflect carbon in their models, boosting real estate owner confidence to transition their building stock.

However, today the market is not demanding and supplying consistent carbon and energy performance data, and many of the certifications and ratings being used do not yet provide the necessary transparency nor have targets consistent with emerging 1.5°C pathways.

This is muddying demand signals, making it near-impossible to establish a clear link between carbon and value.

To bridge these gaps, in this paper we present specific, actionable solutions for real estate owners and others across the system that could in combination amount to a real breakthrough in the space, kick-starting the low-carbon real estate market.

Summary_LOTUF_Seeing is Believing_Unlocking the Low-Carbon Real Estate Market_June2024

As a long-term and diversified investor, our return depends on sustainable development in economic, environmental and social terms. We are therefore committed to expertly managing the climate risks and opportunities across our entire portfolio, including real estate. The principles set out in this report are closely incorporated into our real estate decarbonisation strategy: our 2050 net zero target covers operational and embodied carbon emissions, our 2030 operational targets cover tenant and owner spaces, and we see carbon and energy data transparency, including benchmarking against 1.5°C pathways such as CRREM, as crucial to understand asset performance and inform investment decisions.

Mie Caroline Holstad, Chief Investment Officer Real Assets, Norges Bank Investment Management

Ivanhoé Cambridge joined the LOTUF project to help address some of the key challenges real estate investors face in redeploying capital to support the decarbonisation of the built environment. Over the last 18 months we have worked closely with Systemiq and the other LOTUF investors to better understand what needs to happen to unlock the low-carbon real estate market and further integrate carbon into investment decision-making. We hope this paper helps rally investors behind the call for greater carbon transparency and clear targets as a basis for activating the low-carbon real estate market.

Michèle Hubert, Vice-president, Real Estate Strategy and Portfolio Construction, Ivanhoé Cambridge | CDPQ

Download Two-Page Summary
Download Full Whitepaper
Contact the authors