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1、Sustainable built environments for everyone,everywhere1AHEAD OF THE WAVEFinancing the transition to a decarbonised built environmentFebruary 2023#BUILDINGLIFE Sustainable built environments for everyone,everywhere2OpeningAbout World Green Building Council The World Green Building Council(WorldGBC)is

2、 the largest and most influential local-regional-global action network,leading the transformation to sustainable and decarbonised built environments for everyone,everywhere.Together,with 75+Green Building Councils and industry partners from all around the world,we are driving systemic changes to:Add

3、ress whole life carbon emissions of existing and new buildings Enable resilient,healthy,equitable and inclusive places Secure regenerative,resource efficient and waste-free infrastructureWe work with businesses,organisations and governments to deliver on the ambitions of the Paris Agreement and UN G

4、lobal Goals for Sustainable Development(SDGs).The Europe Regional Network(ERN)is a community of over 20 national Green Building Councils,8 Regional Partners,and close to 5,000 members across Europe.Green Building Councils in the ERN are from both EU and non-EU countries.About#BuildingLife#BuildingLi

5、fe is a project convening 10 European Green Building Councils to support the European Green Deal.These Green Building Councils galvanise climate action through national and regional decarbonisation roadmaps,which tackle the whole-life environmental impacts of the building and construction sector.#Bu

6、ildingLife focuses not only on the operational emissions of buildings,but also the environmental impact of the manufacturing,transportation,construction,and end-of-life phases often called embodied emissions.Tackling these emissions is essential to address the total impact of the built environment,a

7、nd progress towards the European Green Deals aim of a climate neutral Europe by 2050.The Green Building Councils(GBCs)spearheading the project are:Croatia,Finland,France,Germany,Ireland,Italy,the Netherlands,Poland,Spain and the UK.#BuildingLife has received funding from the IKEA Foundation and Laud

8、es Foundation as well as from European Bank for Reconstruction and Development and the European Climate Foundation.#BuildingLife Funders Sustainable built environments for everyone,everywhere3Team Lead author:Julie EmmrichContributing authors:Stephen Richardson;Carolina Montano-Owen;Miles RowlandFor

9、eword“Green investing is a no-brainer for the building and construction sector;for mitigating against climate and financial risks,as well as creating better social value for our communities.Simply put,if youre not investing in sustainable buildings now,then youre not long-term investing.We need a de

10、ep systemic shift to transition financial flows towards decarbonised,resilient and equitable built environments.And I am proud of the work that our European Green Building Councils have been doing to accelerate this shift.”Cristina Gamboa,CEO,World Green Building Council“Green investing is key in th

11、e race to stop catastrophic climate change.The insurance industry is already facing losses due to multiplying climate hazards.Shifting current finance flows towards a decarbonised built environment is therefore critical and I welcome the work that WorldGBC and national GBCs have been doing to enable

12、 this.”Sean Kidney,Climate Bonds Initiative CEO&member of WorldGBC Board of Directors European member Green Building Councils and Regional PartnersSustainable built environments for everyone,everywhere4WorldGBCs call to action to the European finance and real estate sectorsDont wait,invest In light

13、of the climate,energy and resource crises,there is no excuse for inaction:stakeholders in the finance and real estate sectors need to invest in the transition towards a decarbonised built environment.Financial actors should make use of existing data,tools,frameworks and best practice in the market t

14、o inform their decision-making.The EU and its Member States are developing comprehensive sustainable finance policies,most prominently the EU Taxonomy that started taking effect in 2021.The EU Taxonomy and other key policies are still works-in-progress and a lack of clarity and data poses difficulti

15、es in implementing the policies.Real estate and financial actors do not need to wait to take action until more clarity is given they should use existing resources to guide their financial decisions towards a sustainable built environment,such as robust voluntary frameworks.Investments in no-regret m

16、easures that follow the energy efficiency first principle and take a whole life cycle approach can be taken now despite a perceived lack of data.Preparing the shift of finance flows and financial activities towards a sustainable built environment runs along three key pillars:Roadmaps and voluntary f

17、rameworks pave the way Evidence suggests that financial markets are increasingly directing their investments towards projects and companies that guarantee the achievement of social and environmental development goals in addition to economic profitability.However,there is still confusion in the marke

18、t on what short term actions to take,how to develop mid to long term decarbonisation pathways and how to demonstrate progress towards set targets.Green Building Councils in 10 European countries have published National Decarbonisation Roadmaps to guide the transition of the sector.These roadmaps,pro

19、duced under the WorldGBC#BuildingLife project,clearly set out short,medium and long term actions.They are an invaluable resource for investors seeking clear,actionable guidance to start making immediate carbon reductions.portfolio data and informationtowards a zero emission,resilient and circular bu

20、ilt environmentno-regrets actions to have first impacts,kick-start the learning curve,and build and/or increase institutional capacities.National or regional roadmaps(like those in the#BuildingLife campaign)can help identify these actionsDiscloseSet targetsImplementSustainable built environments for

21、 everyone,everywhere5FranceUKIrelandSpainItalyGermanyPolandFinlandFigure 1:Overview of 10 BuildingLife national roadmaps to decarbonise the built environment.1 DGNB,DK-GBC,GBCe,GNI,2021.EU Taxonomy Study:Evaluating the market readiness of the EU taxonomy criteria for buildings.Complementary to natio

22、nal roadmaps,voluntary frameworks,like GBC-run sustainable building certification schemes,can guide sustainable actions and the shift to sustainable finance.Voluntary frameworks allow a common language amongst stakeholders such as between architects,construction companies,manufacturing companies,inv

23、estors and funders.The use of voluntary frameworks is key to showcase action by front-runners and to demonstrate progress towards targets especially when closely linked to policies(patible methods,tools and data).First evidence suggests a correlation between EU taxonomy eligibility and voluntary cer

24、tification schemes:certified projects seem to have a higher rate of eligibility in comparison with non-certified projects,both for the climate change mitigation and the Do No Significant Harm(DNSH)criteria of the EU taxonomy1.Sustainable built environments for everyone,everywhere6The faster we mobil

25、ise the real estate industry in a collective manner,the faster we will catalyse change costs will fall,skilled labour and know-how will increase and awareness amongst all stakeholders will be higher.To build the required know-how,build institutional capacities and push for a collective effort for ro

26、bust and ambitious sustainability claims we call on the real estate and finance sector to commit to action that aligns with existing roadmaps and voluntary sustainability frameworks.What is a sustainable building certification?Sustainable building certifications also known as green building rating t

27、ools are used to assess and recognise buildings which meet certain sustainability requirements or standards.Building certifications recognise and reward companies and organisations who build and operate greener buildings,thereby encouraging and incentivising them to push the boundaries on sustainabi

28、lity.They kick-start the market by setting standards that in turn elevate the ambition of government building codes and regulation,workforce training,and corporate strategies.Certifications vary in their approach and can be applied to the planning and design,construction,operation,maintenance,renova

29、tion,and eventual demolition phases of a building.Sustainable building certifications can also differ in the type of buildings they are applied to,with specific tools or subsets of tools used for different building types such as homes,commercial buildings,or even whole neighbourhoods.Sustainable bui

30、lt environments for everyone,everywhere7Background2 European Environment Agency(EEA),2020.Final energy consumption by fuel type and sector.3 European Parliament,2021.Draft Report on the implementation of the Energy Performance of Buildings Directive(2021/2077(INI).4 European Environment Agency(EEA),

31、2022.Greenhouse gas emissions from energy use in buildings in the EU.5 Eurostat,2022.Energy consumption in households.6 Eurostat,2021.8%of EU population unable to keep home adequately warm.7 Eurostat,2022.HICP monthly data(annual rate of change).Values retrieved 19 January 2023.8 Climate Action Netw

32、ork(CAN),2022.How to maximise the social benefits of climate action Scoping exercise.9 International Energy Agency(IEA),2019.The Critical Role of Buildings Perspectives for the Clean Energy Transition.10 World Green Building Council(WorldGBC),2019.Bringing Embodied Carbon Upfront.11 UNEP,2022.2022 G

33、lobal Status Report for Buildings and Construction:Towards a Zero-emission,Efficient and Resilient Buildings and Construction Sector.The European building sector is currently responsible for 42%of the final energy consumption2 and close to 36%of emissions3 with half of emissions due to the on-site c

34、ombustion of fossil fuels and the other half from the use of electricity and heat4.The current gas and oil crisis in Europe has a large impact on housing costs and disproportionally affects vulnerable households.Of households final energy consumption two-thirds is to heat their homes and one third c

35、omes from natural gas5.In 2020,8%of the EU population said that they were unable to keep their home adequately warm6 and since March 2022 the average inflation rate on natural gas across the European Union had risen by close to 40%compared to the previous year,although it went to a 25%increase in De

36、cember 20227.A sustainable built environment is not only a necessity to limit global warming,but it also strengthens political stability,energy security,and comes with a wide range of social benefits such as reduced pollution,better thermal comfort,job creation and reduced energy bills8.The IEA esti

37、mates that shifting finance flows away from fossil fuels in buildings(including energy systems)towards energy efficiency measures would reduce household spending on energy by half by 20509.Carbon emissions are released not only during operational life but also during the manufacturing,transportation

38、,construction and end of life phases of all built assets buildings and infrastructure.These emissions,commonly referred to as embodied carbon,have largely been overlooked historically but contribute at least 9%of all global carbon emissions10 11.Embodied carbon will be responsible for half of the en

39、tire carbon footprint of new construction between now and 2050,threatening to consume a large part of our remaining carbon budget.Our network of GBCs is mobilised to support investors and asset owners,ensuring ESG reporting and verification of the performance of built assets across their whole life

40、cycle is streamlined and robust.Sustainable built environments for everyone,everywhere8The power of collaborative effortsTo achieve a decarbonised built environment the academic,public,private and financial sectors must come together.The active participation of the financial sector ensures projects

41、can be delivered while the other stakeholders can create the technological and political frameworks to guide the best course of actions.GBCs provide bottom-up technical expertise that can guide sustainable financing in the built environment.National GBC-run certification schemes have been at the for

42、efront of enabling sustainable finance and ESG reporting,underpinning the ESG benchmark GRESB,for more than a decade,forming the basis for many of the first green bonds and sustainability linked loans and green mortgages,for example through the EeMAP project.GBC-run certification schemes are an esta

43、blished,de facto gold standard in the real estate market.WorldGBCs Europe Regional Network(ERN)has leveraged this pioneering work to cement our role and influence in the implementation of sustainable finance for the built environment.We have shaped and defined green mortgage standards,influenced the

44、 recommendations of the first Technical Expert Group(TEG)on climate mitigation criteria for the EU Taxonomy and subsequently steered the definition of technical screening criteria for the building sector in the EU Platform on Sustainable Finance.Our recognised expertise in sustainable finance comes

45、from decades of experience in defining the environmental performance standards for buildings and infrastructure,our networks role as a catalyst for political and industry action through advocacy,training and awareness raising.Sustainable built environments for everyone,everywhere9Financing the trans

46、ition to a decarbonised built environment12 WorldGBC,2021.Beyond The Business Case.13 GFANZ,2021.Amount of finance committed to achieving 1.5C now at scale needed to deliver the transition.14 TCFD,2017.Recommendations of the Task Force on Climate-related Financial Disclosures.15 Muldoon-Smith&Greenh

47、algh,2019.Suspect foundations:Developing an understanding of climate-related stranded assets in the global real estate sector.16 NewClimate Institute,2022.Making finance consistent with climate goals?Taking stock of the financial sectors climate related investment commitments.Sustainability is becom

48、ing an integral part of the business case for the real estate market.Market participants cannot afford not to be part of the sustainability movement from an ethical,financial,risk mitigation or future-proofing perspective12.Financial markets are increasingly directing their investments towards proje

49、cts and companies that guarantee the achievement of social and environmental goals.A first set of financial institutions committed to align USD 130 trillion of private capital with the goals of the 2015 Paris Agreement by 2050 through the Glasgow Financial Alliance for Net Zero(GFANZ)13.The finance

50、sector is well-positioned to boost the transition to a sustainable built environment and it should take advantage of its leverage.Financial actors investment,lending,and insurance underwriting decisions shape tomorrows real economy.Investment decisions taken today will have repercussion on the built

51、 environment in the years to come,so sustainability needs to be anchored in the finance and real estate sectors as soon as possible.Climate change presents one of the most severe financial risks to the global economy but the exact timing and severity of physical effects are difficult to estimate14.R

52、eal estate is a major asset class accounting for 10%of global GDP and is at risk from both physical and transition risks.The potential impact of climate change related effects is in the order of USD 16 trillion on residential assets and USD 5 trillion for commercial assets15.It is important that fin

53、ancial actors in the built environment also consider transition risks from new and upcoming EU and national legislations as well as technology,market and reputation risks(see Table 1 for more information).The creation,renovation and maintenance of a sustainable built environment offers large scale f

54、inancial opportunities from both a market competitiveness and risk mitigation perspective.Financial institutions need to consider key environmental objectives in all financial decisions.Achieving these objectives in the built environment requires enormous amounts of upfront investments and these inv

55、estments require a drastic upscaling of funding options such as standardised and innovative funding models.The finance sector needs to prepare for a deep transformation of the real estate and built environment sectors this includes understanding the fall outs of these transformations.However,current

56、ly the finance sectors potential to support increased climate action in both debt and equity markets is underutilised and the links between financial activities and their impact on emissions in the real economy are poorly understood16.Sustainable built environments for everyone,everywhere10Table 1:K

57、ey financial actors to finance the transition to a sustainable built environment17.Financial actorKey characteristics with regard to a sustainable built environmentKey physical and transition risksBanksBanks offer debt products to individuals(e.g.housing loan,mortgage)and businesses to finance the p

58、urchase,construction and/or renovation of buildings.Climate change induced natural disasters and chronic climate patterns may affect assets and hinder borrowers ability to repay borrowed capital.Asset managersAsset managers perform the service of increasing total wealth over time by acquiring,mainta

59、ining,and trading investments in real estate.Asset managers that do not prepare for transition risks may have reduced demand for products and services and may be subject to write-offs and early retirement of existing assets.Institutional investorsInstitutional investors can be mutual or pensions,and

60、 insurance companies that invest on behalf of their clients.They have the resources and expertise to research a variety of investment opportunities and can favour large-scale long-term investments required for a sustainable built environment.Investment portfolios may be subject to write-offs and ear

61、ly retirement of existing assets(e.g.,damage to property and assets in“high-risk”locations)as well as reduced revenue and higher costs from negative impacts on portfolio assets.Property developersProperty developers buy and/or construct buildings to sell and/or rent floor space.Project opportunities

62、 may be subject to decreased value from transition risks and increased costs to adopt/deploy new practices and processes(e.g.higher materials costs due to additional research and development(R&D)for low-carbon materials).Real Estate Investment Trust(REITs)REITs are publicly traded companies that own

63、,operate or finance income-producing properties and typically have more capacity to act on a larger scale and manage large properties such as building complexes.REITs may be subject to increased operating costs(e.g.,higher compliance costs,increased insurance premiums),to higher capital costs for en

64、ergy intensive assets,and to the risk of stranded assets(e.g.assets too expensive to retrofit).(Re-)Insurance companiesIndividuals and businesses use insurance companies to protect against financial loss,for example due to accidents or property damage.Acute and chronic physical risks may require inc

65、reased insurance premiums and/or reduce availability of insurance on assets in“high-risk”locations to compensate for increased insurance costs.17 Table based on,and adapted from,the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD,2017).Sustainable built environments

66、for everyone,everywhere11The EUs sustainable finance policy packageThe financial sector must take swift action to preserve its stability and limit damages caused by climate change.As policymakers move to enhance sustainability considerations the real estate and finance sectors need to effectively an

67、d proactively consider potential regulatory risks.With the landmark Paris Agreement to limit global warming well below 2C aiming for 1.5C it became clear that all sectors will have to take action.The EU set up the High-level Expert Group on Sustainable Finance(HLEG)in December 2016 one year after th

68、e Paris Agreement to consider the role of and implications for the finance sector.The EUs financial regulations reform package kicked in on 7 March 2018,with the European Commissions action plan for financing sustainable growth based on the recommendation of the Expert Group,which included the idea

69、of a European Taxonomy of sustainable activities.Amongst the sustainable finance policy package three distinct policies stand out.The EU Taxonomy regulation establishes a framework to define sustainable economic activities,whilst the Sustainable Finance Disclosure Regulation and the Corporate Sustai

70、nability Reporting Directive mandate a set of financial actors(or products)and corporate actors to disclose their eligibility and alignment to the EU Taxonomy,thereby enhancing transparency of climate exposure risks and tackle greenwashing(see Table 2).The European Green Bond Standard is a complemen

71、tary policy of these three.It is a voluntary standard to help scale up and raise the environmental ambitions of the green bond market.There are four key requirements under the proposed framework.The funds raised by the bond should be allocated fully to projects that are aligned with the EU Taxonomy.

72、Full transparency is required on how the bond proceeds are allocated through detailed reporting requirements.All European green bonds must be checked by an external reviewer to ensure compliance with the Regulation and taxonomy alignment of the funded projects.External reviewers providing services t

73、o issuers of European green bonds must be registered with,and supervised by,the European Securities Markets Authority(ESMA).This ensures that the quality of their services and reliability of their reviews protects investors and market integrity.Sustainable built environments for everyone,everywhere1

74、2Table 2:Summary of three key sustainable finance legislations in the EU.EU Taxonomy regulation18 Sustainable Finance Disclosure Regulation Corporate Sustainability Reporting DirectiveEstablishes a framework to facilitate sustainable investment,essentially providing a common set of rules to define s

75、ustainable economic activitiesCategorises sustainable economic activities using the NACE framework19Defines the significant contribution to six environmental objectives actors can chose one of the sixDefines Do No Significant Harm criteria for the other five objectivesMinimum Safeguards e.g.UN Guidi

76、ng Principles on Business and Human RightsSeeks to improve transparency in the market for sustainable investment products,to prevent greenwashing and to increase transparency around sustainability claims made by financial market participantsMandates ESG disclosure obligations for asset managers and

77、other financial markets participants at entity and product levelDouble materiality:Actors must disclose environmental impacts on financial institutions and products as well as the impact of investment decisions on the environment,referred to as the principal adverse impacts(PAIs)Amends the existing

78、reporting requirements of the Non-financial reporting directive(NFRD)Mandates the disclosure of EU Taxonomy alignment as well as the impacts of environmental risks on economic activities(double materiality20),and in compliance with the EU sustainability reporting standards(ESRS)Applies as of January

79、 2024 to around 12 000 companies already subject to the NFRD as of 2025 approximately 50,000 companies need to complyThird party“limited assurance”21 is mandatory in the reporting,followed by“reasonable assurance”22 in a few years18 Complementary to the EU Taxonomy Regulation the European Commission

80、 released the Climate Delegated Act Regulation(EU)2021/2139 defining substantial contribution criteria for 1.climate change mitigation,2.climate change adaptation,and setting do no significant harm criteria for 3.transition to a circular economy,4.pollution prevention and control,5.sustainable use a

81、nd protection of water and marine resources,and 6.protection and restoration of biodiversity&ecosystems.19 NACE is the acronym used to designate the various statistical classifications of economic activities in the EU.20 European Sustainability Reporting Standards include double materiality requirin

82、g companies to disclose material(of relevance)climate-related impacts on the company as well as impacts of a company on the climate.21“The conclusion of a limited assurance engagement is usually provided in a negative form of expression by stating that no matter has been identified by the practition

83、er to conclude that the subject matter is materially misstated.”22“The amount of work in a reasonable assurance engagement entails extensive procedures including consideration of internal controls of the reporting undertaking and substantive testing,and is therefore significantly greater than in a l

84、imited assurance engagement.”Sustainable built environments for everyone,everywhere13Jan 2023SFDR level 2 full disclosure:financial actors disclose(PAIs)impacts statement,sustainable funds disclose EU Taxonomy alignment2024CSRD applies to large companies not currently subject to NFRD2023-2024SFDR fu

85、lly applies,incl.EU Taxonomy alignment for all environmental objectives2023Delegated Act on the 4 remaining env.objectives2025CSRD also applies to listed SMEsMid 2023EU Commission to adopt first set of corporate reporting standards based on EFRAGs draft ESRSJan 2023CSRD published in Dec 2022 comes i

86、nto force Non-financial reporting requirements to disclose EU Taxonomy alignmentNov 2022Platform on Sustainable Finances supplementary advice on the March report on the remaining 4 environmental objectivesJuly 2022Complementary Climate Delegated Act(gas&nuclear energy)against expert advice applicabl

87、e as of Jan 2023Oct 2022Platform on Sustainable Finances reports on Data&usability of the EU Taxonomy&Minimum safeguardsJan 2022Financial and non-financial reporting requirements to disclose EU Taxonomy eligibilityJan 2022SFDR level 1“trial year”starts financial actors categorise funds as sustainabl

88、e or not sustainability claims require data to support claimMarch/April 2022Platform on Sustainable Finance convened in Oct 2020 releases reports on social taxonomy&environmental transition taxonomyJuly 2020Taxonomy Regulation comes into forceDec 2019EU Green Deal releasedNov 2019SFDR Regulation pub

89、lishedNov 2022CSRD proposal to amend reporting requirements of the Non-Financial Reporting DirectiveDec 2021Climate Delegated Act released applicable as of Jan 2022March 2021SFDR takes effect:financial institutions must disclose principal adverse impacts(PAIs),sustainability risks&remunerationMarch

90、2020Final Technical Expert Group(TEG)convened in July 2018 releases final report on EU TaxonomyMarch 2018Action Plan on Financing Sustainable Growth includes EU TaxonomyJan 2018High-level Expert Group on Sustainable Finance convened in Dec 2016 releases their final report including the idea of a tax

91、onomyupcomingDec 2015Paris AgreementNov 2022European Financial Reporting Advisory Group releases draft European Sustainability Reporting Standards(ESRS)Sustainable Finance Disclosure Regulation(SFDR)EU TaxonomyCorporate Social Responsibility Directive(CSRD)Figure 2:The legislative wave:milestones of

92、 key sustainable finance policies in the EU.Sustainable built environments for everyone,everywhere14Non-financial policy developments also have a considerable impact on the European real estate sector influencing financial activities in the European building sector.The Energy Performance of Building

93、s Directive(EPBD)is the single most important of non-financial legislations.The EPBD is currently under review to better align with the goals of the EU Green Deal and Fit for 55 package.As part of this,the European Commission proposed a revision text in December 2021,which included the following mea

94、sures:Minimum Energy Performance Standards(MEPS):The European Commission proposed to introduce minimum energy performance standards for existing buildings currently only new buildings are subject to MEPS.The MEPS would require that existing buildings improve their Energy Performance Certificate rati

95、ngs,with different trajectories set for public,non-residential and residential building types.Zero Emission Buildings(ZEB):The Commission proposal introduces a new definition for ZEBs,which are classed as buildings with a very high energy performance.All new buildings would need to be ZEBs by the st

96、art of 2030(2027 for all new public buildings).Whole Life Carbon(WLC)reporting:Under the Commission proposal,all new buildings would have to calculate and disclose their Global Warming Potential(GWP)from 2030,with the recommended use of the Level(s)framework,a requirement that would apply to new bui

97、ldings larger than 2,000 square metres from 2027.23 Ramboll,2022.Whole life carbon models for the EU27 to bring down embodied carbon emissions from new buildings Review of existing national legislative measures.Energy Performance Certificates(EPC):According to the Commission proposal EPCs should be

98、harmonised across the EU by 2025 and rescaled with“a view to the common vision for a zero-emission building stock by 2050”.A new set of mandatory EPC indicators has also been proposed for EPCs,which include calculated final energy use/consumption alongside primary energy use/consumption.WLC disclosu

99、re is an optional indicator at present.Building Renovation Passports:Building Renovation Passports set out step-by-step deep renovation roadmaps for individual buildings.The Commission proposed that by the end of 2024 latest 2025,Member States shall introduce a scheme of renovation passports.It is a

100、lso noteworthy that beyond the translation of EU directives at the national level some Member States are taking the lead on more ambition in the building sector.For example,Denmark,Finland,France,the Netherlands and Sweden have reporting requirements on embodied carbon in place or have proposed requ

101、irements for new buildings,which include maximum thresholds of GHG emissions.These countries pave the way for whole life carbon regulations beyond only operational energy and carbon emissions but issues remain regarding the degree of flexibility in the building assessments and the type of data that

102、can be used23.The Level(s)framework provides a harmonised and EU-approved methodology for assessing the environmental impact of buildings,including Whole Life Carbon(WLC).The European Commission developed the Level(s)framework based on the European standard EN 15978 and GBCs have extensively support

103、ed its development and piloting.Most green building rating schemes in Europe(including those run by GBCs)align or are aligning with Level(s).Level(s)is cited in the 2021 EPBD revision text and the EU Taxonomy Regulation as a methodology to report buildings Global Warming Potential(GWP).Sustainable b

104、uilt environments for everyone,everywhere15Available frameworks and resources for climate change mitigation financing24 Net Zero Tracker,2022.Recommendations and current realities.25 The GFANZ coalition includes the following sub-coalitions:Net-Zero Asset Owner Alliance(NZAOA),Net-Zero Asset Manager

105、s initiative(NZAM),Paris Aligned Asset Owners(PAAO),Net-Zero Banking Alliance(NZBA),Net-Zero Insurance Alliance(NZIA),Net Zero Financial Service Providers Alliance(NZFSPA),Net Zero Investment Consultants Initiative(NZICI).26 GFANZ,2022.Glasgow Financial Alliance for Net Zero.27 Financial Times,2022.

106、Gfanz drops its Race to Zero requirements.28 Financial Times,2022.COP27:Mark Carney clings to his dream of a greener finance industry.29 Bloomberg,2023.Wall Streets CO2 Agenda Drives Green Bank to Quit AllianceAs the demand and supply for sustainable finance in the built environment is growing,conti

107、nuous work is underway to enhance data granularity.Moreover,standardised definitions and more transparent frameworks are being developed to equip the finance community with appropriate tools to identify the level of sustainability amongst projects and thus avoid greenwashing.Pledging to realign fina

108、nce towards a sustainable built environmentIn recent years a global wave of net zero targets expanded to finally cover around 90%of the global economy24.The financial sector has followed suit by joining the net zero wave and/or pledging to align financial activities with 1.5C.Most prominently the Gl

109、asgow Financial Alliance for Net Zero(GFANZ),a global coalition of leading financial institutions,committed to accelerating the decarbonisation of the economy to limit global warming to 1.5C25.According to the coalition,“every company,bank,insurer,and investor will need to adjust their business mode

110、ls,develop credible plans for the transition to a low-carbon,climate-resilient future,and then implement those plans”26.The Coalition has,however,faced several issues to balance inclusion of financial actors with ambition of the pledges27 28 29.In the building and construction sector,WorldGBCs globa

111、l climate action programme Advancing Net Zero works towards total sector decarbonisation by 2050.Working with 34 Green Building Councils across the network the initiative develops tools,programmes and resources to promote the urgency and achievability of zero carbon buildings and build industry capa

112、city to deliver them.The initiative comprises 170 signatories,including financial actors such as Deutsche Bank,Goldman Sachs,Natwest,Lloyds Bank Group and Commonwealth Bank Australia,covering almost 20,000 assets and accounting for 7.3 million tonnes of carbon dioxide emissions.The Net Zero Carbon B

113、uildings Commitment requires that by 2030:New developments and major renovations are built to be highly efficient,powered by renewables,with a maximum reduction in embodied carbon and compensation of all residual upfront emissions.Existing buildings reduce their energy consumption and eliminate emis

114、sions from energy and refrigerants removing fossil fuel use as fast as practicableSustainable built environments for everyone,everywhere16Planning the pathway to zero emissionsThere are several approaches for actors in the finance and real estate sectors to equip themselves for the transition toward

115、s a whole life zero carbon built environment.One approach to inform financial decisions is the setting of emissions and emissions intensity pathways based on a carbon budget approach.Planning for the construction of decarbonised built assets can be straight-forward with a multitude of criteria and c

116、ertification schemes to use.Decarbonising the entire sustainable built environment,however,requires the decarbonisation of existing buildings as well.Because the current stock cannot be simultaneously renovated,tools and frameworks can help to plan the decarbonisation pathways.In response to the nee

117、d for planning the transition of the wider building stock and especially from real estate actors,several tools are now available.Essentially the goal of these tools is that financial actors can set targets informed by a decarbonisation pathway and align financial decisions to the emissions(intensity

118、)trajectory.Despite the usefulness of setting an energy and emissions intensity pathway,there are several difficulties of that exercise to be aware of.Top-down emission pathways rely on a multitude of assumptions around carbon budgets and assume homogeneous action of all stakeholders in the building

119、 sector.Therefore,divergences persist with current pathway methodologies.For example,the Carbon Risk Real Estate Monitor(CRREM)aims to support the industry to tackle transition risks,e.g.arising from changing market expectations and legal regulations,and thus foster investments in energy efficiency

120、to avoid stranded properties“that will not meet future energy efficiency standards and whose energy upgrade will not be financially viable”30.30 CRREM,2023.Carbon Risk Real Estate Monitor.31 UNEP,2022.2022 Global Status Report for Buildings and Construction:Towards a Zero-emission,Efficient and Resi

121、lient Buildings and Construction Sector.32 Worldwide,buildings are not only responsible for around 40%of carbon emissions but also of 50%of all extracted materials,33%of water consumption and 35%of waste generated other environmental impacts include resource depletion,air,water and land pollution an

122、d biodiversity loss(Ecorys,2014;Pomponi&Moncaster,2016;Mercader-Moyano,Esquivias&Muntean,2020).33 Material Economics,2019.The Circular Economy a Powerful Force for Climate Mitigation.At the national level,leading tools for decarbonisation that have been developed and adopted by industry include Dutc

123、h GBCs ParisProof,German Sustainable Building Council(DGNB)Klimapositiv,Ireland GBCs Home Performance Index,LEED Zero or the UK Net Zero Carbon Building Standard(forthcoming).Implementing action key principles to guide financing decisionsResources such as the national and European roadmaps under the

124、#BuildingLife project,clearly set out short,medium and long term actions.Such resources are valuable for financial actors seeking clear,actionable guidance to start making immediate and no-regret emission reductions.Emissions from the construction,renovation and disassembly of buildingsEmbodied carb

125、on in the built environment contributes approximately 9%of all carbon emissions globally for the construction,renovation,deconstruction or demolition and the wider supply chain of a building;and another 6%for“other building and construction industry”referring to concrete,steel and aluminium emission

126、s for infrastructure construction31 32.Embodied carbon is estimated to contribute between 1020%of the EUs building carbon dioxide footprint,depending on factors such as building type and construction technique and materials.In countries with low-carbon energy,the embodied share can already be as hig

127、h as 50%33.Sustainable built environments for everyone,everywhere17PreventA building is heavily anchored in its context,which affects sustainability considerations.It is important for investors and financial institutions to understand that context.In Europe,with a large building stock,urban planning

128、 considerations,including the need for green,well-connected cities,are crucial to limit unsustainable real estate expansion.The most straight-forward approach to avoiding embodied carbon from the outset is to consider alternative strategies,most prominently the renovation of existing buildings rathe

129、r than new developments.Moreover,considerations of space efficiency over time through shared occupancy,flexibility and adaptability can prevent unsustainable real estate expansion.Reduce and optimise materials useFrom structural elements to finishes,building products often represent the biggest cont

130、ribution.This is not just because these materials are used in such great volumes but because producing them is often highly carbon intensive.Therefore,it is crucial to evaluate design choices using a whole lifecycle approach and seek to minimise upfront carbon impacts such as through lean constructi

131、on(which can be implemented straight away)as well as low carbon materials and construction processes.More specifically,materials for the construction or retrofitting of buildings should source durable products and services(e.g.secondary,sustainably sourced,renewable,reusable and/or recyclable materi

132、als).Life-cycle assessment(LCA),life-cycle costing(LCC)and readily available digital information(such as building material passports)help to reduce and optimise material use34.34 WorldGBC,2022.Circularity Accelerator.35 WorldGBC,2022.Circularity Accelerator.36 European Environment Agency(EEA),2020.F

133、inal energy consumption by fuel type and sector.37 European Parliament,2021.Draft Report on the implementation of the Energy Performance of Buildings Directive(2021/2077(INI).Plan for the futureTake steps to avoid future embodied carbon during and at the end of a buildings life,for example by maximi

134、sing the potential for future renovations,future adaptation of a buildings use,and enhancing the circularity of a buildings materials.In the construction or renovation phase longevity,resilience,durability,easy maintenance and reparability of the building are essential.At the end of life,considerati

135、ons of disassembly,reuse or recycling of embedded materials,components and systems are key35.Emissions from the use of buildingsIn Europe,the operation(or use)of buildings alone accounts for 42%of all final energy consumption36.Improving energy efficiency of buildings,electrifying energy use and dec

136、arbonising electricity and heat are key to reducing emissions in Europe.Reduce and optimise energy demand of new buildingsAll new buildings should be built as decarbonised buildings it avoids the need for retrofitting at a later stage.New buildings should be designed to minimise operational emission

137、s from the start,ensuring they meet proposed ZEB standards and that they will require no future renovation work to improve their performance.Roughly 75%of the EU building stock is energy inefficient37.This means that a large part of the energy used goes to waste.Such energy loss can be minimised by

138、improving existing buildings and striving for smart solutions and energy efficient materials when constructing new buildings.Sustainable built environments for everyone,everywhere18Plan for deep decarbonisationAbout 35%of the EUs existing buildings are at least 50 years old,and at least 75%are not e

139、fficient enough to comply with future carbon reduction targets38.This reflects the need to set up action plans to remove any remaining sources of fossil fuels in buildings as soon as possible.Key principles for the retrofitting of buildings are:When a building renovation occurs it should entail a de

140、ep energy retrofit it avoids the need for another retrofit later on Deep energy retrofitting should become the default approach,representing the majority of works undertaken39 The deep retrofitting rate should reach 3%per year as soon as possible before 2030 and be maintained up to 2050 Those number

141、s stand in stark contrast with the current situation,where the average annual deep energy retrofitting rate in the EU is at 0.2%40Source renewable energyTo achieve full decarbonisation,any remaining energy used needs to be carbon free.This is particularly challenging for space and water heating give

142、n that most heating is currently powered by gas,oil,or coal burned on-site.On-site renewables can reduce stress on the power grid from additional demand.Wherever possible,new builds should incorporate on-site renewables.Energy from the grid should be supplied from zero carbon energy sources,acknowle

143、dging the overlap with the energy sector.Smart metres can also play a role in helping to integrate additional demand into a renewable energy-dominated grid41.38 World Green Building Council(WorldGBC),2019.Bringing Embodied Carbon Upfront.39 Building passports could give detailed guidance on what ene

144、rgy efficiency improvement measures are needed when retrofitting and be used for asset rating(WorldGBC,2017).40 BPIE,2021.Deep Renovation:Shifting from exception to standard practice in EU Policy.41 Climate Action Tracker,2022.Decarbonising buildings:achieving zero carbon heating and cooling.Sustain

145、able built environments for everyone,everywhere19Join usThe urgency and complexity of financing the transition towards a fully decarbonised built environment calls for drastic actions.The built environment is of a fragmented and heterogenous nature rendering large-scale and timely financing of clima

146、te actions difficult.There are many signs of change,like recent and upcoming legislations bringing transparency and a common framework,and we need to avoid divergent implementation and reporting practices.In that context,WorldGBC invites all stakeholders within the built environment,whether a financ

147、ial institution,third-party reviewer,investor,developer,owner,manufacturer,architect,designer or consultant,and representatives of national government,states and cities,to be ahead of the transformation wave.We urge you to collaborate with our global network,powered by our Green Building Councils an

148、d our partners to ensure that Europes built environment is decarbonised.WorldGBCs new Sustainable Finance Taskforce convenes key stakeholders to enhance collective learning and progress,advises to build capacities amongst the industry and influences sustainable finance practices and policy implement

149、ation at a larger scale.We invite you to join us on this journey.Sustainable built environments for everyone,everywhere20Appendix INon-exhaustive overview of resources on Whole Life Carbon and sustainable finance in the built environmentKey documentsFindings/InsightsWorldGBCBeyond the Business Case

150、As the urgency of climate change is becoming clearer,sustainability is being integrated into every corner of the economy.Real estate is a major asset class accounting for 10%of global GDP.Therefore,the creation,renovation and maintenance of a sustainable built environment offers large scale financia

151、l opportunities,from both a market competitiveness and risk mitigation perspective.Financial markets are increasingly directing their investments towards projects and companies that guarantee(in addition to economic profitability)the achievement of social and environmental development goals.WBCSD&On

152、eClick LCAWhat investors and asset owners can do about embodied Reducing inefficient material use and wastage has a very direct financial benefit for construction management businesses.However,other players in the value chain do not directly share these benefits,so e.g.investors and designers have l

153、ess incentive to design for material efficiency.Ideally,the incentives should be proportional to the effort.Calibrating the incentives is demanding and will in practice require simplified rules to allow project developers to target a specific performance level to unlock the incentive.Many of the inc

154、entives identified in this document work as part of a voluntary certification system by providing points.From decarbonization point of view,the optimal design for a voluntary certification design would be to make carbon reporting mandatory,and award points for better performance.Incentives with dire

155、ct financial value linked to carbon reduction are rare.Green Finance InstituteLenders handbook Energy efficiency measures and green home retrofit technologies are crucial to the transition to net-zero ready homes,as are the financial products and services which will facilitate their roll-out.Measure

156、ments assures and are unlikely to be justified purely on the basis of financial payback through energy bill savings.WBCSDThe business case for circular buildings:Exploring the economic,environmental and social value Life-cycle costing is currently the most widely used tool used by the industry to in

157、form financial decision-making.However,when working with circular economy practices,almost a third of stakeholders when asked did not know how to create a monetary business case for circular performance.There is clearly a need to adapt conventional economic tools to be able to measure the retained v

158、alue of a building in adopting.Sustainable built environments for everyone,everywhere21Key documentsFindings/InsightsWorldGBCEU Policy Whole Life Carbon Roadmap The report provides an overview of key EU regulations and their timeline.The roadmap puts forward a multitude of policy recommendations fro

159、m today to 2050.DGNB,DK-GBC,GBCe,GNIEU Taxonomy Study Evaluating the market-readiness of the EU taxonomy criteria for buildings When comparing the different business activities related to buildings,newly constructed buildings scored highest in terms of Taxonomy eligibility and also had the least dif

160、ficulty in demonstrating eligibility for the Do No Significant Harm (DNSH)criteria.The study found a strong correlation between eligibility and certification.Certified projects had a higher rate of eligibility in comparison with non-certified projects,both for the climate change mitigation and the D

161、o No Significant Harm(DNSH)criteria.DGNB,GBCe,DK-GBC,GNI,D-GBC,SGNI,CGBC,BGBC,CPEAEvaluation of the market-readiness of the proposed Circular Economy EU-Taxonomy Screening Criteria for construction and real estate activities This intermediate project report aims to guide the transition of the criter

162、ia of the Taxonomy from a technical proposal into a functioning system at the very core of a future-proof,circular European economy.The study tested 31 projects,30 covering the“New Construction”activity and one project covering the“Renovation”activity of the Taxonomy.Around 90%of the projects are(be

163、ing)certified according to varying sustainable or green building standards,so a selection bias may accrue.The diverse group of market participants were unanimous in their motivation to gain a deeper understanding of the Circular Economy Taxonomy,as the topic is perceived as challenging despite the r

164、ecognition that it is integral to sustainable sectoral economic activities.The current ambition of the Circular Economy screening criteria would lead to cherry picking,as achieving alignment to the first two environmental objectives are perceived as less challenging.To achieve wide application and r

165、ealisation of the European circularity objectives,market participants claim the need for clearer description of scope and definitions.Sustainable built environments for everyone,everywhere22Key documentsFindings/InsightsPCAFGuidance on financing the European building transition to net zero The repor

166、t highlights challenges in financing a net-zero building stock It provides 3 key recommendations to the finance community:1.Aggregation&Upscaling,2.Data&Methodology,3.Alignment&Vision It proposes a unified net-zero building definition It suggests a stepwise approach for financial institutions toward

167、s a net-zero building stock by 2050 Pathway towards net-zero buildings:a net-zero building stock by 2050 provides overall guidance for financial institutions to steer their strategies and actions Measuring and tracking progress along two key indicators:kgCO2e or tCO2e per square meter&kWh or MWh per

168、 square meter Decarbonization of building portfolios:Financed buildings of the portfolio need to be transformed on a large scale to EPC rating A to C to be aligned with the overall decarbonization pathway&2030 and 2050 are key milestones(halve emissions 2030 and net zero by 2050)A“Menu of emission r

169、eduction measures”exists to decarbonise buildings:Energy efficiency RES Embodied carbon Efficiency in operation(offsetting)Financing the transition through new financial products and services such as Building Renovation Plans,Green Home Finance Principles,a Lenders Handbook on Green Home Retrofit an

170、d Technologies,Sustainability-linked Bonds/Loans,Green bonds/loans,Local Climate Bonds,Green MortgagesClimate Action TrackerDecarbonising buildings:achieving zero carbon heating and cooling,Element Three Financing In some cases,new or retrofitted zero carbon buildings are cheaper than more carbon-in

171、tensive alternatives,at least when considered over the lifetime of the building.In these cases,easy access to finance can reduce the perceived risk of high up-front costs and overcome financial barriers.However,where gas and heating oil remain cheap relative to the cost of electricity(when onsite re

172、newables are not an option),and for more expensive upgrades,payback periods may be beyond an investors time horizon.Alternative financial support arrangements are required to change the market through improving the cost-competitiveness of low carbon investments,addressing high upfront costs,and redu

173、cing financial risks.Multiple policy instruments are available and the most appropriate depends on the regulatory framework and financial situation of the country or region.Carbon pricing has proven effective in encouraging electrification but ensuring that any money collected through a pricing inst

174、rument is redistributed,such that it does not exacerbate social inequalities,is crucial for a policys long-term viability.Sustainable built environments for everyone,everywhere23Key documentsFindings/InsightsEuropean CommissionLevel(s)European framework for sustainable buildings Level(s)provides a c

175、ommon language for assessing and reporting on the sustainability performance of buildings.It is a simple entry point for applying circular economy principles in the built environment.Level(s)offers an extensively tested system for measuring and supporting improvements,from design to end of life.It c

176、an be applied to residential buildings or offices.Level(s)uses core sustainability indicators to measure carbon,materials,water,health,comfort and climate change impacts throughout a buildings full life cycle.It is a flexible solution for identifying sustainability hotspots and for future-proofing y

177、our project or portfolio.EPRAEU Taxonomy Alignment in Listed Real Estate The Real Estate sector,given its high environmental impact,is in the spotlight of EU Regulations aimed at redirecting financial flows towards more environmentally sustainable investments,in order to achieve carbon neutrality by

178、 2050 or other interim targets.Adding to the complex requirements of the EU Taxonomy,the differences observed in the interpretation of criteria to comply with the EU Taxonomy across European countries adds another level of complexity for organisations that operate in several markets,as they will hav

179、e to calculate the EU Taxonomy eligibility and alignment of their investments using the approach or set of criteria defined in each specific country.In this context,and with other upcoming regulatory obligations(i.e.CSRD,Social Taxonomy)in the pipeline,organisations must remain in-tune with market practices and guidelines being published in order to continuously address the regulatory expectations at its highest level.#BUILDINGLIFE worldgbc.org