Governments in major developed markets are committed to reducing their countries’ net carbon emissions by target dates stretching between 2030 and 2050. Many cities around the world have established policies and strategies to deliver on these commitments, whilst real estate investors are increasingly being asked to put in place their own pathways to net zero.

Looking globally, it is challenging to find consistency in methodologies. There is a range of options available for global investors to pursue, with considerable implications for risk-return trade-offs, as well as investment managers’ behaviour. Some measures are beginning to gain more traction compared to others because they are investor-led. For example, CRREM has integration with the performance information GRESB collects on real estate assets.

The implications of issues such as embodied carbon, stranded assets and mis-pricing of portfolio risk would be welcome areas for a detailed examination, as the industry is at a relatively early stage in turning its attention to these.