Issue link: https://resources.tangoanalytics.com/i/1538218
Copyright © 2025 Tango. All rights reserved. www.tangoanalytics.com Net Zero in the Built Environment The Built Environment's Role in Net Zero The built environment is one of the most emissions-intensive sectors globally, accounting for roughly 40% of total annual greenhouse gas emissions. Of that, ~27% is operational carbon, emissions from heating, cooling, lighting, and powering buildings, and ~13% is embodied carbon, generated during the manufacturing, transportation, and construction of building materials 5 Why This Sector Matters This sector matters because it offers both high impact and high control. Organizations can directly influence how buildings consume energy, what materials are used in construction and renovation, and how tenants and service providers operate within those spaces. And with buildings typically designed to last decades, decisions made today can either lock in emissions for the long term or serve as a catalyst for deep decarbonization. Time is also a critical factor. More than 80% of the buildings projected to exist in 2050 already exist today. That means the most meaningful emissions reductions won't come from future building designs, but from how we retrofit, operate, and manage the structures already in use. Operational changes, not just new construction, must be the central focus of built environment decarbonization efforts. Real Estate Portfolio Risk & Opportunity Buildings face increasing regulatory, financial, and reputational risk related to emissions: Regulations: City- and state-level building performance standards (BPS) are expanding across the U.S., requiring buildings to meet emissions thresholds or face fines. Insurance risk: Buildings in flood- or fire-prone areas are becoming more expensive to insure— or uninsurable altogether. Investor scrutiny: REITs and large owners are being evaluated on ESG performance, GRESB scores, and emissions intensity metrics. At the same time, high-performing buildings offer: Lower operating costs (energy, water, waste) Increased NOI and asset value Better tenant retention Stronger access to green financing, tax incentives, and favorable lease terms Focus Areas for Emission Reduction