The expectation is that buildings and infrastructure constructed today will last 100 years or more and not only remain valuable assets but be safe for human occupants and users. However, portions of the built environment are beginning to collapse under the pressure of climate change, creating uncertainty about longevity. With saltwater intrusion from sea-level rise eating away at foundations, wildfires engulfing towns and shutting down grids, and floods inundating cities and swallowing transportation networks, it’s clear that climate resiliency needs to be a top priority for present and future planning.
In addition to being vulnerable to climate change, the built environment is also a significant contributor to it. The Building Research Establishment, a 100-year old building science research organization based in the UK and owned by the charity BRE Trust, estimates that the built environment is responsible for about 39% of global carbon emissions. Having launched the first green building certification program, BREEAM, in 1990, BRE continues to push for net-zero carbon buildings while also challenging architecture, engineering, construction and real estate industries to push for higher climate resiliency standards.
“As a science research center BRE’s sole purpose is to take any profits from businesses and put them back into research on the built environment,” said Breana Wheeler, Director of Operations for BREEAM USA. “Our program takes building science at the base of the standard, and it's what drives the standard and provides a framework to understand buildings’ performance and to achieve more. So we’re really encouraging industries to stretch themselves a bit more.”
Moving the needle on building sustainability is not a simple task as it involves considering environmental impacts, occupant health and well-being, and ensuring financial viability over the long term. For decades there was nothing in the marketplace to define what that looks like, and it’s still an area under development by BRE and other organizations. Yet, the worsening of climate change impacts becoming more apparent, alongside the coming of age of younger generations who tend to be more concerned about sustainability, is leading to greater systemic adaptation.
BREEAM USA Director of Operations Breana Wheeler spoke with The Carbonic about the current momentum towards sustainable buildings, the danger of greenwashing and the urgent work ahead. The following interview has been edited and condensed for clarity.
Q: It seems that 2021 is the year of corporate climate pledges. Why now, and how meaningful is this trend?
A: I think the growing societal awareness of the urgency of this issue is coming to a peak. Gen Z is certainly very vocal. Previous generations may have understood climate change conceptually. I remember when I was in college in the late 1990s, we talked about climate change as something that was going to happen in the future. These generations see the impacts happening right now. Even in the last few months, when we're looking just at natural disasters, it’s clear that it's very much grown.
Folks growing up in this are making investment decisions; they want to put their money where they're doing good. There's also an expectation from those who want to buy brands that are minimizing their impact. So that's been pushing the investor community to pay attention because that's what's driving it.
The other thing is the impact of climate change and the need for resilience. There’s a growing awareness among the investor community that this will impact value with the damage that is coming. The insurance industry has been very clear about that.
The pandemic was the canary in the coal mine. I know from everybody we speak to, it was a wake-up call that we can make significant changes to our economy when we need to, but it's painful economically and in terms of the damage to our well-being as a society. Taking a step back, we can see that the really destructive impacts of climate change are coming. We know we have 20 to 30 years to address this. We can start doing that now with less cost than if we put on a hard break when we get to 2040 to save our civilization. All you have to do is read the IPCC report to know that's what we're talking about here.
Q: With all of this new momentum comes an increased danger of greenwashing. How can we address that?
A: I think the significant danger is the veneer of action without actual action, and time is so short that inaction is going to start having a real consequence. And so, taking tangible steps towards net-zero carbon in buildings, for example, has been recognized as a major challenge for a long time. This is not going to be an easy thing.
There are a lot of conversations about carbon offsets right now. But, unfortunately, there aren’t enough offsets in the world to solve the problem, so we need to be focused on actual tangible outcomes that will both make a difference in the carbon emissions and also can be transparently communicated to investors, so they can put their money really where the value is.
So, the way that BREEAM deals with this is that our program, particularly for existing buildings, is critical because we're talking about the vast majority of the buildings that are already in existence; we need to move them forward. In some ways, that's the harder problem.
Essentially our program sets net-zero carbon as the ultimate outcome, so only assets that achieve net-zero carbon will receive the maximum credits in our energy categories. And that's not because we believe that most buildings will get there — clearly not at the moment, but what we want to do is make sure that that's the ultimate goal. So our program provides assets a way of evaluating how close they are to achieving net-zero carbon with the metrics of building efficiency first, which is critical, then onsite renewables — those are the two gold standards; because offsets aren’t going to make much of a difference if you don't have building efficiency and onsite renewables.
When we talk about building efficiency, we're talking about reducing costs but also about resilience. The more a building doesn't have to rely on our grid to deliver energy, given the strain during heat events, for example, the better it is for everybody connected to that grid. It also ensures the financial viability of that building. So our program’s focus is to think about this in a very holistic sense, not just about environmental performance, but that it is delivering on resilience as well.
Q: Talk a bit about the role that investors are playing in the push to reduce the carbon emissions of buildings.
A: It depends on where you are in the world. We're headquartered in the UK, so we've been working with the European investor market for a long time. So this has been a conversation since 1990. I think everybody's been finding their feet with this, but certainly, the European investor market has been pretty far ahead from other places. We've seen a lot of tightening of requirements from European investors. Because money and investment are global, these things trickle down into other markets, including the U.S. It has influenced how American ownership pursues and looks at sustainability and starts to influence the impact.
So, for example, European investors, ten years ago, would have been asking about carbon footprinting, but they may have asked more basic questions like, “Do you measure carbon?” Whereas today they're asking for data. They want to know the kilowatt consumption of electricity from every building that they invest in, whether that's full or partial. That’s a significant change, and it has even impacted American firms who had no interest on their own in sustainability. That said, many real estate companies were already interested in this conversation for a myriad of reasons. Now, the push is only growing as Gen Z takes hold and starts to have money to invest.
Q: As the effects of climate change escalate, it seems that we should be aiming beyond carbon neutral and towards carbon negative buildings. What are your thoughts about how we could get there?
A: Carbon negative is really the dream because we know that's probably going to be absolutely necessary. So, our existing building program gives exemplary credits for buildings that achieved net positive performance. The only way we see this happening is to focus on building efficiency — we have to have buildings that are extremely energy efficient in all sorts of ways.
Ultimately it seems that the only pathway is full electrification. That's going to be difficult; it’s going to be a technological challenge. We have the technology, but it's not how we’ve built for 150 years, so we’ll need to have new skills, new approaches, and we're going to need to adapt.
Full electrification assumes that the grid will be fully able to handle it. Based on energy profiles and energy usage right now, that’s not true. That's why building efficiency is so critical in this conversation because it doesn't matter if we electrified everything right now, we wouldn't be able to support it through the grid.
I think the interesting thing is watching how cities are approaching this. We’re seeing ordinances like Local Law 97 in New York, where it's putting in building performance standards, setting minimum standards for energy efficiency, the performance of buildings, and issuing financial penalties for not achieving it. That law is revolutionary in some ways, and we're seeing many jurisdictions actively pursuing higher standards.
It's interesting to see the shift in the real estate market where there are calls for more regulation, not less, because there are many organizations who want to do this, but it doesn't pencil, and when they can't make the full economics, they feel like they can't act. So now we’re hearing of some cautious embracing of the regulations — they haven't been running into the arms of the regulators and saying yes we're thrilled, but having that engagement that’s saying we all need the same outcome and how can we make this as painless as possible — but with the answer not being that we're not going to act —that can't be the answer.
Q: Regarding resiliency, given recent extreme weather events, buildings and infrastructure have been buckling under the pressure. It seems that we’ve been caught unprepared. Can we catch up, and if so, how do we do go about it?
A: Some interesting initiatives are going on. First, we have the Task Force for Climate-Related Financial Disclosures, and this framework is all about organizations reporting on their physical and transitional risks.
Physical risks like floods and wildfires have always been with us, but climate change is making them worse. In the past, this was relegated to insurance — we’ll insure, and it'll be fine. But this was underpinned by assumptions. One is that insurance will be affordable. The second thing is that it will be available. In several cases, in Florida, for example, after Hurricane Andrew, a third of the insurance in the state failed. So, the state had to step in, and California is contemplating something very similar for fire. So, those two assumptions are going away. And so, all of a sudden, the physical risks become a lot more important to understand.
There's also been some great research showing that insurance doesn't cover a lot of the costs. There are hidden costs like the fact that the economics in the area may no longer support the use of the building, so you can repair it, but the economy might not be there. So you can’t insure for everything.
Then there are transitional risks. So the issue of wildfire in California and having to shut off the grid, that’s a transitional risk. The affordability of insurance, the availability of insurance — not everybody can underwrite their own risk. And then there are the increased capital costs where lenders require increased assurance and increased cost to loan on higher-risk assets.
The more democratized the tools are, and the more accessible they are, the easier it becomes to see where the high-risk areas are, but also events are starting to underline this. For example, with sea-level rise in Miami, Florida, the Army Corps of Engineers has proposed a 20-foot concrete wall. So we can protect it, but there are costs involved and questions about how we should approach that.
For us, the first thing is to understand it, do the assessment, understand the risks - physical risks and transitional risks. Our program’s resilience category aligns with the TCFD specifically at the asset level to provide that connection between individual asset level of organizations who own portfolios, and that's quite deliberate, so we're very much about encouraging that evaluation, encouraging the industry to look at it. Because only when they look at it can they act.
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Q: What role should government play in this, and how can organizations like BRE best work together with governments?
A: Government can be an enabler or an inhibitor. Its decisions and its actions make a difference. We've seen that with the struggle on climate change with the previous administration that was not interested in it, so it devolved down into the cities. They could do a lot and are doing a lot. I have a lot of respect for our cities and how they have managed this, but it was clear that this can be so much better, so much more effective when everybody's aligned and delivering together.
It's encouraging to see the current administration's seriousness about climate change, with the appointment of John Kerry as the Envoy, it shows a sense of purpose and the recommitment to the Paris Agreement in particular. The recent IPCC report underlines how important it is that the 1.5-degree C target is met; we have to do this. So the government can really be an enabler. But I also think they need to engage on outcomes and allow the markets to choose the best way forward.
For our program, we work a lot with the [EU taxonomy for sustainable activities] and regulations. The [Sustainable Finance Disclosure Regulation] is essentially about what you can call a green investment. We believe that BREEAM can provide a transparent evaluation to communicate with investors about what is real and what is not.
Third-party verification is going to be critical. In the past, it was acceptable to say, “This is how we're performing, trust us,” and we're moving into the place where we trust, but then verify. The stakes are just getting higher, so for us, it's about third-party assurance; it's about the degrees of assurance that are provided. With any assurance process, some are just documentation-driven. Our program requires an assessor to go onsite to ensure that what is documented on paper is actually in the building's performance. And that provides that layer of assurance that it is indeed real, and that's what we need; we need a dose of reality here on how big this gap is and what it's going to take to close it. And only through measuring is any company going to come to terms with what that looks like and be able to act.
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