Global property owners face decarbonisation investment deficit

A new report from Verdantix, "Building Decarbonization Barometer," reveals that global owners of office, retail, and healthcare properties are significantly underinvesting in decarbonization, with an average deficit of $31 mln (€28.7 mln) per company. 

Decarbonising real estate - Verdantix

This shortfall hinders business resilience despite significant capital allocation towards these initiatives.
The report, based on a survey of 300 senior executives from large firms (mostly generating over $1 bn annually), indicates that current and planned investments are insufficient to implement decarbonization across entire property portfolios. Although companies plan to invest an additional $26 mln (€24.1 mln) on average in sustainability over the next three years, this is less than half of what's needed for full portfolio coverage. For example, the office sectors in Germany and the UK have a combined deficit exceeding $275 bn (€254.9 bn), and the UK healthcare sector has a $21 bn (€19.5 bn) shortfall.
Office property owners plan to allocate an average of $30.8 mln (€28.5 mln), but face an equal $30.8 mln (€28.5 mln) shortfall for complete portfolio decarbonization. Retail property owners intend to invest an additional $21.4 mln (€19.8 mln) on decarbonization, yet have a $27.9 mln (€25.8 mln) deficit for full coverage. Healthcare property owners have only spent 27% of the necessary investment for full decarbonization coverage, requiring an additional $33.3 mln (€30.8 mln) per organization beyond current plans.
In the EMEA region, decarbonization budgets are less than half of what's needed. Office owners need to nearly quadruple their investment in supply chain decarbonization. Retail decarbonization investment in operational initiatives needs to double. Healthcare sustainability plans show a 55% shortfall in required investment for operational initiatives.
Claire Stephens, research director at Verdantix, said: “Our analysis highlights that while property owners have made commendable strides towards decarbonising their building portfolios, planned investments fall dramatically short of the level required to deploy decarbonization initiatives across full portfolios. Without doubling down on decarbonization investments, companies risk missing crucial sustainability targets and failing to align with stakeholder expectations.”
Dayann Charles, advisory manager at Verdantix, stated: “With resource shortages and geopolitical issues elevating the strain on energy worldwide, it is paramount that firms capitalise on opportunities to increase their building and subsequently, business resiliency. A major part of this is investing in energy efficiency and decarbonization initiatives. The current deficits in investment plans are sizeable. For example, in the US, we estimate that large office property owners as a whole need to spend another $1.1t (€1.02t), beyond what is already planned, to deploy decarbonization initiatives across all their properties. Shortfalls of more than $100 bn (€92.7 bn) are seen in the corresponding office sectors in Germany and the UK, as well as the US retail and healthcare industries.”