Net Zero Initiative for Real Estate

Executive Summary

The Net Zero Initiative (NZI) Framework

Since 2018, the Net Zero Initiative (NZI) has been working to define an ambitious framework for companies to contribute to carbon neutrality, in line with climate science. More specifically, the NZI’s work aims to establish a framework for analyzing and managing organizations’ climate action—including measurement, goal-setting, and monitoring—based on three distinct pillars of contribution: emissions caused (Pillar A), emissions avoided (Pillar B), and carbon sequestration (Pillar C).

The role of the real estate sector in achieving global carbon neutrality is now clearly established, not only in terms of the carbon footprint of existing buildings and new construction but also in terms of the sector’s ability to contribute to carbon sequestration. The aim of this guide is therefore to provide a practical application of the NZI framework for the real estate sector, covering both professions related to the operation of existing buildings and those involved in the development of new assets.

In order to build on the methodological strengths of the existing framework and incorporate the challenges and specific characteristics of the real estate sector, this report is organized around the three historical pillars of the NZI:

Introduction to the RE2020 Regulations in France

Since January 2022, France has had an ambitious set of regulations for new construction: the 2020 Environmental Regulations (RE2020). These regulations have introduced the accounting of greenhouse gas emissions through “Life Cycle Assessment (LCA)” at the heart of building design challenges and has enabled all stakeholders in the French real estate sector to rapidly develop expertise in these environmental issues, foreshadowing the changes currently underway at the European level.

However, the RE2020 framework has some methodological peculiarities (e.g., dynamic LCA) compared to international accounting and commitment frameworks (GHGP, SBTi, RICS, etc.)[1] used for reporting and decarbonization strategies by many real estate groups.

French companies therefore face the challenge of ensuring consistency between the operational level (RE2020) and the strategic level (GHGP, SBTi) in terms of carbon accounting, setting targets, and defining action plans. This guide aims to address this issue by providing insights and tools to ensure alignment between strategic decisions and operational actions.

Pillar A – Reducing Emissions from Real Estate Activities

While existing frameworks such as the GHG Protocol do account for the majority of emissions generated by real estate activities, some significant categories are missing (emissions related to the replacement of materials over the building’s lifespan in the construction sector, and emissions related to visitor travel in the commercial real estate sector), This guide is intended to supplement this scope.

Furthermore, the challenges of ensuring methodological consistency between the operational and strategic levels require us to adopt carbon accounting indicators derived from project-level LCAs more specifically, by strongly integrating climate expertise and equipping ourselves with the relevant tools.

Regarding the sector’s decarbonization goals, the Science Based Targets Initiative published the final version of its guidance in August 2024 SBTi Buildings. This new sector-specific approach reinforces the SBTi’s goals and refines its historical trajectories for both existing portfolio management and new asset development.

Given the ambitious decarbonization trajectories expected for the sector and the associated methodological challenges, a detailed analysis of the impact of the various available policy levers is essential. In particular, it is essential to assess the impact of these levers not only in light of sector-specific trajectories—such as those set by the SBTi—but also in relation to the regulatory deadlines outlined in the RE2020. This guide presents a detailed comparison of various design strategies.

Pillar B – Contribution of real estate activities to the overall reduction in emissions

Real estate operations, renovation, and construction activities can help prevent emissions—that is, help reduce emissions beyond the company’s direct reporting scope (for example, among its clients and tenants).

The framework for avoided emissions is a valuable tool for the real estate sector’s contribution; however, to remain relevant, this framework must adhere to precise methods and specific safeguards at both the project level and the level of the contributing companies’ strategies.

This guide provides methods for calculating emissions avoided through renovation and new construction projects. In order to encourage the adoption of these new tools, Practical case studies were conducted in collaboration with the engineering firm Elioth in order to illustrate how to calculate avoided emissions for a renovation project and a new construction project.

A strategy to maximize avoided emissions generally focuses on three key areas:

1. An increase in the number of solutions implemented (e.g., maximizing the volume of renovations);
2. Improving the performance of solutions (e.g., systematically seeking to phase out fossil fuels and ensure optimal preservation of existing structures during renovation);
3. Optimizing the contexts in which solutions are implemented (e.g., prioritizing renovation projects based on energy consumption levels and the type of energy source used for heating).

Pillar C – The Contribution of Real Estate Activities to Carbon Sequestration

According to the National Low-Carbon Strategy (SNBC), the building sector will have to play an important role in increasing carbon sinks by promoting carbon storage in long-lasting products. The “StockC” indicator, introduced by RE2020, makes it possible to quantify the carbon stock for each new construction project, but this indicator is not, for the time being, mandatory. It therefore seems appropriate to give it greater prominence in the future as a fully-fledged indicator of environmental contribution (Pillar C).

The Reference Framework GHG Protocol on the Land Sector and Removals (currently being finalized) will introduce a new methodological framework for accounting for carbon sequestration. However, this work is still being finalized, and the approach focuses primarily on the land sector. In addition, an initial method proposed by the Low-Carbon Label allows for the quantification of carbon sequestration using an approach specific to the real estate sector, making it possible to rely on existing indicators such as the “StockC” while ensuring compliance with minimum safeguards consistent with those of the GHG Protocol.

Finally, for carbon sequestration (Pillar C) to become a full-fledged contribution, it is necessary to set coherent goals and define a roadmap for achieving them. This guide addresses these issues by describing carbon sequestration levels consistent with climate science, as well as how these goals can be integrated into the real estate value chain (e.g., shared goals between landlords and tenants). This guide also provides an organizational framework for defining a roadmap and identifying ways to contribute to the development of carbon sinks, whether through the lens of one’s own real estate operations or through informed project financing.

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