Moving From Strategy to Implementation: 3 Key Next Steps for Real Estate Companies

Many real estate companies have already developed decarbonization strategies in response to regulatory, investor, and tenant pressures. However, having a strategy is only the first step – successful implementation requires executing concrete and coordinated actions across different business units and assets, and companies may struggle with many challenges during implementation.

Although successful implementation may look different for each company, there are several areas real estate companies should focus on once they’ve developed a portfolio-wide strategy.

This focus should include both operational carbon (i.e. energy use in buildings) and embodied carbon (i.e. emissions from materials and construction) and any other key categories of emissions.

Three key steps explained

Below, we outline three key steps that will help kick off implementation efforts and drive emission reductions.

Corporate decarbonization strategies are extremely helpful in guiding overall actions, but they don’t necessarily help an individual building manager being asked to reduce emissions in his/her asset. To provide operations personnel with more concrete guidance, companies should:

Develop asset-level targets:
Each building in a portfolio is unique – whether because of the location, the type of asset, the age and type of equipment, etc., each building has a different starting point and potential for decarbonization. Breaking down corporate goals into asset-specific targets (such as a building energy usage intensity (EUI) target) can give operations teams more concrete and realistic goals and drive successful implementation.

For example, a 250,000-ft² office with a baseline EUI of 68 and 3,400 tCO₂e/year could set a 2028 target of EUI 54 (-20%) and -30% CO₂e. This target gives the building team a realistic, concrete, and measurable goal.

Develop asset-specific strategies:
Individual buildings also require individual strategies. Companies should create simple tools and guidance to help individual building managers identify which efficiency, electrification, and renewable energy strategies may be most relevant for their specific asset and integrate these strategies into financial planning. In addition, conducting an energy audit can help identify specific opportunities.

For example, an audit might find opportunities for retro-commissioning (RCx) and controls tuning to deliver savings quickly, allowing building managers to achieve quick wins before moving on to costly upgrades like electrifying heating or replacing chillers.

For developers, embodied carbon can be a major contributor to overall emissions. Developers should update design guidelines, procurement requirements, and project processes to incorporate low-carbon solutions. In addition, they should establish governance and measurement frameworks to systematically integrate the following best practices:

Conduct LCAs on each new development:
Life Cycle Assessments (LCAs) can help inform design decisions by quantifying the emissions associated with different design solutions, material choices and construction site setup. This allows designers to understand the impact of their choices and optimize for emission reduction. LCAs can also identify emissions “hot-spots”, which can help designers focus low-carbon efforts on the areas of the design that will be most effective.

LCAs should include whole-life carbon impacts (including both operational and embodied emissions) so design decisions optimize total lifecycle performance. In addition, LCAs should be integrated early in the design process as a decision-making tool — not just an accounting exercise at the end of design.

Incorporate low-carbon materials into procurement:
Using low-carbon materials can be an effective way to reduce embodied carbon emissions. Companies should first identify low-carbon alternatives that are suitable for their designs (including factoring in safety and aesthetic requirements).

Procurement guidelines should be updated to mandate these materials where practical, or, at a minimum, require an analysis of material options to be completed before final materials are selected. Guidelines should clearly list any performance-based requirements, such as maximum Global Warming Potential (GWP) thresholds for high-impact materials, and should specifically allow the use of reused or salvaged materials where practical.

Guidelines should also require Environmental Product Declarations (EPDs) from suppliers to help track material emissions.

Consider and integrate new design practices
Low-carbon and circular design practices, such as minimizing material usage, modular construction, and designing for deconstruction and adaptability, can help significantly reduce emissions. Updating design guidelines and requiring (at a minimum) an analysis of how these practices could be incorporated into a new design can help normalize these new processes. In addition, developers could pilot new practices on specific projects to identify additional implementation challenges before rolling out the changes across the portfolio.

For example, a new project could create a deconstruction and recovery plan on material reuse, recycling, and end of life disposal. This plan can help reduce embodied carbon but also support broader waste-reduction goals and deliver long-term value through more flexible and adaptable spaces. Any lessons learned from developing and implementing the plan could be incorporated into portfolio-wide requirements going forward.

To support these design guideline updates, developers should consider upskilling their development teams (designers, procurement, construction, etc.) around low-carbon practices. Standardizing practices around LCAs, procurement choices, and circular design measures, developers can also build a portfolio-wide knowledge base that accelerates learning and implementation across future projects.

Decarbonization requires upfront investment. Without including carbon considerations in financial decision-making, strategies will remain aspirational. In addition, being able to track money going towards decarbonization (and savings resulting from it) can help solidify the business case for sustainable real estate and build buy-in for the strategy. Real estate companies will need to update their financial processes to drive successful implementation:

Add carbon reduction projects into CapEx planning
Developing a decarbonization strategy included identifying key decarbonization initiatives and their financial impact. During implementation, companies actually need to set aside budget to fund these projects. There are several ways to approach securing this budget (see our article on financing mechanisms).

Update financial processes and incentives to include carbon
Traditional project evaluation processes don’t typically include carbon – they tend to focus on short term financial returns and other key criteria. The result is that these evaluations often don’t favor sustainability projects, which tend to have non-financial benefits (mitigation of risk, reputational benefits, etc.).

In addition, financial incentives in the company aren’t linked to carbon, so employees won’t receive any benefit from prioritizing decarbonizing. Updating these processes to consider carbon as a key factor can help drive change throughout the portfolio. For the more ambitious companies, setting an internal carbon price and integrating this into financial processes can help put money towards decarbonization.

... And what to do next

Having a decarbonization strategy is important, but success and real life impact depends on implementation. By breaking strategies into asset-level plans, integrating low-carbon practices into design, and aligning financing with decarbonization, real estate companies can ensure progress toward their climate goals.

Not sure how to get started? Contact our experts to discover how your company can effectively implement its decarbonization strategy.