Net Zero for All

Report Summary: The business case for a net zero real estate industry is clearer than ever. Rising stakeholder pressure to decarbonize, alongside the scale of business opportunity, has ensured that the companies who lead that effort will see the highest value creation.

Simultaneously, the need to address social inequity and the structural forces of exploitation – whether based on race and ethnicity, wealth and social class, gender, or any other social factor – also grows continually more dire. Marginalized communities (such as Black, Indigenous, and other communities of color and low-income communities) experience the impacts of climate change first and worst, and are often shut out of the environmental, economic, and social benefits of the net zero transition.

Net Zero for All: A Just Transition for Real Estate provides an introduction for real estate owners, developers, and investors to understand why and how to center marginalized communities in the process and outcomes of achieving net zero.

This introduction draws on work conducted under the ULI Net Zero Imperative, a multi-year initiative to accelerate decarbonization in the built environment, and is based on research demonstrating that prioritizing social and racial equity within decarbonization helps realize better ESG and real estate outcomes for all.

This publication presents:

• The concepts and applications behind equitable decarbonization
• The business case and market drivers for an equitable transition
• Project profiles of real estate-based solutions demonstrating how to integrate equity within every step of ULI’s Real Estate Journey to Net Zero

Real estate’s role in achieving net zero and building community wellbeing situates the industry in a unique position to address these intersecting challenges. Real estate leaders in sustainability and equity have already begun implementing equitable decarbonization strategies in partnership with community stakeholders, demonstrating their transformative capacity.

By following suit, real estate investors, developers, and owners can support environmental and climate justice and link the net zero and social (E and S) goals of their corporate ESG programs, achieving greater long-term impact for their businesses and the communities they work in.

Real estate actions related to equitable decarbonization can include:

• Deep community engagement on net zero development projects.
• Diversifying project staff and development partners working on net zero projects.
• Diversifying net zero-related supply chains, such as vendors and contractors.
• Workforce development around net zero technologies and businesses for low-income communities and communities of color.
• Community-owned or affordable renewable energy.
• Equitable wealth building and investments through net zero projects.
• Developing affordable, healthy, resilient, net zero buildings.

The business case for equitable decarbonization can include:

• Stabilizing markets for investment by a broader array of actors in previously underinvested areas, activating unexpressed human and social capital and enhancing value over time.
• Improving asset value by including upgraded, efficient technologies in envelopes, HVAC systems, energy generation, and building management that improve NOI and capture a green premium.
• Meeting investor demand, improving access to capital, and securing brand benefits, as nearly 70 percent of investors and 100 percent of investment managers surveyed for ULI’s Social Impact: Investing with Purpose to Protect and Enhance Returns report expected their social value and social impact activity to increase over the next three years. The largest market driver behind this growth, identified by 75 percent of investors, was public pressure and reputational benefits.
• Securing increased community and financial support for development, as projects that incorporate strong net zero and social equity goals are more likely to win backing from community stakeholders, reducing costly delays caused by public pushback.
• Achieving diversified, resilient supply chains and increasing hiring of local, minority and/or women-owned business enterprises (MWBEs) on net zero development projects helps support project delivery, increase insight into community needs, and lower barriers to growth for these communities.
• Aligning with policy drivers which are moving toward prioritizing social equity within net zero, such as local building performance standards and the U.S. federal Justice40 Initiative, and real estate leaders who strengthen the equity focus of their decarbonization programs now can get ahead of the curve.

Project profiles align with every step of ULI’s Real Estate Journey to Net Zero, and include equitable decarbonization examples such as:

• Mixed-Income Passive House with Bridging the Gap Development (Pittsburgh)
• Off-Site Renewables and Community Solar—STAG Industrial’s Solar Portfolio (US-wide)
• Electrified Building Retrofits with BlocPower (US-wide)
• Electrified Communities with Veridian at County Farm (Michigan)
• Tenant Selection with L+M Development Partners (New York City)
• Embodied Carbon with BoKlok’s Modern and Sustainable Modular Housing (Europe)

The net zero transition and the enormous economic, environmental, and social changes it will usher in present real estate with a chance to right historic and current inequities. Opportunities exist to boost positive social change in every step of ULI’s Real Estate Journey to Net Zero, and calls to do so from the industry and its chain of investors, regulators, and community stakeholders are growing.

Real estate companies that successfully prioritize equity in the net zero transition will see the greatest benefits to their combined social, environmental, and economic bottom line. And if done right, owners, developers, and investors can use this moment to orient their collective pool of capital and expertise toward building a cleaner, greener, healthier, wealthier industry in partnership with low-income and BIPOC communities.