Breakthrough, agreement, and funding futures: COP28’s impacts on climate risk resilience and CRE

With COP28 wrapped up for the year, we highlight what was achieved and give our take on  outcomes for the commercial real estate industry.

Buildings breakthrough

A key initiative launched for our industry at COP28 was ‘Buildings Breakthrough,’ a goal for ‘near-zero emission and resilient buildings’ to become standard by 2030 through fostering international collaboration to decarbonise the built environment. This was supported at launch by 28 nations and 18 international organisations, accounting for almost one-third of the global population, over half the planet’s greenhouse gas emissions and around two-thirds of global GDP.

With the building sector responsible for nearly 40% of all global emissions and 50% of extracted materials, this is a clear indication that nations are stepping up their action to accelerate the transition toward sustainable buildings for everyone everywhere. In March 2024, France will host the Buildings and Climate Global Forum to further develop this initiative. 

Agreement at last

An agreement was established for all countries “to contribute to… transitioning away from fossil fuels.” While for many this outcome falls short of the original call for a “full phase-out,” it is nevertheless the first time a COP decision has explicitly mentioned fossil fuels, with the UN Climate Chief, Simon Stiell, calling it “the beginning of the end” of the fossil fuel era. There was also consensus that this should be achieved in a “just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science” and the Paris Agreement.

Funding the start of next steps

One overarching theme, beyond the global stocktake, was the role of finance and the current, significant funding gap in delivering the upscaling of global renewable energy capacity and energy efficiency improvements. There were clear commitments from the private sector to do more around climate action, which should see a pivotal shift to integrate private capital and a more progressive and collaborative approach with the public sector. With COP28 introducing this agreement with a target to triple global renewable energy provision and double energy efficiency by 2030, there should be no shortage of opportunities for the private sector to invest in decarbonisation.

While the finalised text remains very subjective on adaptation, cleantech, carbon markets and finance, the COP28 President Al Jaber notably stated that “this consensus is only the beginning of the road.” Significant action will be needed by all nations to reduce global emissions by 43% by 2030 to minimise the effects of climate change. The next round of Nationally Determined Contributions to achieve this will be unveiled in Brazil at COP30 in 2025. Until then attention will turn to Azerbaijan for COP29 in 2024, which will likely focus on establishing a post-2025 climate finance goal. This will need to deal with all the contentious issues that present themselves when discussions turn to who pays for what and where we can realistically go from here.

The CRE industry will need to continue to innovate to minimise fossil fuel consumption across the life cycle of built assets. The Buildings Breakthrough initiative could be a key driver of this innovation and could encourage knowledge sharing and collaboration as the industry works as a whole to lower our carbon footprint. All eyes are on the Buildings and Climate Global Forum to see where we will go next.