The Time to Act is Now — Why Real Estate Has Taken Center Stage at COP26
This week, I presented at COP26, the UN Climate Change Conference in Glasgow, Scotland — widely-recognized as the most important climate conference of the year.
While it might feel as though momentum behind climate action is at an all-time high these days, it’s important to remain cognizant of reality: despite pandemic-related lockdowns, greenhouse gas emissions reached record highs in 2020. At this year’s COP26, measures to reduce emissions — especially in the real estate industry — will take center stage in the climate change policy debate.
Why? Because the real estate and construction industries are responsible for 40% of all CO2 emissions globally, more than any other major industry. In the past, climate policy has focused predominantly on industries like transportation, energy, and manufacturing, but as the reality of real estate’s outsized emissions have been brought to light, regulatory focus has shifted: international, national and local regulators intend to pursue far more ambitious and aggressive decarbonization standards, carbon neutrality laws, and asset-based carbon taxes & fines. The real estate industry is now, for the first time ever, at the epicenter of the public discourse on climate change.
I contributed to this discourse at COP26; and made the case that the real estate industry MUST increase its investment into climate technology immediately. The imperative for investment in climate tech was framed perfectly by Tariq Fancy, BlackRock’s former head of sustainable investing, on a request Economist podcast:
“If you want to do some good for the climate, the best thing you can do is invest in a long-term private vehicle that’s providing primary, fresh funding to innovators who are building solutions we need for the climate crisis, so think of a climate tech VC. The simple reason is that that kind of fund can make the promise around ‘additionality,’ or the idea that by investing in it, you’re creating some impact in the world that would not have otherwise occurred.”
Today, most real estate organizations are not investing nearly enough — or at all — to prepare themselves for this wave of decarbonization. And they have no strategy in place to ramp up investing. Historically, they’ve never needed to moonlight as climate tech investors, nor have they faced external pressure to do so.
However, as this year’s COP26 will highlight, real estate firms are under pressure to contribute to climate innovation, and quickly. Firms that resist will find themselves on the wrong side of economic history and will be viewed unfavorably by regulators, capital markets, tenants, and the public.
We created Fifth Wall’s Climate Tech Fund to enable the real estate industry to come together to fund and adopt these new technologies & solutions to decarbonize. Many sustainability leaders from the real estate industry — like Equity Residential, Invitation Homes, Ivanhoe Cambridge, Kimco, and Hudson Pacific Properties — have already announced their investments into Fifth Wall’s Climate Technology Fund. And many more will be announcing their participation in the coming months.
Fifth Wall is bringing the real estate industry together so that we — as leaders — can join forces and work towards being the “solution” instead of the “problem.”
This post is presented for informational purposes only, is not intended to recommend any investment, and is not an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Fifth Wall Ventures Management, LLC or its affiliates (collectively, “Fifth Wall”; any such investment vehicle, a “Fund”). Any such solicitation of an offer to purchase an interest will be made by a definitive private placement memorandum or other offering document.
Forward-looking statements and opinions as to carbon reduction initiatives and real estate markets or any other matters, as expressed in this presentation, are those of the individual presenters, but are not necessarily the views of Fifth Wall as a firm, and cannot constitute a guarantee of future success or profitable results. As a result, investors should not rely on such forward-looking statements and/or opinions, or on anything else contained in this post, in making their investment decisions. Moreover, certain information contained herein may have been obtained from published and non-published sources prepared by other parties and may not have been updated through the date hereof. While such information is believed to be reliable for the purposes for which it is used herein, Fifth Wall does not assume any responsibility for the accuracy or completeness of such information, and such information has not been independently verified by Fifth Wall. This presentation speaks as of its publication date, and Fifth Wall undertakes no obligation to update any of the information herein.
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No assurances can be given that any of the carbon reduction initiatives or other initiatives described in this presentation will be implemented or, if implemented, will be successful in effecting carbon reductions or any other initiatives. Further, no assurances can be given that any Fifth Wall fund or investment vehicle will ultimately be established to invest in these technologies or that such fund or investment vehicle, if established, will successfully identify and execute on investments that meet its stated objectives. Investments targeting carbon emission reductions involve substantial risks and may not ultimately meet Fifth Wall’s stated investment objectives. Investors should consult their own financial, tax, legal and other advisors in connection with any proposed investment and should carefully review all disclosures and
