It’s been eight years since world leaders came together in Paris and pledged to reduce emissions to net zero by 2050. Eight years of being told to ditch plastic, ditch meat, and ditch cars. Eight years of billion-dollar investments into measures that are at best distractions, at worst self-sabotage.
I’m talking about the capital flowing into meatless burgers and alternative milks, paper straws and e-scooters, all presented as urgent efforts to tackle climate change.
Yet for eight years, temperatures have continued to hit record highs.
This summer in Europe, as with last summer, extreme weather has caused wildfires that have destroyed homes, businesses and communities. In the last 12 months, catastrophic flooding has hit Pakistan and Canada. Focusing on the wrong targets – like making an all vegetarian population – will not help, certainly not in time. We need to reprioritise and tackle sectors that have a much bigger impact.
The built world in which we live, work, shop and create is the world’s most carbon-emitting sector and in urgent need of transformation. Right now, this is where we should be putting our energy and capital, if we are to make any difference at all.
Real estate is the world’s largest industry ($330tn). It’s also the least digitised and most polluting asset class. As much as 8 per cent of global green house emissions come from concrete alone. A third of solid waste in Europe and North America comes from the construction and demolition of our buildings and the built world industry as a whole is responsible for 40 per cent of global energy-related carbon emissions.
The numbers are staggering.
If left unchecked, these emissions are set to double by 2050, as our economies build more to accommodate growing populations and rapid global urbanisation.
The built world problems are only exacerbated by current economic challenges – rising interest rates and rampant inflation. Meanwhile, working from home has fundamentally changed cities like London, where offices have 14 per cent vacancy rates.
There is a particular advantage in Europe, where more than $4.5bn has been invested into green construction tech between 2017 and 2022. More than half of these deals were in Europe. European regulations in renewable energy, building standards and sustainability are world-leading. The research taking place at European universities can establish a climate tech industry that serves the whole world.
Climate tech has also managed to buck wider economic trends. It attracted a record $65bn of VC funding globally last year, and will need to transform traditional industries that currently account for 20 per cent of global GDP. Transforming industries such as steel and cement will be pivotal.
Innovations are being seen across the entire lifecycle of the built world, from tackling the supply chain to new materials and construction techniques, to building operations and management. In every aspect of the built world there is an opportunity to decarbonise, as well as increase efficiency.
We also need to realise sooner rather than later that we do not have the luxury of time. A deadline like 2050 is still flung too far into the future, it creates political complacency and the sense we can wait to implement real change.
Investors are at the front line of this, and can direct capital into the industries which can effect change. Time is running out and without focus we will leave it too late.