By: Casey Talon
Teen climate activist Greta Thunberg captured the world’s attention with a poignant statement: “Our house is on fire.” She has followed up with an energy and passion that motivates an army of youth protesters demanding that the climate crisis reach the headlines worldwide. Greta’s capacity to mobilize a generation must now be matched with action from adults. As L. Hunter Lovins, president and founder of Natural Capital Solutions, author of A Finer Future, puts it, “Humanity is in a race with catastrophe” with a caveat that, “Humanity can avoid collapse. We have the technologies, we have the knowledge.”
So, what’s holding us back? Storytelling.
Drivers for Action
The moral imperative to tackle climate change rallies demonstrators, but economics move corporations. When material risks threaten the bottom line, executives justify huge investments to right the course. The connections between climate change, real estate, and financial risk are clear for corporate leaders across the economy.
First, consider that buildings and their construction account for over 35% of global final energy consumption and nearly 40% of total direct and indirect CO2 emissions. Now, consider the financial risk associated with damages to the world’s commercial buildings tied to climate change related weather disasters. The global real estate exposure to climate-related stranded assets totals $5 trillion according to a March 2019 Energy Research & Social Science study.
While just one economic model, the study puts the climate crisis impacts on real estate in perspective—$5 trillion is nearly equivalent to the GDP of Japan. If those numbers are staggering enough to grab some attention, what’s next? Buildings have to be transformed. According to the Intergovernmental Panel of Climate Change’s chapter, Strengthening and Implementing the Global Response, in its 2019 special report, building emissions must be reduced by 80%-90% by 2050 to achieve the 1.5°C-consistent pathway required to avoid catastrophic climate change impacts.
Climate Solutions Can Be Profitable and Sustainable
The kind of investment needed to achieve the deep reductions necessary requires this straightforward story. Let’s start with technology. Digital transformation can deliver deep energy savings through efficiency while enhancing brand and real estate value. Corporations recognize that employees choose where to work and customers choose where to shop based on multidimensional perceptions of brand. Increasingly, sustainability and brand are inextricably linked. Investments in distributed energy resources (DER), notably solar PV, have become a badge of commitment to sustainability and ultimately brand.
DER is also the bridge to the low carbon economy of the future, or the Energy Cloud. New revenue streams emerge via the data and orchestration of these new energy assets. Real estate can become a platform for this new value creation, which Navigant Research defines as Building-to-Grid (B2G). B2G unifies buildings, DER, and an ecosystem of stakeholders to deliver dramatic emission reductions and enhanced experience. The economics of building ownership are changing in the era of digital transformation and climate change. Data is the new layer of value creation stemming from investment in digital technologies that appeal to the demands of occupants and executives—these bottom-up and top-down pressures are driving investment in B2G-enabling technologies. Market momentum is growing, and energy, technology, and service providers that fail to innovate face major disruption to their business.
It all comes down to the story. The adult advocates for tackling climate change need a slogan. It could be something as simple and straightforward as a twist on Lovins’ book to Our Finer Future. We can unify the youth in protest with the CEOs in board rooms to plan climate solutions that are profitable and sustainable.
