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Early Data Suggests SBTi Effectiveness Among REITs

On a global basis, real estate overall accounts for approximately 40% of end-use carbon emissions. As such, the commercial real estate sector continues taking measures to achieve net-zero emissions goals.

The Science Based Target Initiative (SBTi) is one tool aiding this effort. The SBTi represents a partnership between CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature. At the heart of this initiative are science-based targets, including setting a specific goal or target, focusing on emission reductions based on SBTIi criteria and annually reporting on emissions and progress.

But can this work with commercial real estate? According to data from CenterSquare Investments, early results are promising.

In its recent “REIT on the Money” newsletter, CenterSquare reported that, as of Q2 2023, nearly 75 REITs published science-based targets. Initial targets were set to keep global temperature increases to 2 degrees Centigrade. However, “The vast majority of commitments have been focused on keeping global temperature rise to 1.5 degrees Centigrade,” the newsletter said.

Was this effective? Early analysis suggests that it is. CenterSquare explained that, on average, REITs with published science-based targets outperformed the global index over the year following publication.

CenterSquare surmised that sustainable buildings generate lower operating costs “that directly flow to the bottom line.” Furthermore, these efforts have impacted revenues through more leases, higher rents and lower vacancy rates.

There are some caveats to this data, however. CenterSquare explained that “the data is not inclusive of all REITs in the global universe.” Furthermore, the SBTi program is still relatively new, so it’s difficult to analyze long-term data from the initiative. “However, we do believe that the case for decarbonization of real estate is not only ‘doing good’ but also ‘good business,’” CenterSquare said.


Inside The Story

CenterSquare Investments

About Amy Wolff Sorter

I love content. I love writing it, visualizing it, and manipulating it to fit into different formats. I have years of experience in working with content, both as creator and editor. The content I create and edit provides assistance with many goals, ranging from lead generation, to developing street cred through well-timed thought-leadership pieces. Content skills include, but aren't limited to, articles and blogs, e-mails, promotional collateral, infographics, e-books and white papers, website copy and more.

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