Deepki’s guide towards a common definition of a building’s carbon footprint

Given the increased collective awareness of climate change issues over the past decades, institutions, companies, and collectives have been encouraged to monitor their greenhouse gas emissions to reduce them. ESG disclosure standards are pressuring them to respond and adapt, while several methodologies have emerged to guide organizations in this exercise. The GHG Protocol is now the most used worldwide. In parallel, organizations that own, finance, occupy or manage real estate are increasingly financially exposed to climate-related risks. 

In this matter, many financial institutions are committing to various goals, including reducing financed emissions to net zero by (at the latest) 2050 and engaging capital markets as part of the global transition to a low-carbon economy. The real estate industry has been urged to participate in finding sustainable solutions. 

We know it: the decarbonization journey is arduous, encompassing multiple methodologies and strategies that actors need to research and design carefully: from the precise scope of a company or country’s CO₂ emissions to the selection of the most pragmatic and efficient roadmap of actions to reduce the overall impact. As part of this complex necessary journey, carbon accounting plays a significant role. 

Read more: ESG & asset value

What is carbon accounting?

Carbon accounting is a necessary step for organizations to manage, align and control their emissions. It refers to the processes required to measure the amount of carbon emitted, avoided, or removed by an entity (e.g., an asset or business) over a given period of time. It allows companies or entities to monitor and report these emissions in a manner consistent with other accounting practices – for example, financial reporting.

Carbon as an indicator allows us to measure both the impact of climate change and the dependence on fossil fuels. Carbon accounting is a critical factor in reducing emissions, complying with regulations, and reducing financial risks while protecting the entity’s image. Regulatory and financial pressure is leading to the professionalization of carbon accounting.

Please note: while carbon dioxide (CO₂) is often considered the leading emitter of harmful GHGs, it is by no means the only gas to be considered. Although carbon accounting and GHG accounting are similar and often used interchangeably, there is a subtle but essential difference. Carbon accounting concerns only carbon dioxide emissions, whereas GHG accounting concerns all greenhouse gases. Under the Kyoto Protocol, GHGs include CO₂, methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and nitrogen trifluoride (NF3).

Learn more: Breaking down carbon accounting

Deepki’s approach towards a common framework for real estate on the road to net zero

As the 2050 deadline for net zero approaches, it’s getting increasingly challenging to deliver a solid decarbonization policy that will delve into a universe of data, carbon accounting methodologies, and reporting options. Effectively, the ultimate goal has been set in 2015 by the Paris Agreement, and significant challenges lie ahead, like choosing the right pathway and monitoring it along the way at the asset or portfolio level.

Deepki’s nearly 10-year experience in the real estate sector has given us a privileged amount of data, insights, and overall background to fully assess and share our vision of the future of carbon accounting.

Deepki concludes that the entire building must be considered in the logic of financial risk assessment. The performance of the whole structure, not just the common areas, will determine the risk of an asset losing value. And players in the real estate sector are in charge of ensuring that a strategy is in place to minimize emissions and that the overall emissions connected to the properties they manage are tracked and assessed. In our new opinion piece, “Carbon accounting: a guide towards a common definition of a building’s carbon footprint,” Deepki outlines the major carbon accounting approaches proposed by different initiatives, analyzes them through a comparative study, and concludes what, in Deepki’s opinion, should be the way forward.

We’re pleased to make it available to the public. We invite you to read it, as this content aims to clarify a complicated topic, offer guidance, and encourage conversation. We would value and take into account your input on it. On this basis, the industry will hopefully be able to come together and create a virtuous future.

Click below to discover Deepki’s guide toward a common definition of a building’s carbon footprint.