Verdantix Report Highlights $31 Million Average Property Owner Deficit In Investment For Decarbonization Initiatives

Verdantix Report Highlights $31 Million Average Property Owner Deficit In Investment For Decarbonization Initiatives

Owners of office, retail and healthcare properties around the world are significantly underinvesting in decarbonization initiatives, falling short by an estimated $31 million per company and limiting business resiliency, according to a groundbreaking report from Verdantix, the research and advisory firm.

The report, Building Decarbonization Barometer, surveyed 300 senior executives worldwide from some of the largest office, retail and healthcare firms, most of whom generate revenue of more than $1 billion a year. It highlights that while companies have allocated significant capital towards decarbonizing their property portfolios, current and planned investments fall short of the levels required to deploy decarbonization initiatives across full company building portfolios.

Despite plans to invest an additional $26 million on average in sustainability initiatives over the next three years, this amount is less than half of what is required to achieve full portfolio coverage of decarbonization. In the US office sector, for example, there is a total shortfall of $1.1 trillion; the total combined shortfall for the office sectors in Germany and the UK is more than $275 billion; and the total shortfall in the UK healthcare sector is $21 billion.

Key findings:

• Office property owners have demonstrated strong intentions, planning to allocate $30.8 million on average for sustainability initiatives; however, this still leaves a $30.8 million shortfall for achieving complete portfolio coverage
• Retail property owners plan to invest an additional $21.4 million on average on decarbonization over the next three years, but face a $27.9 million deficit to achieve full coverage
• Healthcare property owners have spent just 27% of the investment required for full decarbonization coverage; an additional $33.3 million beyond current plans is needed per organization to close the gap

Investment shortfalls by region:

• Americas: Decarbonization plans are still $29.4m below what is required, despite intent to invest a further $26.6m:

• Office owners need to increase supply chain decarbonization investment by nearly four times
• Retail decarbonization investment plans need to double
• Healthcare owners have set aside only $34 million of the $70 million required

   

• EMEA: Decarbonization budgets are less than half the investment needed:

• Office owners’ investment in supply chain decarbonization must nearly quadruple what has been invested already
• Retail decarbonization investment in operational initiatives needs to double
• Healthcare sustainability plans show a 55% shortfall in required investment for operational initiatives

• APAC: Companies face an average $38.4 million shortfall, with current investment levels less than a third of what is required:

• Office owners’ investment in supply chain decarbonization must double current and planned levels, requiring a further $16.5 million on average
• Retail operational decarbonization investment plans are more than $33 million short on average
• Healthcare companies face an average $16.8 million deficit

Claire Stephens, Research Director at Verdantix, said: “Our analysis highlights that while property owners have made commendable strides towards decarbonizing their building portfolios, planned investments fall dramatically short of the level required to deploy decarbonization initiatives across full portfolios.

“Without doubling down on decarbonization investments, companies risk missing crucial sustainability targets and failing to align with stakeholder expectations”. 

Dayann Charles, Advisory Manager at Verdantix, stated: “With resource shortages and geopolitical issues elevating the strain on energy worldwide, it is paramount that firms capitalize on opportunities to increase their building and subsequently, business resiliency. A major part of this is investing in energy efficiency and decarbonization initiatives.

“The current deficits in investment plans are sizeable. For example, in the US, we estimate that large office property owners as a whole need to spend another $1.1 trillion, beyond what is already planned, to deploy decarbonization initiatives across all their properties. Shortfalls of more than $100 billion are seen in the corresponding office sectors in Germany and the UK, as well as the US retail and healthcare industries”.

To learn more, join the webinar Closing The Carbon Gap: The State Of Building Decarbonization Investment on 16^th April.