The full scope of the REIT sector’s contribution to global carbon emissions has not been fully quantified, which could affect the valuation of listed REITs that aren’t keeping pace with recent advancements in emissions reduction programmes. In addition, the World Business Council for Sustainable Development’s Greenhouse Gas (GHG) Protocol Initiative definitions do not translate well enough to the real estate sector in many instances.

While scope 1 and 2 categories are mostly measured across the listed REIT universe, it’s the scope 3 carbon emissions that may end up surprising investors who haven’t assessed the impact of emissions from “noncontrolled energy” and embodied carbon associated with development when more stringent regulations are put in place like those seen in the United Kingdom and France.

The problem

There is currently little consistency across the globe in the measurement of embodied carbon. This is due to differences