The real estate sector contributes nearly 40% of global carbon emissions, making it a critical focus in the fight against climate change (UNEP).
As the world works to meet the Paris Agreement’s 1.5°C target, sustainability certifications like LEED, BREEAM, and the Net Zero Carbon Buildings Standard offer a clear path for real estate companies to reduce emissions and align with the global net-zero agenda.
Increasingly, they are also paving an important role for carbon offsetting in the net zero trajectory for the real estate sector.
Why sustainability certifications matter
Sustainability certifications provide a transparent framework to measure and reduce environmental impacts in construction and operations, often addressing energy use, water efficiency, and materials.
These certifications signal to investors, tenants, and stakeholders that a building aligns with ESG goals, which are increasingly important in today’s market. Certified buildings are not only greener but also financially competitive. For example, LEED-certified buildings achieve 21% higher rental premiums on average compared to non-certified buildings (CBRE).
How these certifications align with net zero goals
Certifications like LEED and BREEAM help real estate companies set science-based targets to reduce carbon emissions.
Research from the United States Green Building Council (USGBC) found that Leadership in Energy and Environmental Design (LEED) certified buildings produce 34% less CO2 emissions and save 80 million tons of waste from landfills (Novel Hand).
Similarly, BREEAM-certified projects in the UK and Europe often see 50-70% carbon reductions compared to traditional building practices (CIRCE). By focusing on reducing energy consumption, certifications drive buildings toward net-zero emissions, prioritizing efficiency and renewable energy sources.
While these certifications focus on maximizing on-site reductions, they also recognize that eliminating 100% of emissions may not always be feasible. This is where carbon offsetting plays a crucial role.
The role of carbon offsetting in achieving net zero
Carbon offsetting provides a way for real estate developers to address emissions that cannot be eliminated through direct energy efficiency or renewable energy measures.
Offsetting involves purchasing carbon credits, which support global projects like reforestation, renewable energy development, and carbon capture initiatives that reduce or remove carbon emissions elsewhere. This makes offsetting a practical solution for achieving net-zero emissions, particularly for older buildings or developments where immediate reductions are technically or financially difficult.
LEED explicitly recognizes the value of carbon offsets for operational emissions. Buildings pursuing LEED certification can use carbon offsets to compensate for residual emissions, helping them reach carbon neutrality.
Similarly, BREEAM and the Net Zero Carbon Buildings Standard encourage the use of offsets, but they emphasize that companies should focus on reducing emissions at the source first. This balance ensures that carbon credits are used as a complement, not a crutch, to meet net-zero goals.
The use of carbon credits is particularly relevant in today’s rapidly evolving real estate market. By investing in offsets, companies can continue developing projects while still meeting stringent sustainability targets, positioning themselves as leaders in the fight against climate change.
The business case for certification and carbon offsetting
Certified buildings not only benefit the environment but also offer significant financial advantages.
LEED-certified buildings reduce energy costs by an average of 30%, providing long-term operational savings. Investors increasingly seek out sustainable assets—90% of real estate investors now consider ESG factors when making decisions. And tenants are often prepared to pay more to secure sustainable space. JLL research shows an average green premium of 7.1% across eight major cities in North America, 9.9% across nine cities in Asia Pacific and 11.6% in London (JLL).
The road ahead
Sustainability certifications are more than just current benchmarks—they are evolving to guide real estate companies toward a net-zero future.
As governments tighten environmental regulations, early adopters of certifications and offsetting will be better prepared to navigate the changing landscape. Certifications like LEED, BREEAM, and the Net Zero Carbon Buildings Standard provide a clear pathway to reducing emissions, while carbon offsets offer a complementary solution for achieving ambitious climate goals.
Conclusion
The journey to net zero in real estate begins with every building and every certification.
LEED, BREEAM, and the Net Zero Carbon Buildings Standard provide real estate developers with a roadmap to reducing carbon emissions and achieving long-term sustainability. By integrating carbon offsets where necessary, companies can reach net-zero targets while gaining a competitive edge.
Now is the time for real estate leaders to step up, embrace these certifications, and lead the transition to a greener, more sustainable future.
Get in contact with one of the team at Thallo who will support you creating the perfect portfolio of carbon credits for yours or your clients’ sustainably certified building.
