Decarbonization strategies have become an absolute essential when creating a financially and environmentally smart ESG plan. But, it isn’t just saving carbon pushing decarbonization to the forefront of CRE headlines. Net-Zero regulations are now requiring that buildings decarbonize…unless you want to face heavy financial penalties.
Working in the CRE industry, you undoubtedly know what Local Law 97 is–New York’s aggressive, penalty-based Net-Zero regulations set to bring the city to 80% emissions reduction by 2050. With Boston recently following suit with hefty financial penalties for buildings that don’t hit carbon reduction targets in coming years, it’s predicted that other major cities across North America will also introduce legislation to fast-track the introduction of their own penalty-based Net Zero goals.
If paying up to $1 million per year for noncompliance doesn’t fit in your budget, you need to start preparing now—even if these regulations haven’t hit your city yet.
As CRE decarbonization experts and entrepreneurs building a fast-growing climate tech business, Cortex is here to help you know what to look for and how to prepare. Keep reading to learn more about the Net-Zero regulations that will affect your business sooner than you may think.
The Consensus Is in: Decarbonize Now… Or Else
New York City’s Local Law 97 and Boston’s BERDO guidelines have proven to be deeply complicated for CRE groups to navigate. With lofty decarbonization goals looming over the heads of every building owner in NYC and Boston, it’s left those responsible for reducing CO2 in a scramble. After all, decarbonizing has historically been put on the back-burner—not because the climate crisis isn’t important, but because reaching Net Zero has typically been a convoluted process that has been both disruptive to business operations and destructive to bottom lines.
To make matters even more challenging, while more cities are aiming towards achieving Net Zero by 2050, they are also requiring near-term action. While New York’s goal is to reduce carbon by 80% and Boston’s goal is to reach 100% reduction by 2050, both cities have strict compliance requirements for commercial buildings starting as soon as 2025—a mere three years away. This leaves building owners faced with an urgent challenge: Begin decarbonizing now, or else.
The First Splash of a Tidal Wave Aimed at Your City
To put it simply, Local Law 97 in New York City and Boston’s BERDO guidelines should be considered an omen of the Net-Zero regulations to come. “NYC and Boston’s legislation are not isolated cases,” said Cortex’s founder and CEO, Bryan Bennett. “They’re just the first splash in a massive tidal wave that’s aimed directly for every major city in the country.”
Consider Carbon Free Boston
Think about this: Boston’s “Carbon Free Boston” initiative vaguely stated in 2019 that tighter regulations for buildings would come “soon.” Fast forward to 2021, and buildings are given the extreme choice to decarbonize or face budget-busting fines.
Yet, while Boston quickly rolled out this decision, this is a storm that has been brewing for years. Take the U.K.’s Climate Change Act, adopted in 2008, as an example. As the original framework for setting incremental carbon reduction goals on a governmental level, the most recent development includes the goal to cut emissions by 78% by 2035.
Europe Stays in the Lead
Europe has been lightyears ahead of the U.S. when comparing commitments to reducing carbon emissions, and Local Law 97 and the BERDO guidelines show that we’re finally catching up – and it’s not slowing down anytime soon.
Bill Landis, Co-Founder and Managing Partner at Raith Capital Partners, said it best: “The regulatory climate of private equity real estate is changing at a brisk pace, which includes balancing an increasingly complex ESG landscape. It is important more than ever that firms keep pace with this shifting ESG landscape to ensure they remain compliant and sustainable.”
Are You Prepared for What Your Buildings Are Facing?
As we look ahead, it is vital that CRE leaders, owners, and managers stay ahead of the regulations that are set to make a splash across the country as soon as this year.
Our sustainability tech team is here to help commercial real estate leaders prepare for ESG regulations and help them make the most financially lucrative choices for their buildings.
Learn more about the fastest and lowest-cost path towards the decarbonization of your office buildings through a custom decarbonization plan for your portfolio from the CRE sustainability experts at Cortex Sustainability Intelligence today.