2C — May 20 - June 16, 2022 — Owners, Developers & Managers — M id A tlantic Real Estate Journal


O wners , D evelopers & M anagers By Joe Holman and Baird Newbern, WITHUM Greenhouse Gases and Real Estate: Risks and Opportunity I storms, fires, and sea-level rise. On the other hand, the transitional risks associated n past decades, climate change has been a loom- ing threat with unfore-

investors still have time to be on the front end of the curve before they are left behind. There is great value in making operational and investment decisions based on energy- related issues. The first focus should be on limiting the GHG footprint of a building. GHGs can be managed if they can be mea- sured. One of the first steps to systematically reduce a carbon footprint is to understand the impact. Engaging in a compre- hensive GHG inventory will allow asset owners to under- stand where they are having the greatest negative impact and where cost-effective en- ergy efficiency projects can and should be done. Wherever you currently are in your approach to ESG, Withum can teach your orga- nization how to best leverage its activities to create real change within your company and the world. Withum’s ESG advisory services iden- tify sustainable business models, hidden risks and most importantly, make way for a better future. Joe Holman is principal and practice leader, ESG Services at Withum. Baird Newbern is an ESG Analyst at Withum. MAREJ

seen con- sequences. That is no longer the case. The physical im- pacts of cli- mate change are readily obvious, with

with climate change and real estate will have direct finan - cial impacts in both the near and long term. For example,

Joe Holman Baird Newbern

more to come. The real estate sector exists on both sides of the issue. It is both at risk for the physical and transitional impacts but is also a large source of the greenhouse gases (GHG) that contribute to global climate change. In 2019, commercial build- ings were responsible for 35 percent of electricity consumed in the U.S. and 16 percent of all U.S carbon dioxide emis- sions [1]. The majority of these GHGs are emitted through the on-site combustion of fossil fu- els for heating and the off-site combustion of fossil fuels for electricity generation. The real estate sector faces significant and impending risks, which act as an incen- tive and a driver for change. The building sector is tangibly at risk for the physical impacts of climate change – floods,

starting in 2024, New York City’s Local Law 97, which becomes more stringent over time, will begin fining (taxing) buildings that emit emissions in excess of their permitted per square footage threshold. Another transitional risk is changing consumer prefer- ences. Consumers, especially high-end tenants, are in- creasingly choosing to work in sustainable properties. This sustainable designation implies that energy-efficient buildings cost less to operate, have better air quality and can also attract a higher val- ue tenant. A LEED-certified building is a prime example of a sustainable property. What does this mean for real estate asset managers and investors? With great risk comes great opportunity. Real estate managers and

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