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Asia's decarbonisation gap

23rd February 2024

Leading Asia Pacific real estate owners and occupiers have ambitious net zero targets, but the sector is far from achieving them.

CBRE this week released its Asia Pacific Real Estate Chief Sustainability Officer Survey, a wide-ranging report based on interviews with 41 Asia Pacific landlords and 26 investors in the Asia real estate. 

The report shows progress on a number of levels in the region. More than four-fifths (84%) of respondents believe a chief sustainability officer (CSO) or similar is an essential role, three-quarters of asset owners have used green finance and nearly half (44%) of prime office stock is green-certified.

However, the report also reveals both varying ambitions and huge gulfs between ambitions and practical possibilities, especially with regard to decarbonisation. 

Most (70%) Asia Pacific landlords have a net zero goal of 2050 of earlier, and more than half (53%) of corporate occupiers are targeting 2030. However, the likelihood of such targets being met is slim, as they are out of sync with national goals. 

China, India and Indonesia, responsible for one third of global carbon emissions, have set net zero targets of no earlier than 2060. CBRE notes: “the need to balance sustainability goals with economic objectives poses a significant challenge”, adding that Asia Pacific emissions have kept rising since the 2015 Paris Agreement.

Meanwhile, markets such as Singapore and Hong Kong appear to have a narrow chance of hitting their 2050 targets given their infrastructure limitations. Singapore did not set a net zero target until 2022, having previously said its reliance on imported power made such a target unrealistic.

Occupiers and owners are using electrification and energy efficiency to drive decarbonisation, however the energy intensity of the grid in most nations in the region is much higher than in the US and Europe. On-site renewables meanwhile, “can only account for a low percentage of consumption,” CBRE says.

The ability of Asia Pacific real estate occupiers to achieve net zero by 2030 will be particularly challenged by these factors, CBRE says. It also notes that only 40% of occupiers take account of Scope 1,2 and 3 emissions and 38% do not use scope categories at all. 

Asia Pacific CSOs cite infrastructure limits as the leading obstacle to achieving net zero, along with competing business priorities, uncertain costs and a lack of policy incentives.

A clear majority of the CSOs surveyed say increased collaboration between landlords will be crucial to meeting decarbonisation goals and CBRE suggests that landlords should align their net zero goals with those of their tenants. 

The broker also suggests firms should match their ESG objectives with wider business aspirations - something CSOs cite as a major challenge - and that they should be more active in lobbying and driving policy.  

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