Buildings account for roughly 34% of global energy-related CO2 emissions, while also representing one of the asset classes most vulnerable to climate-related risks. With real estate valued at USD 111 trillion in OECD countries alone, the real estate sector is central to both climate mitigation and adaptation.
This report is part of the OECD Programme on Decarbonising Buildings in Cities and Regions. Since its inception, the Programme has explored many important themes. The first phase examined the pivotal role of cities and regions in driving building decarbonisation within a multi-level governance framework. The second phase took a deeper dive into multi-level governance through practical applications, with a case study on the Netherlands as an illustration of how national and subnational governments can jointly accelerate housing renovation. The third phase expanded the perspective from operational carbon, meaning the emissions generated during building’s use such as heating, cooling and lighting to whole-life carbon, which also includes the embodied emissions from the extraction of materials, construction, renovation and demolition. This shift underscored the need to address emissions in the construction and disposal alongside energy performance.
This report marks the beginning of a new phase, looking beyond buildings to the broader real estate sector. It recognises that achieving decarbonisation and resilience goals requires co-ordinated action not only from governments, but also from investors, banks, insurers, developers and households. This report therefore explores how climate-related risks are assessed, priced and managed across the real estate ecosystem and how policy can strategically align private investment with public climate objectives as well as promote a better functioning real estate market.
The report builds on the momentum of the Declaration of Chaillot on Buildings and Climate, endorsed by approximately 60 countries at the Global Forum on Buildings and Climate in March 2024. The declaration highlighted the urgent need to redirect investment flows away from carbon-intensive, high-risk buildings towards climate-resilient, near-zero emission assets.
Against this backdrop, the OECD launched the Future-proof Real Estate Investment Project, supported by the OECD Future-proof Real Estate Task Force. This collaborative initiative has brought together regulators, investors, banks, insurers, climate-related risk specialists, developers, and international organisations to share evidence, identify barriers and propose solutions for managing climate-related risks in the real estate sector. This report synthesises these insights into a structured analysis of climate-related risks in real estate and sets out a roadmap of policy recommendations for governments, markets and communities.
This report seeks to support policymakers and market actors in aligning investment decisions with the imperatives of decarbonisation and resilience, helping secure a built environment that is not only sustainable, but also future-proof for all.