The Business Case for Reducing Embodied Carbon: 9 Investments Commercial Real Estate Developers Can Make Today

This guide by RMI outlines the business case for commercial real estate developers to reduce embodied carbon—the emissions from material production and construction—which accounts for an estimated 11% of global emissions. It presents nine specific investment strategies divided into building-level and corporate-level actions to mitigate transition risks, reduce development costs, and create competitive advantages.

• Embodied carbon represents a significant portion of a building's total climate impact and a developer's overall emissions profile. It is estimated to be responsible for 11% of global emissions and can constitute 50% of a building's life-cycle emissions. For developers, embodied carbon is a major component of Scope 3 emissions, which can make up as much as 90% of their total Scope 1–3 emissions.
• Developers can reduce development costs by using integrative design to minimize material quantities. Up to 80% of embodied carbon in multi-story buildings is linked to the structure, which is often oversized. By optimizing building forms and beam sizes, developers could eliminate 40%–60% of embodied carbon in building frames while achieving 10%–20% savings in frame costs.
• Switching to low-carbon materials can offer significant emissions reductions with minimal or even negative costs. Some material switches provide 19%–45% embodied carbon savings for a premium of less than 0.5% of total project cost. Recycled steel from electric arc furnaces is generally cost-neutral, and supplementary cementitious materials can replace cement at a negative cost.
• Prioritizing retrofits over new construction significantly lowers embodied carbon and capital costs. New builds generate two to four times more embodied carbon than retrofits. Deep energy retrofits using carbon-storing materials can pay back their embodied carbon immediately, or within seven years if conventional materials are used.
• Circular construction practices, including component reuse and design for disassembly (DfD), can reduce the embodied carbon of new construction by up to 20%. While DfD may increase up-front design and material costs, it can increase net asset value by mitigating future liabilities, such as rising landfill costs, especially as the US may run out of permitted landfill capacity by 2036.
• Corporate-level strategies, such as institutionalizing embodied carbon practices and reporting Scope 3 emissions, reduce regulatory risk and attract investment. Approximately 69% of investors are likely to increase stakes in companies managing sustainability well, while 42% have already divested from those that have not. California has already enacted a law requiring large companies to disclose annual greenhouse gas emissions, including Scope 3.
• Developers can overcome the 'chicken and egg' problem of low-carbon material supply by forming buyers' coalitions and using off-take agreements. This provides producers with the demand certainty needed to secure financing for large-scale decarbonization of production, allowing first-movers to secure a competitive advantage in accessing limited early production runs.

APA

RMI (2024). The Business Case for Reducing Embodied Carbon: 9 Investments Commercial Real Estate Developers Can Make Today. https://rmi.org/resources/the-business-case-for-reducing-embodied-carbon-9-investments-commercial-real-estate-developers-can-make-today/

Chicago

RMI. The Business Case for Reducing Embodied Carbon: 9 Investments Commercial Real Estate Developers Can Make Today. 2024. https://rmi.org/resources/the-business-case-for-reducing-embodied-carbon-9-investments-commercial-real-estate-developers-can-make-today/.

Wikipedia

{{cite report |author=RMI |title=The Business Case for Reducing Embodied Carbon: 9 Investments Commercial Real Estate Developers Can Make Today |date=25 July 2024 |url=https://rmi.org/resources/the-business-case-for-reducing-embodied-carbon-9-investments-commercial-real-estate-developers-can-make-today/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2024business, author = {{RMI}}, title = {{The Business Case for Reducing Embodied Carbon: 9 Investments Commercial Real Estate Developers Can Make Today}}, institution = {RMI}, year = {2024}, month = jul, url = {https://rmi.org/resources/the-business-case-for-reducing-embodied-carbon-9-investments-commercial-real-estate-developers-can-make-today/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }