Sustainability Case Study: Avoiding the Brown Discount, or Depreciation of High Emissions Buildings

Case Study
Minute Read

Approximately 80% of our real estate emissions are generated by our tenants, which for real estate owners represents scope 3 emissions. Lowering our overall scope 3 emissions requires substantial partnership and alignment with our tenants, which ultimately serves the longer-term value of our business.

The growing global effort to achieve net zero carbon emissions and Brookfield becoming a signatory to the Net Zero Asset Managers initiative created an opportunity to address climate change, enhance the value of our assets, and serve our tenants. Brookfield’s real estate business procured clean energy through our renewable power business to advance net zero across our company, also facilitating carbon reduction goals of our tenants and New York State. Our efforts demonstrated that procurement can have an outsized impact on a building’s carbon emissions footprint and make a very sizable impact in a short amount of time.

  • By 2026, the majority of Brookfield’s U.S. Office portfolio across eight states and Washington, D.C. will be powered by clean energy.
  • Brookfield’s U.S. office portfolio will procure ~600 GWh of clean electricity, reducing GHG emissions by 250,000 mtCO2e annually (the equivalent of 59,000 gas-powered cars taken off the roads for a year).
Case Study_Avoiding the Brown Discount

It is our responsibility to preserve and add value to our real estate assets. We accomplish this in part by ensuring our buildings are desirable to tenants. We’re very closely listening to what tenants are interested in and what they care about. We believe that we are witnessing a fundamental shift in the market. Clean power is becoming a necessity for many tenants in their search for high-end office space.

The changing market dynamics are on the radar of most Class A building operators. In addition to offering highly connected, well-located, operated and maintained buildings, landlords are increasingly being required to offer secure and stable access to clean power. Many of our corporate tenants have made their own net zero commitments, necessitating the addressing of emissions from their office occupancy. Brookfield can take an outsized role delivering solutions to them.