Could sustainable buildings help get us to net zero?


Could sustainable buildings help get us to net zero?


Multiple structural shifts are underway across the built environment as it undergoes rapid transformation to reduce its carbon intensity. From planning, construction, usage and decommissioning, there are enormous opportunities when it comes to delivering the next generation of green buildings and infrastructure.

An immense carbon footprint

Urban centres are significant carbon emitters, with more than 60% of total global emissions stemming from the built environment and just over a third of this attributed to buildings.1

Currently, around half the resources extracted globally are used for housing, construction, and infrastructure and the continuing trend of urbanisation means that 230 billion square metres of new buildings will need to be constructed over the coming 40 years.

With global commitments to achieving a net zero emissions future, finding a way to cater to the world’s growing urban population, while ensuring emissions reductions are achieved, means industrial innovation and new practices will need to be invested in.

Rethinking each stage of the construction cycle

There are opportunities to reduce carbon emissions and intensity at every stage of the building and construction life-cycle, and significant investment is already underway.

Lowering the carbon footprint of construction through better building materials processing, optimising design, using recyclable components and improving energy usage are just some pathways to mitigating emissions.

In a return to bygone days, city buildings are once again being constructed from timber, which is both a renewable resource and a store of carbon, replacing materials like concrete and steel, which are far more emissions-intensive, as well as finite resources.

Meanwhile, there is a wave of tech innovation driving efficiencies, shrinking buildings’ carbon footprints. AI-driven controls, IoT and sensor technology are helping optimise energy usage – putting a stop to heating, cooling and lighting vacant office spaces, while also making use of on-site renewable energy generation.

In 2021, over US$500 billion was raised for green bond issuances, with 30% of these funds going towards buildings2. Yet this is just a fraction of the investment opportunity, with global investments in green buildings accounting for less than 9% of the US$5 trillion spent on building construction and renovation in 2017.

Chart 1: Green Bond Issuance (USD Trillion)

Source: Climate Bonds Initiative, 2022. 2022-2025 are estimates. Forecasts cannot be guaranteed.

Research suggests that the green building materials market could achieve a compound annual growth rate of 10.16% in 2030.3 Meanwhile, new sustainable buildings are set to represent a US$24.7 trillion investment opportunity in emerging markets alone.4

The momentum behind sustainable construction, including green buildings and infrastructure, provides investors with the opportunity to participate in a long-term global shift as an increasingly urbanised world moves to also achieve net zero emissions.

Invest in the transition to net zero

Our new active ETF, the Janus Henderson Net Zero Transition Resources Active ETF (Managed Fund) (ASX:JZRO) offers access to this multi-trillion dollar investment thematic. It can invest in companies worldwide that are enabling the transition to a net zero carbon emission future, including green buildings and sustainable infrastructure.

1. Generating Power – United Nations
2. Climate Bonds Initiative
3. Green Building Materials Market Report
4. Green Buildings Report, International Finance Corporation

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