Why I Started Tangible
Real estate has a climate problem, and everybody knows it.
The real estate industry produces about 40% of greenhouse gas emissions–more than any other industry.*
According to research from the latest IPCC report, every 1,000 gigatons of carbon dioxide equivalent (GtCO2e) results in about 0.45 degrees of warming. So far the world has emitted 2,390 GtCO2e since pre-industrial times, warming the planet by about 1 degree already. The real estate industry was responsible for emitting 10 GtCO2e in 2019, alone. That’s 1/200th of a degree of warming, in one year, by one industry. Absolutely nuts.
In the past few decades, there’s been a big focus on operational emissions from things like heating & electricity. However, about a third of real estate’s emissions actually come from the materials used in the building (11% of all GHG emissions globally, at the latest estimate). That’s more than flights (2.5%) and the fashion industry (4%) combined, both of which have gotten considerably more attention from the press in recent years. Concrete, which is the second-most used material on Earth (after water), accounts for about 8% of all GHG emissions. Yikes.
If that weren’t bad enough, the construction industry also has a huge social impact — and often not for the better. For one thing, many building materials contain toxic chemicals. This impacts the health of frontline communities (in the places where these materials are produced) and the building occupants themselves (not ideal when we spend 90% of our time indoors). And then there’s the issue of forced labor: according to one report from 2017, an estimated 18% of all forced labor (25 million people globally) occurs in the construction industry. One shocking example is timber: one report estimated the amount of timber to come from illegal logging at up to 40%, and an estimated 50% of this illegal timber is produced through forced labor.
So what’s a developer to do? Luckily, the industry is starting to wake up. Perhaps the biggest driver for change is that real estate owners and developers are starting to feel pressure to decarbonize from their investors. The UN-Convened Net-Zero Asset Managers Alliance is a group of institutional investors who have committed to transitioning their portfolios to net zero carbon emissions by 2050. The 74-organization alliance, representing at least $10 trillion in assets under management, has set interim targets for the industries in which it invests. These targets, released in late 2020, include a -16% to -29% CO2e reduction by 2025 for the real estate industry and the alliance now specifically calls out cement, steel, and aluminum as industries which must set decarbonization pathways. Similarly, The Institutional Investors Group on Climate Change (IIGCC) is a group of pension funds and investment managers who manage $40 trillion in AUM. They have the mission “to support and enable the investment community in driving significant and real progress by 2030 towards a net zero and resilient future.”
Then there’s the regulatory world. The Security & Exchange Commission (SEC) has proposed requiring publicly traded corporations to report on their carbon emissions, which could open up a gateway to a carbon tax but at the very least requires getting a handle on emissions. One report by Schroders found that the building materials sector was the most exposed sector when looking at total EBITDA at risk from higher carbon prices.
In the meantime, cities and states are taking action. Many jurisdictions are requiring lower carbon footprints for buildings not only through energy efficiency and renewable energy requirements, but also by setting embodied carbon limits. The state of Colorado recently passed legislation around the global warming potential (GWP) of materials allowed for public projects. The state of New York passed a bill regarding the procurement of low carbon concrete; California has a similar ‘Buy Clean’ bill for public contracts. Vancouver, B.C. has passed its Climate Emergency Action Plan, in which it has set out plans to achieve a 40% reduction in embodied carbon from construction by 2030 by setting future limits on the carbon footprint of products like concrete and insulation. The city of Portland, OR is also planning to roll out carbon limits for concrete used in city projects. One report by the NRDC estimated that “if all the cement and steel the federal government purchases for public construction was 30–50% cleaner, it could reduce emissions between 9.2 and 15.4 million metric tons of CO2 equivalent (MMt CO2e) by 2030. That’s the equivalent of taking 2 to 3.34 million cars off the road or eliminating the energy use from 1.1 to 1.9 million homes for a year.”
All of this is to say, regulation around the embodied carbon of construction is not only coming; it’s already here.
Unsurprisingly then, real estate asset managers and other major landlords have set themselves ambitious decarbonization targets. The Better Buildings Partnership brings together some of the largest commercial real estate owners in Europe and the U.K., and under its Climate Commitment many of the members have committed to net zero carbon emissions by 2050, including embodied carbon emissions. Lendlease Europe has revealed that 80% of their emissions come from the embodied carbon. Nuveen and other global asset managers have set out decarbonization trajectories which outline “significant reductions in embodied carbon” by 2040 at the latest. Hudson Pacific Properties, which has achieved carbon neutrality in operations, plans to “measure embodied carbon at all its developments” and “leverage innovative design and materials choices to drive lower-carbon construction.” Kilroy Realty, in their most recent sustainability report, similarly calls out embodied carbon as a major focus over the next five years. And Legal and General, one of the largest asset owners and managers in the world, has stated that, “By 2030, all homes built by Legal & General’s housing businesses will be capable of operating at net zero carbon emissions, and we will strive to understand, monitor and reduce the embodied carbon associated with the construction of our homes.”
As Victor Olgyay, a principal in RMI’s Carbon-Free Buildings Program and co-author of RMI and Skanska’s Reducing Embodied Carbon in Buildings report, put it, “People are going to demand low-embodied-carbon materials, and the people who can supply these products will own that market.”
Tangible is your platform for sustainable building materials.
I started Tangible, alongside my co-founder Nicole Granath, because we think it should be stupidly easy to choose low-carbon materials that don’t decimate communities, or cost an arm and a leg. We think it should be easy to connect the materials that go into buildings with decarbonization goals. We think it should be easy for people who aren’t sustainability experts to make the right choices. Although it sounds a little cheesy, we truly think it should be easy to build a better world.
Nicole and I have spent the last few years working in manufacturing sustainability and real estate sustainability, respectively, and we were tired of watching the real estate industry fail to address embodied carbon at scale. Currently, architects, developers, and others in the built environment rely on bulky databases, manufacturer websites, homegrown spreadsheets, and ye olde Google search to find materials that meet their sustainability needs. Sustainable design is often done on a case-by-case basis, rather than being the status quo, with each new project starting from scratch.
We wanted a place where built environment professionals could easily find, manage, and report on products that meet their carbon, environmental, and social goals. Rather than adding more hot air to the real estate sustainability space (in the words of Greta, “net zero blah blah blah”), we wanted to build something that could catalyze *ahem* tangible climate impact.
The real estate industry is one with a lot of stakeholders — from developers to architects to contractors to consultants to manufacturers — each of whom is partly responsible for the industry’s emissions. If we’re going to take climate change at scale, we need all hands on deck, and we need a tool that can speak to everyone’s needs. That’s what we’re aiming to build with Tangible.
We hope you will join us on our journey to decarbonize the built environment. Here’s to transforming a millennia-old industry together!
(Sign up for our waitlist here.)
*Of course, this calculation disperses oil & gas sector emissions across other industries (e.g., emissions from gas boilers in buildings are attributed to the real estate, not the natural gas industry), so that emissions are not double-counted.
