Real Estate Portfolio Carbon Risk Score (CaRiS)

Decarbonising the built environment is being highlighted at COP27 as fundamental to make progress towards mitigating the impacts of the climate crisis and enabling zero carbon pathways for society. A range of third-party voluntary commitments enabling transparency are on offer and an array of carbon calculators, tools and processes help somewhat in guiding and in decision making. Rightly so much attention has focused on construction professionals and their role in decision making to decarbonise new build and, to a lesser extent, refurbishment.

For a portfolio of residential buildings there is a lack of visibility, or awareness, of the operational carbon load and the embodied carbon an investor is taking on. This conceals risks, but also obscures opportunities. Financial services organisations need to better understand the relative contributions that operational and embodied carbon make on the climate and environmental risk associated with assets (and the impact that lifecycle considerations and building improvement interventions have). However, there is currently no consistent methodology to do this.

CaRiS is a methodology and proof-of-concept tool that brings visibility to embodied and operational carbon associated with a residential portfolio, enabling the financial sector to effectively risk manage and make better decisions in managing portfolios in future. Our Phase 1 project built a proof-of-concept tool which is the starting point for this project. We will work with stakeholders from the financial services sector to deliver the functionality and user interface required. The user insight we gather will direct the build of the technical models, develop and test the iterations of the CaRiS tool drawing upon existing data sets. A circular economy approach will be explored to quantify potential for an 'embodied carbon credit' to enable clients to manage their built assets as valuable materials banks (rather than embodied carbon liabilities). For operational carbon we continue to look beyond EPC for data sources and approaches that can be harvested to provide a consistent measure. Interventions (e.g., renewables, heat, fabric) to improve the assets operational carbon performance will be presented alongside embodied carbon incurred. The two strands combine as a carbon position and pathway for the asset (aggregated into the portfolio) enabling a carbon risk score concept. The risk score considers this carbon position alongside any limitations for improvement, the remaining design life, the need for deeper refurbishment and benchmarks against national performance targets and entity databases.