Geo Week News

April 7, 2023

More climate-focused investment must be directed towards the built environment

Those inside the industry are accepting the challenge, but more assistance from the outside is necessary.

Every industry across the world is reckoning with their contributions to the current climate crisis we all find ourselves in, and sectors around the built environment are near the top of the list in terms of urgency for change. You’ll find different estimates as to just how much the built environment plays into global carbon emissions based on how different entities define who qualifies within the space and what does and doesn’t qualify towards total carbon emissions, but the World Economic Forum in 2022 put the estimate at 39 percent. The exact number is less important than the broader point, which is that significant change is needed in this industry in particular.

Of course, this is not new information to anyone, and by and large the industry is taking this seriously, if for no other reason than they have to. There are regulations that have been put in place for both new construction projects as well as retrofitting older structures, and deadlines for those are not as far away as it may seem at first glance. Some estimates indicate that, in order to reach the zero-emission goal set for 2050, embodied carbon – “emissions from material production and construction processes" – needs to be nearly halved by 2030. Given how long many large, urban construction projects last, this means that those goals will need to be met for some projects that are already beginning. It’s a lofty goal that will not be easy to meet, to say the least. 

There is no one solution that will solve any of this – if you have it, you can be a very rich person while also basically saving the world – but one great first step to address this specific problem would be for investors and funders focused on climate issues to put more of a proportional focus on the built environment.

Consider, for example, a July 2022 report from Tech Nation. As part of this report, which looks specifically at scaling hardware solutions aimed at climate, they point out the disparity of funding directed at addressing carbon in the built environment in comparison to those emission rates mentioned above, comparing it to the transportation and mobility sector. According to their statistics, transportation and mobility accounts for about 16 percent of global emissions, but receives over 45 percent of climate technology investment. On the other hand, their estimates have the built environment representing 17 percent of global emissions while receiving only five percent of that funding. That is a jarring disparity, and frankly cannot continue.

It’s worth talking a little bit about what exactly these tools are which can be used to limit carbon emissions, particularly within buildings in the operational phase. This is something we’ve written plenty about here at Geo Week, and given what I mentioned above about people in the industry being ready to face these challenges, it’s not going to be a big revelation. But things like digital twins and BIM, particularly when used in concert with Internet of Things (IoT) sensors, can track key metrics in real time and catch potential issues before they become an issue. We’ve talked here about how digital twins and BIM can reduce these carbon footprints, as well as a Bentley Systems integration made specifically for tracking these types of metrics. We can even include tools that simply make it easier to work remotely, meaning fewer people are traveling around the globe to be on-site. Any reduction in travel is a reduction in a project’s carbon footprint.

So, where are the investors? There’s not a clear answer to that, though the Tech Nation report above does have a theory. They believe that investors in the tech space are more interested in companies with a business backbone, i.e. founders coming in with MBAs and those types of backgrounds. For many of these types of solutions, particularly the hardware which they focus on in the report, the founders come from more of a STEM background.

I should note that they don’t provide empirical evidence for this so I certainly can’t say definitively that this is correct, though it does feel right. Investors want to be as sure as possible they’ll get a return on that investment, and of course they’d feel better knowing there is business know-how in the C-Suite.

Of course, my preference would be for investors to be less concerned about absolutely maximizing their ROI and more on the global effects of a product or company, but I live in the real world. The good news is there is still plenty of money to be made with these types of solutions, and that potential should only grow. Yes, tools like digital twins can be used for sustainability practices, but there are also plenty of business uses.

They help detect potentially costly clashes before they happen; they ensure a “single source of truth” is maintained between all stakeholders; they catch maintenance issues in operational phases before a human would be able to detect them; they allow owners-operators to run simulations to maximize efficiencies in their own operations. Those are only a few examples. With construction demand expected to increase as populations continue to gravitate towards urban centers, the value of these tools should rise in kind.

To be clear, any investment going towards a tool, solution, or company with aims towards putting us in the right direction in the climate fight is a net positive. The issues are too disparate to rail against an investment with the right idea in mind. That said, proportionality matters, and if we’re truly going to reverse course we need to address areas which are contributing the most damage. As stated, the construction and broader built environment sector is taking this seriously, and even with the relatively disproportionate investments there are still great tools being introduced seemingly every day. But imagine what we could have with more financial backing. It’s crucial for those outside the industry to recognize this and change course, and at the same time there is plenty of ROI to be had in conjunction.

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