Real Estate Carbon Accounting Principles

Carbon accounting has so far focused on carbon flows over a given period. As a result of the approach corporations have been essentially focusing on emission during the production of a product or service with little follow-up of what happens to that carbon after the production.

This approach to climate change “accounting” does not seem fully aligned with the nature of the physical problem which is aimed at keeping the concentration of greenhouse gas concentration in the atmosphere below a given level, irrespective of when the flow takes place.

According to the IPCC global Net zero carbon dioxide (CO2) emissions are achieved when anthropogenic CO2 emissions are balanced globally by anthropogenic CO2 removals over a specified period. Translating into accounting words, this is more akin to balancing assets and liabilities, rather than netting-off revenues and costs.

Flow management (like P&L) is a tool to manage the short-term perspective and immediate impact of one’s business decisions. The long-term prospect of a company, its health is reflected in its balance sheet. One of the key difficulties that carbon management is facing today, is that while carbon might have a price, it seldomly has a value. Carbon is not a primary good that is valuable to any material production process. The introduction of a balance sheet into a carbon accounting framework has the main advantage of shifting this paradigm as it allows to externalize a value of the carbon as a part of the asset which is being produced.   

The real estate carbon accounting principles where designed by alstria office REIT-AG to help manage it exposure to climate carbon transition.

While theses principles have been designed with real estate in mind, they could be equally applied to any other industry.

The full principle can be downloaded here, or accessed through this website.

The application of theses principle to alstria and its first carbon accounting report is available on alstria’s website.

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