NREP has introduced an internal carbon tax and committed to reducing embodied and operational CO2 emissions by 30% and 50%, respectively, by the end of 2023.
The Nordic real estate investor expects that the CO2 tax will drive innovation by putting a monetary figure on the cost of carbon and will also contribute to reaching the net zero goal by 2028.
The tax will be coupled with a green incentive to financially encourage project teams to implement sustainability efforts above market standards and obtain above average sustainability certifications.
NREP will use the EU Trading System as its primary benchmark and set the tax at its existing level of €90 per tonne, compared to a market estimate of around €30 per tonne.
The tax on operational emissions produced by existing buildings will be paid yearly, whereas the tax on embodied emissions during construction will be paid once the asset is complete.
Peter Bakker, president and CEO of the World Business Council for Sustainable Development, said: ‘NREP’s decision to incorporate carbon emissions as a cost directly into investment and operational decision-making through a carbon tax demonstrates leadership at the highest level. It shows how the cost of carbon can be integrated in a clear, measurable way that directly affects the business case and sends a clear signal to the wider built environment industry.’
Claus Mathisen, CEO of NREP, commented: ‘Sustainability actions are most powerful when they are taken early on and are at the core of a business. Putting a price on carbon is a great motivator. To reduce the CO2 fee as much as possible, teams are now doing a deep carbon analysis on every building within NREP’s portfolio. Our internal carbon tax is a means to an end. It puts us one step ahead in adjusting our business for a greener future, with regulations tightening every year. As such, it reduces risks and drives business value. We see a surge in demand for sustainable real estate, from customers, banks, and investors alike. I firmly believe that decarbonising now will equate to a future advantage.’
The carbon tax will be re-invested in the projects to improve sustainability performance and reduce emissions, including a carbon capture program, which will combine both established and new technologies such as direct air capture.
NREP’s decarbonising road map also includes three ‘earth shot’ projects to be completed by 2025 that will become 100% CO2 neutral, across operational and embodied carbon, without external offsets.
As part of its 2028 net zero strategy, NREP has set near-term company-wide emission reduction targets in line with climate science with the Science Based Targets initiative (SBTi), measuring its progress against 2020 levels.
The company has also pioneered real estate sustainability initiatives like the use of CO2 neutral geothermal heating, the largest rooftop solar power plant in the Nordics, the world’s first 100% upcycled concrete building, and the UN17 Village project aligned with all the UN’s 17 Sustainable Development Goals.
NREP has €18 bn of assets under management across Denmark, Finland, Sweden, Norway, Poland, and Germany.