Introduction

The Sixth Assessment Report from the United Nations Intergovernmental Panel on Climate Change underscores the critical role of the real estate sector in addressing global warming. Buildings account for roughly 40% of global carbon emissions, with 29% arising from daily energy consumption and 11% from construction activities. Improving building energy efficiency and lowering carbon footprints are essential steps in mitigating climate change.

Asia is at the forefront of this climate change crisis. According to the World Economic Forum, the region accounts for around 50% of global emissions—a figure that is expected to rise in parallel with ongoing construction activities. While Asia already comprises about 50% of the global real estate market today, it is expected to add over 70 billion square meters of real estate in the next two decades.

Decarbonizing Asia’s built environment will require a multifaceted approach, focusing on sustainable urban planning, innovation in construction materials, optimizing operations and retrofitting existing buildings for better energy efficiency.

Outlined below are four key levers to decarbonize Asia’s built environment.

 

01 The Key Decarbonization Levers in Asia

1. Limiting Urban Sprawl

As hubs of economic activity, cities emit over 70% of global CO2. With more than half of the world’s urban population, Asian cities are responsible for a significant share of these emissions. A carbon footprint mapping exercise of 13,000 cities conducted by NASA^[1] revealed that seven of the top 10 emitters and 10 of the top 10 per capita emitters are in Asia, underscoring the imperative for Asian cities to adopt sustainable urban development practices.

Urban sprawl, characterized by low-density development, inherently demands more transportation infrastructure and energy, leading to significantly higher emissions. Studies have shown that the rate of urban land expansion in China has outpaced population growth^[2], exacerbating urban sprawl and its associated environmental impacts. To counter this, cities need to be planned to limit sprawl and create multi-use high-intensity zones.

2. Decarbonizing the Construction Process

Embodied carbon, which can constitute up to 50% of a building’s total lifetime emissions, is largely determined by material choice and procurement processes.

In Asia, the material manufacturing sector can be fragmented, with multiple suppliers contributing raw materials and components to the production process. Project developers often hesitate to adopt lower-carbon materials due to their higher upfront costs and a perception that these alternatives lack the quality and durability of traditional materials like cement, iron, steel, and aluminum, which are notably carbon-intensive.

There are some promising technologies in this space, but it will take time for them to be widely adopted.

 

 

 

3. Implementing Carbon Capture, Utilization, and Storage Solutions

Broader carbon capture and storage technologies also present significant opportunities for emissions reduction. Implementing Carbon Capture, Utilization, and Storage (CCUS) technologies—such as chemical absorption and calcium looping—offers effective methods to decrease emissions from material production.

CCUS technologies, along with negative emission technologies aimed at directly removing carbon from the atmosphere, are still in early development stages and face significant technological barriers.

However, innovative projects are reshaping the industry. For example, a house in Karuizawa, Japan was recently constructed using the world’s first CO2-removing concrete, CO2-SUICOM^[3]. Despite these advancements, scaling these innovations to commercial viability requires significant capital investment.

4. Advancing the Use of Data and Artificial Intelligence

Without standardized frameworks for conducting Life Cycle Assessments (LCA) or mandates for reporting akin to Environmental Product Declarations (EPD) seen in the EU and US, transparency remains low for production processes in Asia. To date, fewer than 10,000 of the global 100,000 EPD declarations originate from Asia.

Startups are emerging as pivotal players in organizing data flow and increasing supply chain transparency. Innovative platforms like Accacia are enabling materials manufacturers in Asia to perform lifecycle assessments and generate EPDs. Accacia has enabled manufacturers across 25+ categories of construction materials to generate EPDs and recently assisted a $100bn+ AUM real estate asset manager to incorporate Greenhouse Warming Potential (GWP) as a key metric in their tendering process.

 

 

02 Putting Capital to Work in Asia to Address the Opportunity

The VC industry has been actively investing in innovation across the built environment. Despite significant global growth in built environment start-up funding, Asia has yet to claim its fair share.

In 2023, venture capital investments in this sector surpassed $3 Billion globally, but Asian startups secured only 10% of this funding.

Asia’s built environment funding grew 10x from 2019 to 2023 but still remains only 10% of total global funding

Notes: VC funding (Seed to pre-IPO) considered; Doesn’t include PE, IPO, Buyouts, M&A, Grants, Corporate Deals
Source: Pitchbook, Secondary Research

We see this trend changing in the next 10 years with the emergence of climate focused funds and game-changing climate technologies being built in Asia.

Source: Pitchbook, Secondary Research

Corporates and financial institutions in Asia also have a role to play and must take the lead in strategically allocating capital towards sustainable industries and practices. Corporates, as major contributors to greenhouse gas emissions, carry a significant responsibility in driving change. They must not only invest financially but also dedicate their time, expertise, and resources to actively seek out and pilot innovations that can transform their sectors. By leveraging their scale and influence, corporates can accelerate the adoption of sustainable technologies, creating a ripple effect throughout their supply chains and industries. This dual approach—combining financial investment with active engagement in innovation—is crucial for corporates to shift from being part of the problem to becoming instrumental in the solution, ultimately driving meaningful progress in the fight against climate change.

Singapore stands at the forefront of sustainability innovations, marked by a surge in investments and innovation efforts aimed at the green economy. Companies are also increasingly recognising corporate venturing – which includes both corporate venture creation and startup partnerships – as a powerful tool in their innovation strategy. The third edition of the Corporate Venture Launchpad (CVL) programme has been expanded to support companies in developing sustained venture creation capabilities as well as establishing best practices for effective corporate-startup collaborations, leading to impactful business outcomes.

Corporate venturing is vital for Singapore’s green economy as it enables the rapid scaling of innovative sustainability solutions, reduces time-to-market for green technologies, and aligns with the nation’s broader goals of environmental stewardship and economic resilience. These corporate venturing efforts allow Singapore to position itself at the forefront of global sustainability efforts while simultaneously driving economic growth and securing a greener future.

~ Mr. Yuan Chun Ling, Vice
President of EDB

 

Conclusion

Decarbonizing Asia’s built environment presents a critical opportunity to mitigate climate change while addressing the region’s rapid urbanization. Buildings, which account for nearly 40% of global carbon emissions, are central to achieving this goal, especially given Asia’s significant share of current and future construction. The strategies outlined in this report, such as limiting urban sprawl, decarbonizing construction processes, and leveraging technologies like carbon capture and artificial intelligence, are pivotal in reducing emissions.

Investment in climate-focused ventures, as well as corporate engagement in pilot projects and innovation partnerships, are key drivers in accelerating the decarbonization process. By integrating these approaches, Asia’s built environment can transform into a more sustainable model, ensuring economic growth aligns with environmental stewardship.

About the authors

Karan Mohla, General Partner, B Capital

Karl Noronha, Vice-President, Strategy & Operations, B Capital

Mehul Garg, Associate, B Capital

Annu Talreja, Founder & CEO, Accacia

Piyush Chitkara, Co-founder & CTO, Accacia

Hanno Stegmann, Managing Director & Partner, BCGX

Neels Steyn, Partner, BCGX

Megha Kehar, Lead Product Manager, BCGX

Amar Sood, Independent Researcher

Avinash Jain, Sr. Business Analyst, Accacia

 

^[1] Voiland, A.,(2019), ‘Sizing Up the Carbon Footprint of Cities’. Available at: Link Here [14 July 2024]
^[2] Wang, Y., Chunlin H., Yaya F., Minyan Z., and Juan G., 2020, “Using Earth Observation for Monitoring SDG 11.3.1-Ratio of Land Consumption Rate to Population Growth Rate in Mainland China” Remote Sensing 12, no. 3: 357. Link here [16 July 2024].
^[3] CO2-SUICOM, standing for CO2-Storage and Utilization for Infrastructure by Concrete Materials, was used in a house designed by Nendo, a Japanese design studio.