The real estate industry is in full transition towards more sustainable practices. While efforts have long focused on reducing the energy consumption of buildings(Scope 1 and 2), one major challenge remains underestimated: Scope 3, which accounts for up to 90% of an asset manager’s carbon footprint.
Scope 3 emissions include construction materials, renovation work, waste management and the end-of-life of buildings. Until they are integrated into ESG strategies, the goal of carbon neutrality will remain out of reach for the real estate sector.
Why is Scope 3 still the forgotten part of the low-carbon transition? How can this obstacle be overcome to ensure that real estate is truly aligned with climate requirements?
1. Why is Scope 3 underestimated in real estate?
A sector historically focused on energy performance
For decades, the reduction of CO₂ emissions in real estate has focused on the energy efficiency of buildings:
- Improved thermal insulation to limit heating and air-conditioning consumption.
- Optimizing energy systems with more efficient equipment.
- Use of renewable energies to limit direct emissions (Scope 1) and electricity-related emissions (Scope 2).
These actions have significantly reduced the impact of buildings in operation, but only account for a fraction of total emissions.
An invisible carbon footprint in construction and renovation
Scope 3 covers all indirect emissions associated with a building:
- Carbon incorporated into materials (concrete, steel, wood, glass, etc.).
- Emissions linked to renovation and maintenance work.
- Construction waste and its environmental impact.
- Transporting materials and waste.
These are the elements that weigh most heavily in the carbon footprint of a real estate asset. An energy-efficient new building can take several decades to offset its construction carbon footprint.
A lack of tools to quantify and reduce these emissions
Until recently, tools for measuring and tracking embodied carbon were underdeveloped. Unlike energy consumption, which can be easily measured and tracked, Scope 3 requires more complex analyses, notably life cycle assessments (LCA).
Without accurate data, it is difficult for asset managers tointegrate these emissions into their investment and renovation decisions.
2. Why is Scope 3 essential to achieving carbon neutrality?
Regulations gradually integrating on-board carbon
Regulations are rapidly evolving to include the overall carbon impact of buildings:
- France’s RE2020 requires new buildings to limit their lifecycle emissions.
- The European taxonomy requires an assessment of embodied carbon to qualify for green financing.
- The BBCA, HQE and BREEAM labels include Scope 3 in their certification criteria.
Eventually, it is likely that taking into account embodied carbon will become as restrictive as energy performance, making certain assets non-compliant and difficult to value.
Increasingly demanding investors in terms of their overall carbon footprint
ESG financiers and investment funds now include Scope 3 management in their investment criteria.
- Green bonds and sustainable financing favor projects with a clear low-carbon trajectory.
- Banks are demanding greater transparency on emissions over the entire lifecycle of assets.
- Investors apply “brown discounts” to buildings with a high embedded carbon impact.
A building poorly optimized for Scope 3 risks losing value and being excluded from the portfolios of the most committed investors.
3. How can we remove the Scope 3 brake to structure a zero-carbon trajectory?
Mapping and measuring the carbon footprint of the real estate portfolio
Integrating Scope 3 into a zero-carbon strategy begins with a precise analysis of emissions:
✅ Identification of materials and their carbon footprint using low-carbon materials databases.
✅ Mapping of reusable material deposits to maximize the circular economy.
✅ Integration of renovation and maintenance cycles to anticipate the carbon impact of future work.
Without this data, no low-carbon trajectory can be credible or measurable.
Integrate strategies for reuse and low-carbon materials
Reducing the carbon impact of Scope 3 involves :
- Reusing existing materials rather than buying new ones.
- The use of bio-sourced or recycled materials (wood, low-carbon concrete, natural insulation).
- Optimizing construction and renovation processes to limit waste and resource consumption.
These strategies can reduce the carbon footprint of a real estate project by up to 40%【2】.
Optimize investment and renovation decisions through modeling
Thanks to digital asset management tools, it is now possible to :
✅ Simulate different renovation scenarios and measure their carbon impact.
✅ Compare the environmental and financial benefits of reuse with those of new materials.
✅ Aligning assets with the requirements of ESG financiers and investors.
This approach makes it possible to structure a credible low-carbon trajectory and anticipate regulatory and financial changes.
4. Towards systematic integration of Scope 3 in real estate?
A new standard for asset management
Managers who adopt a Scope 3 approach today will enjoy a major competitive advantage:
- Easier access to green financing and subsidies for the ecological transition.
- Better anticipation of regulatory obligations and emission thresholds.
- Optimized asset valuation, limiting the risk of devaluation linked to new ESG standards.
A key lever for the competitiveness of real estate players
Scope 3 optimization is becoming a decisive criterion for players in the real estate market:
- Investors are demanding greater transparency on building lifecycle emissions.
- Tenants and users are looking for buildings that are truly low-carbon, and not just energy-efficient.
- Environmental labels and certifications increasingly take into account the carbon impact of materials and work.
Conclusion: integrating Scope 3, the final step towards truly low-carbon real estate
If the real estate sector is to achieve true carbon neutrality, it must go beyond energy performance alone and integrate the embedded carbon of buildings into its ESG strategies.
Asset managers who adopt this approach benefit from :
✅ Priority access to green financing and investment.
✅ Better control of compliance costs.
✅ Enhanced value for their assets over the long term.
Scope 3 is no longer a constraint, but an essential strategic lever for ensuring the resilience and competitiveness of low-carbon real estate.
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Would you like to structure a zero-carbon strategy and integrate Scope 3 into your property management? Find out how Upcyclea can help you digitalize your assets and optimize their low-carbon trajectory.
Sources :
[1] Global Status Report for Buildings and Construction 2021 (UNEP) – Link
[2] European Environment Agency (EEA) – Link
