Sustainability Atlas
Mobility & Built Environment·12 min read··...

Playbook: adopting low-carbon buildings & retrofits in 90 days

what's working, what isn't, and what's next. Focus on a sector comparison with benchmark KPIs.

Playbook: Adopting Low-Carbon Buildings & Retrofits in 90 Days

The global low-carbon building market reached $654.77 billion in 2024 and is projected to exceed $2 trillion by 2035, growing at a 12% compound annual growth rate (Astute Analytica, 2025). Yet 21 cities worldwide will face a 30% shortage of low-carbon office space by 2025, with the gap projected to exceed 70% by 2030 given current development pipelines. For procurement professionals responsible for facilities and real estate decisions, the transition to low-carbon buildings represents both an urgent imperative and a significant opportunity for organizations willing to lead.

Why It Matters

Buildings account for approximately 37% of global energy-related carbon emissions when considering both operational energy and embodied carbon in construction materials. Regulatory pressure is intensifying: New York City's Local Law 97 began enforcement in 2024, imposing penalties of $268 per metric ton of CO₂e for buildings exceeding emissions caps. The EU's Energy Performance of Buildings Directive (EPBD) mandates 16 kWh/m²/year energy intensity reductions by 2030, while 151 countries have now adopted net-zero building commitments.

The economics increasingly favor low-carbon construction and retrofits. Light-to-medium retrofits unlock 10-40% energy savings, with annual savings across analyzed portfolios ranging from $2.9 billion to $11.4 billion depending on intervention depth. Green-certified buildings command rent premiums of 6-10% while experiencing lower vacancy rates and faster lease-up periods. Institutional investors representing over $7 trillion in assets participate in the GRESB assessment, using sustainability performance as an investment criterion.

For procurement professionals, building decisions carry multi-decade implications. Leases, construction contracts, and major renovation investments lock organizations into energy profiles and carbon trajectories for 10-30 years. Decisions made today will determine whether organizations meet 2030 and 2050 climate commitments or face escalating compliance costs, stranded asset risks, and stakeholder scrutiny.

Key Concepts

Embodied Carbon refers to the greenhouse gas emissions associated with building materials and construction processes, distinct from operational emissions from building energy consumption. Materials including concrete, steel, and aluminum represent significant carbon footprints before a building ever opens. Life cycle assessment (LCA) methodologies quantify embodied carbon, with Environmental Product Declarations (EPDs) providing standardized disclosure—over 100,000 EPDs are now available in the EC3 database.

Energy Retrofit encompasses improvements to existing buildings that reduce operational energy consumption. Common measures include building envelope upgrades (insulation, windows, air sealing), HVAC system replacement or optimization, lighting efficiency improvements, and controls/automation additions. Retrofit depth varies from shallow (individual system replacement) to deep (comprehensive renovation approaching new construction performance).

Green Building Certification systems including LEED, BREEAM, and WELL provide third-party verification of sustainability performance. Certifications establish credibility with tenants and investors while providing frameworks for project teams. Approximately 20% of new OECD commercial buildings achieved green certification in 2024, with certified buildings demonstrating measurable performance advantages.

Building Performance Standards are regulatory requirements that mandate maximum emissions or energy intensity for existing buildings. Unlike building codes that apply only to new construction, performance standards require improvements to the existing building stock. Major cities including New York, Boston, Denver, and St. Louis have adopted performance standards with penalties for non-compliance.

Building TypeBaseline Energy Intensity (kWh/m²)Best Practice (kWh/m²)Typical Retrofit SavingsPayback Period
Office200-30080-12025-40%5-10 years
Retail300-500150-25020-35%4-8 years
Healthcare350-600200-35015-30%8-15 years
Multifamily120-18050-9030-50%7-12 years
Industrial/Warehouse100-20040-8025-45%3-7 years

What's Working and What Isn't

What's Working

Integrated Retrofit Approaches that address multiple building systems simultaneously outperform piecemeal interventions. Johnson Controls launched its OpenBlue Retrofit Platform in April 2025, providing AI-driven energy analytics that identify optimization opportunities across HVAC, lighting, and envelope systems. Projects that combine envelope improvements with mechanical upgrades achieve 30-50% energy reductions—far exceeding the sum of individual measure savings due to right-sizing of replacement equipment.

Low-Carbon Material Specifications are increasingly incorporated into procurement requirements. Major construction firms including Skanska, Lendlease, and ATAS report growing client demand for concrete with supplementary cementite materials (SCMs), structural timber alternatives to steel, and recycled content metals. Holcim's ECOPact low-carbon concrete achieved 8% revenue share in 2024, demonstrating market acceptance of sustainable materials at modest cost premiums.

Performance-Based Contracts align incentives between building owners and retrofit contractors. Energy-as-a-Service (EaaS) models, where service providers guarantee savings and share benefits, reduce owner risk while motivating aggressive efficiency improvements. Measured and verified savings, rather than deemed or stipulated values, ensure contracted performance translates to actual energy reduction.

What Isn't Working

Fragmented Incentive Structures create barriers to economic retrofits. Split incentives between landlords (who pay for improvements) and tenants (who pay utilities) persist in commercial leases, undermining investment justification. Green lease provisions that share savings can address this challenge but require negotiation complexity many parties avoid. Similarly, real estate transaction timelines rarely accommodate pre-sale retrofit investments despite long-term value creation.

Skilled Labor Shortages constrain retrofit delivery capacity. Heat pump installation, building envelope optimization, and controls programming require specialized skills in short supply. Retrofit ambitions exceed industry capacity in many markets, extending project timelines and increasing costs. Workforce development initiatives are expanding training programs, but pipeline development requires years while retrofit demand accelerates now.

Verification and Accountability Gaps undermine confidence in claimed performance. Buildings often fail to achieve designed efficiency levels due to commissioning shortcuts, operational deviations, or measurement errors. Without rigorous performance verification, owners cannot confirm retrofit value while policy makers cannot enforce compliance. Building performance standards are beginning to address this gap through mandatory ongoing reporting requirements.

Key Players

Established Leaders

Johnson Controls combines building automation legacy with AI-driven optimization through the OpenBlue platform. Their retrofit solutions target existing building portfolios with non-invasive interventions achieving 20-30% energy reductions. The company's global service network enables consistent delivery across multi-location portfolios.

Siemens AG provides Building X for digital building management alongside Xcelerator building lifecycle software. Their focus on digital twins enables simulation of retrofit alternatives before physical implementation. Siemens' broader infrastructure portfolio enables integration of building improvements with grid and mobility solutions.

Schneider Electric delivers EcoStruxure Building solutions connecting design, construction, and operations phases. Their emphasis on open protocols facilitates integration with third-party systems common in retrofit contexts. Schneider's global presence serves multinational portfolios with standardized approaches.

Kingspan Group manufactures high-performance insulation and building envelope systems critical for deep retrofits. Their acquisition of Troldtekt A/S in 2023 expanded sustainable acoustic panel offerings. Kingspan's focus on rapid installation systems addresses skilled labor constraints in retrofit markets.

Emerging Startups

Sealed provides home energy efficiency upgrades through a no-upfront-cost model, financing improvements through utility savings. BlocPower focuses on electrification retrofits for multifamily and commercial buildings in underserved communities, combining technical solutions with innovative financing. Cove.tool delivers building performance modeling software that enables early-stage evaluation of design alternatives and retrofit scenarios.

Key Investors & Funders

CBRE Investment Management has committed substantial capital to sustainable real estate strategies including retrofit-focused funds. The U.S. Department of Energy provides grants through the Building Technologies Office and loan guarantees through the Loan Programs Office for qualifying building efficiency projects. The European Investment Bank offers favorable financing terms for building renovation projects through various climate-focused lending programs.

Examples

  1. Empire State Building Deep Retrofit: The iconic Empire State Building completed a comprehensive energy retrofit in 2011 that has since served as a reference case for commercial building improvements. The $31 million project achieved 38% energy reduction through window refurbishment (instead of replacement), chilled water system optimization, tenant lighting and plug load improvements, and advanced building management systems. Crucially, the project demonstrated that deep retrofits could proceed while maintaining full building occupancy—a prerequisite for most commercial building owners. Annual savings exceed $4.4 million, with payback achieved in under seven years. The building subsequently achieved LEED Gold certification, enhancing its market positioning.

  2. CBRE's Sustainable Supplier Program: Real estate services firm CBRE established a sustainable procurement program requiring suppliers to meet environmental and social criteria. In 2024, the company reported $6.29 billion in spending with sustainable suppliers and achieved a 30.8% reduction in operational emissions. CBRE's approach extends beyond direct operations to influence service providers and contractors across managed properties. For procurement professionals, CBRE's model demonstrates how specifications and vendor qualification requirements can accelerate market transformation even without direct construction authority.

  3. TITAN Group's Low-Carbon Materials Joint Venture: In February 2025, TITAN Group announced a joint venture in India to expand production of low-carbon cement and supplementary cementious materials. The venture targets the massive construction demand from India's urbanization while addressing the 8% of global emissions attributable to cement production. For procurement professionals, partnerships between global materials companies and regional manufacturers signal expanding availability of low-carbon alternatives in emerging markets. Specifying EPDs and carbon intensity limits in procurement requirements accelerates adoption of these alternatives.

Action Checklist

  • Weeks 1-3: Portfolio Assessment and Baseline Establishment — Compile energy consumption data for all owned and leased facilities. Identify buildings subject to performance standards or disclosure requirements. Benchmark energy intensity against industry comparables and establish carbon accounting for Scope 1 and 2 emissions. Prioritize facilities based on regulatory exposure, lease expiration timing, and retrofit opportunity.

  • Weeks 4-5: Retrofit Opportunity Identification — Commission energy audits (ASHRAE Level II or equivalent) for priority facilities. Evaluate measure packages including envelope improvements, mechanical system upgrades, lighting, and controls. Model projected savings and capital requirements for shallow, moderate, and deep retrofit scenarios. Assess site suitability for on-site renewable generation.

  • Weeks 6-7: Procurement Strategy Development — Develop specifications incorporating low-carbon materials requirements, EPD submission, and carbon intensity limits. Evaluate delivery models including traditional design-bid-build, energy performance contracting, and energy-as-a-service. Identify qualified contractors with relevant retrofit experience and sustainability credentials. Design vendor qualification criteria aligned with organizational sustainability commitments.

  • Weeks 8-10: Pilot Project Initiation — Select pilot facility for initial retrofit implementation. Finalize scope, budget, and performance targets. Execute procurement and engage implementation team. Establish measurement and verification protocols including sub-metering, data logging, and baseline adjustments.

  • Weeks 11-12: Program Development and Stakeholder Alignment — Document pilot learnings and develop retrofit playbook for portfolio-wide application. Build business case for programmatic retrofit investment including utility savings, carbon reduction, compliance positioning, and asset value enhancement. Engage leadership stakeholders and finance partners to secure multi-year retrofit commitment.

FAQ

Q: How should procurement professionals evaluate trade-offs between retrofit depth and investment scale? A: Deeper retrofits deliver greater savings but require larger capital investment with longer payback periods. Optimal depth depends on building remaining life, regulatory trajectory, and capital availability. For buildings with 15+ years remaining life in jurisdictions with strengthening performance standards, deep retrofits that address building envelope alongside mechanical systems typically maximize lifetime value. For buildings approaching major renovation or sale, targeted interventions addressing immediate compliance requirements may be more appropriate.

Q: What specifications should procurement documents include for low-carbon construction materials? A: Key specifications include requirements for Environmental Product Declarations (EPDs) conforming to EN 15804 or ISO 14025 standards, maximum global warming potential (GWP) thresholds by material category, minimum recycled content percentages, and third-party verification of claimed environmental attributes. The Embodied Carbon in Construction Calculator (EC3) provides benchmark data for material category comparisons. Progressive specifications may reference buy-clean policies being adopted by government agencies including the U.S. General Services Administration.

Q: How do building performance standards affect lease negotiations and asset valuation? A: Buildings subject to performance standards face potential penalties that tenants may resist absorbing through operating expense pass-throughs. Proactive retrofits that achieve compliance protect rent levels while buildings failing standards may require rent concessions or face reduced demand. Asset valuations increasingly incorporate carbon risk, with performance standard exposure affecting cap rates and transaction pricing. Procurement professionals should evaluate building compliance trajectories when negotiating leases and prioritize compliant or recently retrofitted buildings where possible.

Q: What verification approaches ensure retrofits deliver projected performance? A: Robust verification requires pre-retrofit baseline measurement, post-retrofit measurement under comparable conditions, and adjustments for weather, occupancy, and other variables affecting consumption. The International Performance Measurement and Verification Protocol (IPMVP) provides standardized methodologies. Continuous monitoring using building management system data enables ongoing performance tracking and early identification of degradation. Performance contracts with savings guarantees transfer verification risk to contractors with financial incentives for accurate projections.

Q: How should organizations prioritize retrofits across diverse building portfolios? A: Prioritization frameworks typically consider regulatory urgency (buildings nearest compliance deadlines), energy intensity (highest consumers offer largest absolute savings), lease timing (approaching renewals or expirations create natural intervention points), and execution feasibility (buildings with engaged operators and capital access proceed faster). Portfolio-level analysis may identify efficiency investments that generate savings funding subsequent retrofits, creating self-sustaining improvement programs.

Sources

Topics

biomaterialsCSRDstandardsSEC climate ruleregenerative

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