Putting buildings on the climate and finance agenda

Paris, beautiful buildings in the center, typical parisian facades in the Marais
Typical Parisian building facades in the Marais. Photo by Pascale Gueret on Adobe Stock.

The Buildings and Climate Global Forum in Paris on 7-8 March put the buildings sector back in the limelight – laying a path to the Buildings Breakthrough, highlighting champions, and illuminating the massive gap in delivery. The buildings sector is responsible for more than a third of global emissions and energy demand, with that share growing each year. Yet, action on buildings can deliver safer homes for all, achieve our global energy goals by 2030, and address the physical and financial risk of climate change.

Buildings constitute the very fabric of our economies and societies. We spend 90% of our lives in buildings, 55% of global wealth is held in buildings, and 7% of people are employed in the construction sector. Buildings are also a major contributor to the climate crisis and are at the front line of climate impacts. 

The scale and urgency of the challenge 

The Buildings and Construction Global Forum – hosted by the French Ministry of Ecological Transition and Territorial Cohesion and UNEP in Paris this month – aimed to grapple with this challenge. On Day 1 of the Forum, the Global Alliance for Buildings and Construction published their Global Stocktake reporting that the buildings sector is not on track. In 2022, the sector accounted for 37% of global energy emissions, rising 1% every year since 2015. To meet the goals of the Paris Agreement, emissions in buildings need to fall 9% each year by 2030.  

The sector’s scale and sluggish progress carries three systemic risks: to people, climate action, and finance.  

First, as homes and workplaces, inefficient and unadapted buildings leave billions of people exposed to energy price and physical climate shocks. Globally, an energy price shock of the scale triggered by the Russia-Ukraine could push an additional 114 million people into extreme poverty. Unadapted buildings leave 1.2 billion people at high risk from heatwaves due to lack of access to cooling comfort and 1.8 billion highly vulnerable to floods

Second, in terms of climate action, buildings account for 34% of energy demand and half of global raw material consumption. Construction accounts for half of all waste sent to the landfill. Through energy efficiency, flexible demand, resource efficiency and low embodied emissions construction materials, buildings are the main demand side lever to transform the energy system and drive industrial decarbonisation. Poor progress in buildings increases the cost and reduces the speed of transition in the energy and industry sectors. 

Thirdly, buildings are at the heart of local tax revenue as well as national and global financial systems. As buildings constitute over half of global wealth, buildings that are inefficient and poorly adapted to the threat of climate change decline in value, rent and insurability and are poised to exacerbate existing and create new macroeconomic instabilities. At least 6% of the value of global real estate could be at risk from climate change – or $20 trillion – based on the current value of the sector. Investment in decarbonising buildings rose by 14% in 2022 to USD 285 billion – largely due to the US and EU response to energy insecurity – yet it fell short of net-zero targets. 

One good step deserves another: What next? 

The Buildings and Climate Global Forum brought together 1450 stakeholders from across government, industry, finance, and civil society. The Forum concluded with the Chaillot Declaration – signed by 70 ministers of buildings and construction – which called for inclusive implementation of decarbonisation and resilience pathways for buildings. The Declaration created an intergovernmental council for governments to meet regularly at senior and ministerial level to assess delivery of the Declaration. In addition, the Brazilian Minister for Cities committed to support a working group on buildings and real estate under the framework of the G20, which would create yet another strong political signal on the importance of decarbonising the sector. 

Buildings are at the core of climate action with implications for the energy system, construction industry, and financial sector. To realise the Paris Agreement, and capitalise on the momentum of the Chaillot Declaration, buildings must inhabit a new, active role in the energy system, contributing to lower demand and bills. The use of low-carbon materials in buildings can drive industry transformation while finance must flow into healthier, more affordable homes that address climate and transition risks for investors. 


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