CRREM and carbon risk: What real estate needs to know

Andrea Palmer: In today’s landscape, investors and asset managers need clear, actionable guidance, and CRREM provides exactly that. Before CRREM, sustainability efforts in real estate have mostly been framed in relative terms, measuring progress against peers or setting incremental targets without a clear connection to the deep reductions that climate science demands. 

CRREM changed this by offering the market an absolute standard, grounded in a rigorous scientific method. It defines what “enough” looks like in terms of intensity improvements, delivering a level of detail that is both practical for investors and powerful in driving real change. From an investment underwriting perspective, the concept of "distance from the CRREM pathway" provides tremendous indicative value. It gives a quantifiable signal of transition risk and sustainability performance that can be directly translated into cash flows and/or cap rates.

Andrea Palmer: At CRREM, we originally used the term “Stranding Year” to describe the year in which a building’s current or projected carbon or energy intensity exceeds the respective CRREM pathway threshold. However, we’ve been listening closely to asset owners and real estate professionals, and one message stood out: while “Stranding Year” sparked important conversations, it wasn’t the most accurate or helpful term for interpreting CRREM results. That’s why we launched the “CRREM Misalignment Year” — a clearer, more objective metric that shows when a building or portfolio overshoots its carbon budget under the CRREM Pathways. This indicates the building has an above average transition risk profile.

Andrea Palmer: CRREM is fully integrated with other leading frameworks. GRESB and MSCI use CRREM’s methodology in their own assessments, and the SBTi relies on CRREM pathways as the science-based benchmark for climate targets in real estate.

Andrea Palmer: It’s not CRREM that drives value — it’s how you respond to the risks it helps you identify. CRREM highlights transition risk. But it’s the investor’s strategy — refurbishments, retrofits, energy systems — that determines how that risk impacts value. The tool is a starting point for smarter, faster, more aligned decisions

Andrea Palmer: Different investor types have different tools and potential to measure, manage, and price transition risks within their real estate strategies. Real estate markets are also very fragmented in terms of regulation. These differences underscore why a global standard like CRREM is so powerful. Its simplicity and transparency cut through complexity and fragmentation, offering a common language and a practical, comparable basis for decision-making across portfolios. We’re at a turning point—towards a more focused approach to transition risk management, where progress comes not from adding more frameworks, but from using a streamlined, consistent set of metrics that capture performance and risk across a global portfolio

As the market accelerates toward decarbonisation, investors need more than ambition — they need clarity. CRREM delivers just that: a practical, science-based compass to guide decisions and protect asset value. At Pulse, we’re proud to integrate CRREM into our revalorisation approach catalyst — empowering investors to anticipate carbon challenges, make smarter investment decisions, and stay ahead of the curve. Because in a changing market, resilience isn't just about compliance — it’s about securing long-term performance.