The commercial real estate industry contributes between 30% and 40% of global carbon emissions each year.
To combat the amount of carbon being pumped into the atmosphere, a property trust has chosen to make an investment this week that could revolutionize the commercial real estate industry.
Standard Life Investments Property Income Trust (SLI) purchased 1,447 hectares (3,575 acres) of land in Cairngorm National Park in Scotland.
The objective is to plant 1.5 million trees to offset carbon emissions from its property portfolio. Their market cap is currently listed as £275 million.
While commercial real estate companies have been looking into energy-efficient retrofitting, solar installations, and carbon credit purchases, SLI has taken carbon offsetting to the next level by offsetting their own carbon themselves.
They purchased the property for £7.5 million, with the cost of planting trees covered by grants.
SLI is paying approximately £38 per ton of carbon (about $53 US dollars per ton). Since the global carbon market is expected to boom to $22T by 2050, it’s safe to say that SLI sees potential for growth and profits. The project is expected to offset 195,630 tons of carbon until 2060 – representing 73% of the company’s carbon output.
In addition to this land purchase, SLI installed a major Photo Voltaic (PV) solar panel scheme on one of its assets. The panels are expected to save the equivalent of 229 tons of carbon in the first year. SLI is also looking to roll out additional solar panel installations across its portfolio.
With environmental, social, and governance (ESG) issues at the forefront of SLI’s mind, Jason Baggaley – SLI’s Manager – has recently sold several older assets, utilizing funds to invest within more sustainable properties.
Reducing carbon emission continues to be at the top of consumer, company, and government agendas. SLI’s forward-thinking initiatives should present a lucrative opportunity for years to come. If more commercial real estate companies follow suit, carbon emissions will drop, revenues will increase, and the environment will improve.
