The CRREM Pathways are based on a globally standardized methodology that starts from a carbon budget aligned with a 1.5°C scenario. This budget is allocated to real estate globally, then further allocated to property types and regions, while accounting for local electricity grids and climate conditions. This helps investors, asset managers, and owners identify and manage transition risks by comparing current and projected emissions against forward-looking, science-based targets.
The methodology begins by allocating global or regional carbon budgets derived from IPCC climate scenarios (e.g., for limiting global warming to 1.5°C or 2°C). These budgets represent the maximum allowable greenhouse gas emissions to remain within specific temperature thresholds.
CRREM allocates a portion of the global carbon budget to the real estate sector. This allocation is further divided by country, building type (e.g., residential, office, retail), and climate zone using parameters such as:
The result of the allocation is a carbon intensity pathway, expressed as:
These pathways decline annually to reflect the necessary reduction in emissions to stay within the allocated carbon budget. They act as benchmarks for evaluating the performance of individual assets or portfolios.
In addition to carbon intensity, the methodology also defines energy intensity pathways:
CRREM accounts for changes in national or regional emission factors (eg. grid carbon intensity) over time. As electricity grids decarbonize, buildings using electricity will emit less CO₂, which is incorporated into the future projections.
The methodology allows for dynamic modelling and can be adapted to different policy and market scenarios. It uses time-series data to simulate the trajectory of building emissions and assess compliance under changing conditions.
The CRREM Pathway Methodology underpins tools and decision frameworks that support climate transition risk assessment, retrofit planning, and ESG reporting in the real estate sector.
