The Role of Investors in Measuring and Achieving Lower Embodied Carbon in Real Estate and Infrastructure
The resources outlines why embodied carbon is a financially material risk and provides practical pathways for integrating carbon considerations into investment decisions, stewardship activities and financing mechanisms. It presents a maturity framework for the finance sector, moving from measurement and benchmarking to target setting and emissions reduction, helping investors align portfolios with net-zero commitments and a 1.5°C climate pathway.
Project Background
The project built on global guidance principles and recommendations, including the Measuring and Managing Whole Life Carbon in Real Estate Portfolios paper and the supplementary Net Zero Investment Framework (NZIF) guidance.
Rather than just outlining high-level principles, the project focused on translation: distilling expertise from the Australian property, infrastructure, and construction sectors into a clear, finance-focused roadmap. It aims to equip investors with practical steps to measure, manage, and reduce embodied carbon across equity and debt investments within the local market.
About the Guidance
The Role of Investors in Measuring and Achieving Lower Embodied Carbon in Real Estate and Infrastructure focuses on addressing embodied carbon across three core investor types:
- Investors in Private (Unlisted) Equity, who can directly shape project outcomes by influencing design briefs, selecting low-carbon materials, and integrating carbon performance into ESG frameworks.
- Investors in Public (Listed) Equity, where systems stewardship and collaborative corporate engagement (such as Climate Action 100+) act as the primary levers for influencing value chains and high-emitting companies.
- Debt Investors, who can drive reductions by structuring green bonds and sustainability-linked loans that tie interest rate margins or review events to explicit embodied-carbon targets.
- The financial materiality of embodied carbon as a significant Scope 3 exposure that impacts asset valuations, portfolio transition risk, and long term 1.5°C alignment.
- The implications of mandatory climate-related financial disclosures (AASB S2) and how frameworks like the Net Zero Investment Framework (NZIF) and SBTi inform target-setting.
- An “Embodied Carbon Maturity” pathway, which guides investors to first measure and benchmark, then set targets, and finally implement reduction strategies.
- Approaches to measurement using industry-standard tools, such as the PCAF standard aligned with EN15978, the NABERS Embodied Carbon Rating Tool, and the IS Materials Calculator.
- Strategic benefits for investors, including differentiating assets to capture “green premiums,” future-proofing against regulatory costs, and mitigating the risk of standard assets.
Event Recording and Slides
Event Recording
Event Slides
Acknowledgements
The authors would like to thank all MECLA members for their contributions and support throughout the development of this guidance. Special acknowledgement is extended to the MECLA Subgroup on Finance (part of Working Group 1: Demand) and the IGCC Real Assets Sub-Working Group for their valuable feedback and contributions during the preparation of the guidance.
The authors also gratefully acknowledge the support of the Investor Group on Climate Change (IGCC) for their support in developing this work.
Past Related MECLA Resources
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What's Next
Insights from these resources, together with participant feedback and discussion captured during the event, will help inform MECLA’s consideration of future priorities and next steps, including potential follow-on initiatives and Working Group activities in this area.
If you are interested in contributing to this work, further information about MECLA membership and onboarding is available via the website.
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