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Green Buildings: A Financial and Policy Blueprint for Emerging Markets

"Emerging evidence indicates that green buildings are a higher-value, lower-risk asset than standard structures."

Green buildings play a pivotal role in spurring low-carbon economic growth and securing a transition to clean energy as an increasing number of companies and governments aim to be carbon neutral by 2050. During the next decade, green buildings represent a sig... view more

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Executive Summary: Green buildings play a pivotal role in spurring low-carbon economic growth and securing a transition to clean energy as an increasing number of companies and governments aim to be carbon neutral by 2050. 

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Introduction: Understanding the Market for Green Buildings estimates the size of the current market for green buildings and its potential in emerging markets. It reviews the investment opportunities by region and building type, and considers the business case for green buildings for investors, developers, and governments. 

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The Business Case for Green Buildings: Investing in green buildings—whether single-family homes, apartment complexes, office buildings, or industrial setups—makes good business sense for a wide variety of stakeholders.  

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Financing Green Buildings: Mobilizing institutional investors is essential to accelerate the uptake of green building practices. Institutional investors participating in the green real estate market will help inject liquidity and enable primary lenders to free up capital to develop new green lending products. 

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Policy and Regulatory Building Blocks: The government’s role is critical to create an enabling environment for developers to build green and, thus, create a robust pipeline of green assets for financiers to finance, while creating conditions for the growth of green finance practices in the financial sector.

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Lessons learned and Next Steps: Policymakers should set minimum standards with compulsory codes and encourage voluntary certification to spur private sector ambition and innovation. Policymakers and regulators can design policies that consider industry-specific factors to induce behavioral change. Policies need not have fiscal impacts. 

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Conclusion and Recommendations: The future of building construction is green. It must be if we are to reach global climate goals and restrict global warming temperatures to under 1.5°C from pre-industrial levels. Green buildings can substantially reduce the carbon emissions that come from heating and cooling spaces and powering multiple appliances and devices.