Green Buildings : A Finance and Policy Blueprint for Emerging Markets

Abstract

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. As an impact investor focused on pursuing positive social and environmental outcomes through profitable investments, IFC views the green buildings sector as a multitrillion-dollar business opportunity and an avenue to reduce energy-related emissions. The green buildings sector represents a 24.7 trillion U.S. Dollars investment opportunity by 2030 across all emerging market cities with a population of more than half a million people. Most of this investment potential—17.8 trillion U.S. Dollars—lies in East Asia Pacific and South Asia, where more than half of the world’s urban population will live in 2030. The investment opportunity in residential construction, estimated at 15.7 trillion U.S. Dollars, represents 60 percent of the market. There is a strong business case for growing the green buildings market. Emerging evidence indicates that green buildings, or buildings that use energy and water more efficiently, are a higher-value, lower-risk asset than standard structures. While building green could range from savings of 0.5 percent to 12 percent in additional costs, green buildings can decrease operational costs by up to 37 percent, achieve higher sale premiums of up to 31 percent and faster sale times, have up to 23 percent higher occupancy rates, and have higher rental income of up to 8 percent.