Marianne Langelaar: Decisive investors accelerate sustainable new construction

March 27, 2025

_{This interview was originally written in Dutch. This is an English translation.}

Marianne Langelaar, Development Manager at Achmea Real Estate, won the MRE thesis prize from the Amsterdam School of Real Estate last autumn. Her research shows that investment managers can do more to reduce CO₂ emissions in the construction industry more quickly. ‘The need for change is too often placed with another party in the chain.’

By Daan Nijssen

Congratulations! You graduated with honours and won the thesis prize.

‘Thank you. It was hard work alongside a full-time job, but it was definitely worth it. I am very happy that I was able to do this Master's degree.’

Why does your research focus on the embodied carbon footprint of new-build homes in particular?

'There is a major housing shortage in the Netherlands. The government is aiming for 800,000 new homes by 2030. If we continue with the current construction methods, the CO₂ budget for construction will be exhausted by 2026, at which point global warming will have reached 1.5 degrees. This means the zero-carbon goal set in Paris will not be achieved. Material-related CO₂ emissions, embodied carbon, account for approximately 50% of the total CO₂ emissions during the life cycle of a home. The largest peak of these emissions occurs during construction, before the institutional investor receives the key to the home and becomes the owner. These emissions do not currently appear in investors' sustainability reports and fall under scope 3 emissions. As clients of new-build homes, institutional investors can encourage behavioural change in the property chain. This offers opportunities to significantly reduce CO₂ emissions in the property sector in the short term.

What are the biggest obstacles to reducing the embodied carbon footprint of new homes?

'On both the supply and demand sides of investor-rented housing, the biggest obstacles relate to the financial feasibility and attractiveness of shaping the transition. Externalities, such as environmental damage from climate change, are not priced in. The current, non-sustainable economic system is maintained by a lack of (financial) incentives for actors in the property chain. Technical challenges and a lack of clarity and measurability are also mentioned as concerns by the respondents in my research, but play a lesser role.

In many cases, the need for change is placed on another party in the chain and there is a lack of urgency. My research focuses on what each party in the chain can contribute to break this vicious circle, so that more new homes are built with a low embodied carbon footprint.

How can institutional investors contribute to this?

‘When managing investors’ property portfolios, the focus is currently on emissions during occupation, the operational CO₂ emissions, while the subject of embodied carbon is still in its infancy. Whereas a direct link can be made between lower housing costs and a reduction in operational carbon, the reduction of embodied carbon requires a long-term vision from investment managers and institutional investors. Consider, for example, the desired reputation of a fund and the risk of inaction for the total investment portfolio in the long term. The guiding principle is not only the short-term earnings model, but also the importance of an orderly climate transition.

Institutional investors such as pension funds and insurers can cause a domino effect through investment managers by stimulating demand for new homes with a low embodied carbon footprint. Although new-build homes form a small part of the total investment portfolio, targeted investment in this area can have a major impact on the property chain. Putting the subject higher on the agenda, with gradually increasing ambition, keeps costs down and offers investment managers scope for short-term measures to guide the transition. In the longer term, investors are expected to benefit from this.

Your research focused specifically on the role of the investment manager as a buyer of real estate on behalf of an institutional investor. How can investment managers help reduce the embodied carbon footprint?

Investment managers connect the supply and demand sides of newly built rental housing. Investment managers can be expected to form a vision of future-proof real estate with a low footprint during all phases of a home's life and to advise their institutional clients on this. The investment manager can contribute by utilising their role in the real estate chain to focus on a broad package of short-term measures, so that the ambition can be gradually increased. This requires change across the board in the areas of technology, behaviour, culture, customs and institutions.

In the short term, this means building more with circular and renewable materials (wood and biobased materials) and adjusting the Schedule of Requirements so that developers and sellers make different choices in project and area developments. Haste is of the essence, because material choices are made at the start of the development process and ambitions regarding embodied carbon are determined at the urban planning level. With the current development lead times, the effect of the changed demand can only be seen after years.

It is also important that more knowledge is built up, that knowledge is shared widely and that discussions are held about collaborations within the chain. A steeper learning curve can be created by bringing together intrinsically motivated people and embedding measures in policy and portfolio plans. This also eliminates non-commitment. The advice is to constantly measure projects so that a widely supported, reliable measuring tool (that also includes operational carbon) can be developed as quickly as possible.

What can be expected from CO₂ pricing?

'Legislation and financial incentives, such as CO₂ pricing, can ensure a level playing field. Many respondents in my study see this as a breakthrough in the transition. Solutions to reduce the embodied carbon footprint of new construction are often mentioned in the same breath as the distribution issue: the dilemma of who pays in the chain. However, the introduction of CO₂ pricing is only feasible if the market can absorb this without major economic disruptions. Developments are currently not progressing fast enough to achieve the agreed reduction of CO₂ emissions by 55% compared to 1990.

The challenge lies with all parties in the property chain to jointly contribute to climate mitigation with a healthy business model. This will prevent higher costs due to climate adaptation, including in their own property portfolios. Influence and cooperation at all levels within the chain, including investors, is necessary to advance the transition so that the tipping point in the transition is reached. Companies that are already preparing for CO₂ pricing are ensuring that they are future-proof and that the transition will go smoothly when it is actually introduced.

The advice is therefore to build up ambition step by step, also in collaboration with other investment managers, seeking a delicate balance together to ensure future-proof real estate portfolios for clients.'