Executive summary

Decarbonising real estate portfolios depends heavily on the performance of the electricity grids to which assets are connected. Identical assets require different strategies depending on whether their local grid is categorised as slow, typical, or fast. For assets on fast-decarbonising grids, cleaning the energy supply makes a major contribution to reducing emissions. Conversely, for assets on slow or typical grids, the sequencing of decarbonisation actions depends on asset efficiency, current electrification levels, and the intensity of the grid supply. On a cumulative basis, an asset on a slow grid is projected to emit more than twice as much carbon from 2026 to 2040 as one on a fast grid.

Analyzing the building stock

The GRESB Real Estate Assessment provides standardized performance data for 816,448 asset-years across 73 countries and territories. The 2026 dataset covers 135,000 assets and 1.9 billion square meters. Electricity comprises approximately 70% of kWh consumed, with on-site fuel combustion accounting for 25% and district heating and cooling 5%. Electrification rates vary significantly by sector: data centers are 99% electrified, while residential assets are 56% electrified. Between 2022 and 2026, the overall share of on-site fuel in energy use fell from 24.3% to 23.2%, representing a modest increase in electrification.

Projecting grid decarbonization

Using Asset Impact’s dataset of more than 154,000 power plants, grid pathways are forecasted through 2040. The average emissions intensity of grid electricity consumed by GRESB-reporting assets was 326 gCO2e/kWh in 2025. This is projected to fall to 226 gCO2e/kWh by 2040, a decline of 2.4% per year. Grids are classified by their annual rate of emissions intensity change: slow grids (slower than -1.5% per year), typical grids (-1.5 to -4.0% per year), and fast grids (faster than -4.0% per year). Fast grids decarbonise at a median rate of 7.0% per year, while slow grids decarbonise at just 0.6% per year.

Integrated scenarios

Three scenarios explore the interaction between grid decarbonisation and asset performance. The ‘rapid parallel’ scenario assumes a 14% per year improvement rate, delivering a 57% cut in annual emissions by 2030 and a 65% cut by 2040. The ‘sequential project’ scenario, where assets receive step-wise retrofits, reaches a similar annual reduction by 2040 but results in higher cumulative emissions (0.78 GtCO2e) compared to the rapid parallel scenario (0.55 GtCO2e). The ‘slow parallel’ scenario, with a 2% annual improvement, achieves a 53% cut in annual emissions by 2040. Grid progress alone is expected to cut annual emissions from the GRESB stock by about 22% by 2040, irrespective of asset-level improvements.

Implications for investors and managers

Cumulative emissions are identified as the most effective measure for comparing decarbonisation strategies. On fast grids, grid decarbonisation alone can reduce 2040 emissions by 55%, compared to 24% on typical grids and only 10% on slow grids. On a cumulative basis, an asset on a slow grid emits 0.77 tCO2e/m2 from 2026–2040 with no action, against 0.36 tCO2e/m2 on a fast grid. The gap between slow and rapid parallel scenarios represents 287 MtCO2e, equivalent to approximately 3.4 years of the portfolio’s current emissions.

Investors are advised to classify electricity markets by emissions intensity and trajectory, and assets by their current efficiency and electrification levels. Recommended actions for managers include: ‘electrify, then cut demand’ for fuel-burning assets on slow or typical grids (33% of floor area); ‘electrify first’ for fuel-burning assets on fast grids (11%); and ‘cut demand, generate on site’ for mostly electric assets on slow or typical grids (41%). For assets on slow grids, the report stresses that acting early provides more significant cumulative savings than late-stage efficiency gains.

Appendices

The technical analysis assumes a conservative heat pump coefficient of performance (COP) of 2.5 and an 85% boiler efficiency. Electrification is considered beneficial from an emissions perspective when the grid emission factor falls below 537 gCO2e/kWh. Approximately 95% of fuel-burning floor area is currently connected to grids below this threshold. On-site generation targets for solar photovoltaic arrays are set at 50% of electricity use for high-roof-area assets like warehouses and 25% for others like offices and data centers.