Putting a Price on Carbon: Redevco’s Path to Sustainable Value Creation

By Martijn Horsman, Sustainable Development Manager at Redevco

As the world races to meet net zero targets amidst intensifying climate risks, the urgency to act has never been greater. With a third of global carbon emissions linked to the built environment (1), real estate offers one of the most powerful levers for climate action.
 
At Redevco, we’re shaping the future of European urban real estate by embedding sustainability into the core of every project. We believe transformative real estate not only delivers lasting value for investors but also enriches the communities we are part of.
 
As we progress toward our goal of a net zero carbon portfolio by 2040, carbon pricing has become a powerful tool guiding our decisions. As detailed in our latest Responsible Investment Report, we have introduced an internal carbon pricing mechanism for the embodied carbon of a development. By assigning a cost to carbon emissions we can be more deliberate about the design and material choices in our projects, which helps us to significantly reduce the embodied carbon emissions of our developments.
 
Driving better decision making with carbon pricing
Carbon pricing refers to initiatives that put an explicit price on Greenhouse Gas (GHG) emissions, i.e. a price expressed as a value per tonne of carbon dioxide equivalent (tCO₂e) (2). Setting an internal carbon price is one carbon pricing mechanism companies can use to reduce GHG emissions and lower the cost of climate mitigation. It is meant to guide the decision-making process in relation to climate change impacts, risks and opportunities.
 
By assigning a real price to carbon – just as we do with energy – we’re able to build more holistic business cases. While low-carbon or bio-based materials may require greater upfront investment, they are recognised as delivering long-term value by reducing emissions and strengthening the resilience and performance of our assets.
 
Implementing a carbon price
We have established a carbon price of €120/tCO₂, in line with IEA Net Zero Emissions 1.5°C Pathway 2050, as a benchmark. Based on the mandates agreed with our investor clients, we either charge this price as an internal carbon fee to the development project, or we apply it as a ‘shadow price’, to demonstrate the potential future risk of a carbon tax to the investment returns of the project. If we charge the internal carbon fee to the development project, we then invest these funds in nature-based solutions, to neutralise the project’s remaining emissions.
 
This approach encourages our teams and partners to think differently, evaluating materials and design choices through a sustainability lens, and future-proofing assets in line with evolving regulations such as the EU Taxonomy and International Sustainability Standards Board (ISSB). This is especially relevant to our €1 billion pan-European investment strategy. The programme aims to transform and future-proof retail properties across major Western European cities by 2030. Our redevelopment of Elisen Palais in Hamburg demonstrates this decision making in action – we have repurposed materials from the original structure, including steel beams, to reduce the project’s embodied-carbon footprint.
 
Every Redevco project undergoes a Whole Life Carbon Assessment (WLCA), enabling us to track emissions, benchmark performance, and embed impact into each development. As a proud partner of Urban Land Institute’s C Change programme, we align with its principles of life-cycle carbon pricing, consistent application, and data-driven decision-making across the real estate sector.
 
Carbon pricing is more than an accounting exercise. It’s about pioneering positive change – putting climate accountability at the heart of real estate regeneration.
 
Tracking our impact over time
Looking ahead, the influence of our internal carbon price is only set to grow. This year marks the first wave of investment decisions incorporating carbon pricing, with initial projects now entering construction. In 2026, we will complete the first set of projects developed under this model. By 2030, we aim to have 12–15 projects finalised using this framework, providing a robust data set to analyse carbon reductions and measure asset performance across environmental, social, and economic dimensions.
 
Carbon pricing helps us ensure that every building we regenerate goes beyond bricks and mortar – it becomes a catalyst for better living. It’s one of the many ways we advance our mission of driving positive change and creating lasting value for generations to come.
 
We encourage others in the real estate industry to explore carbon pricing for their projects and we look forward to exchanging experiences to build collective knowledge and insights over time.
 
For more insights into our sustainability initiatives, read our full Responsible Investment Report: Redevco Responsible Investment Report 2024

(1) https://www.unep.org/news-and-stories/story/heres-how-buildings-contribute-climate-change-and-what-can-be-done-about-it
 
(2) https://carbonpricingdashboard.worldbank.org/what-carbon-pricing