“This is one of the biggest things to happen to real estate since the invention of the internet.”
That is Brendan Wallace’s reasoning behind the launch this week of Fifth Wall’s $200m (£153m) Carbon Impact Fund.
Speaking to EG, Fifth Wall’s co-founder and managing partner warns that 2020 will be the year everyone realises that, above all else, climate change is “a real estate problem” as he urges the sector to prepare for a “pitchfork moment”.
He adds that as the general public, financial markets and regulators become increasingly focused on climate change, real estate – as the single biggest culprit – no longer has a choice when it comes to addressing its carbon footprint. Those who don’t change will not only be hit with huge financial penalties but will have to face the wrath of the world.
“The industry needs to do something,” says Wallace. “People will be looking at you and asking, ‘what are you doing?’ We don’t believe the real estate sector has a good answer to that. But when people realise how culpable the industry is, they will be angry, and they will want action.”
That, he says, is why California-based venture capital firm Fifth Wall has launched the Carbon Impact Fund.
Led by venture partner Tyson Woeste, it will offer real estate companies the opportunity to invest in sustainable technology.
“There is often a focus on transportation and plastics when we talk about the climate crisis,” says Woeste. “But they are a drop in the bucket compared to real estate. While businesses might not understand that yet, regulators certainly do and huge financial burdens will mean massive consequences for the sector.”
The Carbon Impact Fund will operate in the same way as Fifth Wall’s previous two technology funds and will be built using investment from the largest real estate companies in the world. It will be broken down into four categories: decarbonisation; climate resilience – which will focus on technologies that manage and mitigate risk to prepare for future heat, water and fire stress; circular economy – to ensure materials are better re-used within the sector; and general tracking and reporting – which will help the sector better understand the damage they are causing through tracking assets and portfolios.
Wallace argues that what the industry has been doing thus far to tackle climate change has been done on an “amateurish scale” and warns that the current state of the world is all the evidence the sector should need that the time to change is now.
“This is not just about saving money anymore,” he says. “It is imperative that the entire real estate sector accepts responsibility for being the single biggest contributor to the climate change crisis. “This is one of the most important fights of our generation. Australia is on fire, Brazil was on fire, and people are dying. If this is not your number one priority as a real estate owner, you have got your priorities wrong.”
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