Built structures with walls and a roof (commonly known as buildings) are at the heart of human activities. We spend 90 percent of our lives in buildings as they provide space for sleeping, working, learning, socialising, cooking, and eating. From a philanthropic perspective, buildings are more than just physical structures; they are critical intervention areas where governance, the economy, industry, and community well-being converge.

Yet, buildings also reflect unsustainable consumption patterns. The buildings sector consumes more resources than any other sector, accounting for nearly one-quarter of global greenhouse gas emissions. These emissions mainly come from three sources: the electricity generated off-site used to heat, cool and light buildings (often fossil-fuel-based), the burning of fossil fuels on-site for heating and cooking, and the vast amounts of resources required to extract raw materials and turn them into construction materials like steel and cement.

Amidst growing philanthropic engagement in the fight against climate change, little attention is paid to the resource use of buildings. A recent Alliance survey amongst philanthropy professionals showed that less than a quarter of respondents were taking steps to make their office spaces more climate-friendly. Beyond their own operations, foundations and philanthropists are currently dedicating only a small portion of climate fundings to sustainable buildings. A recent survey of funders’ activities [LW1] revealed that in 2023, US$ 110 million were spent on the built environment transformation. In comparison, global climate funding reached over US$ 7.8 billion already in 2022.

Philanthropy should invest more resources into targeted funding strategies that curb the resource use of buildings. Doing so, would be a unique opportunity for simultaneously addressing the climate crisis and social equity issues.

The buildings sector’s paradox: growing demand, shrinking carbon budgets

The dilemma facing the buildings sector is clear: as the global population grows and people’s aspirations for larger, (and often more luxurious) living spaces increase, so does the demand for new buildings and the resources to power and construct them. This intensifies the simple yet immense challenge: buildings must accommodate diverse human activities while remaining within planetary boundaries and adhering to the remaining carbon budget. While the scale of this challenge is vast, it also presents a significant opportunity for philanthropy to make a transformative impact.

Progress has been made in improving building efficiency, evidenced by a 22 percent reduction in energy intensity since 2000. As a result, less energy has to go into buildings to achieve the same functionality. This has been driven not least by the support of various philanthropic actors. However important, these gains have not resulted in absolute reductions in emissions. Instead, the growing demand for buildings continues to drive up overall emissions. This rebound effect is particularly stark in Europe where a significant rise in living space per capita means that the sector is missing a great opportunity: While efficiency measures and renewables have decreased emissions by 645 million tonnes of CO₂ between 1990 and 2018, in the same time period, the rise of living space per person added 306 million tonnes of CO₂ to the atmosphere.

Shifting focus toward altering consumption behaviours and reducing overall resource demand is thus a critical opportunity for philanthropies to drive change in the sector. Demand-side strategies not only ease the pressure on the carbon budget but also help reconfigure the entire system of resource use within the buildings sector. Despite growing recognition, these interventions have yet to be widely implemented in the sector. Philanthropy can fill this gap.

How philanthropy can shape the future of buildings

The building sector as it exists today is fragmented as siloes between planners, builders, financiers and users of buildings. This creates challenges for concentrated collaborations that move the needle. Moreover, priorities and opportunities in the building sector are local by nature, meaning that one funding strategy cannot easily be applied elsewhere. To tackle these challenges, philanthropy should use its characteristic freedom to tailor interventions to specific contexts and convene multiple stakeholders.

Indeed, philanthropy has strong ties to the building sector already. Real estate is valued at over US$ 300 trillion globally and has been key driver of creating the wealth that enables philanthropy. With two thirds of global wealth connected to the real estate sector, philanthropy is deeply entrenched and well positioned to even go beyond grant-making, leveraging its wider resources and influence.

Targeting the building sector’s resource demand offers a unique opportunity for philanthropy to address both climate impact and social justice: reducing over-consumption of resources allows to lower emissions while ensuring that resources are distributed more equitably, enabling underserved communities to meet their housing needs. This dual focus on climate and equity aligns closely with the existing funding strategies of many funders who have traditionally focused on one or the other.

There are already inspiring examples of philanthropy-supported efforts making headway in the buildings sector, recognising that the transformation must go beyond incremental efficiency gains. Below are a few notable initiatives:

• Through the network ‘Built by Nature’, Laudes Foundation is promoting sustainable bio-based building materials, aiming to decouple the construction industry from resource-intensive, carbon-heavy materials like concrete and steel.
• Through the support of the Toni Piëch Foundation, the think tank Bauhaus Earth crafted ‘Building for the Future’. The multi-series knowledge collection engages the public, industry professionals and changemakers with clear facts, figures, and actionable strategies for a sustainable building sector, making complex concepts accessible to a broad audience.
• Funded by Realdania and VILLUM FONDEN, ‘Housing construction from 4 to 1 planet’ aims to reduce carbon emissions from new homes by 75 percent. Through explorative exhibitions, best practices, and extensive industry engagement, the initiative reshapes the housing construction sector, promoting sustainable methods that align with the planet’s ecological capacity.
• Through its work on circular economy principles, the Ellen MacArthur Foundation is pushing the buildings sector to adopt resource-efficient models that minimise waste and promote sustainable material cycles.

There is no way around the building sector in the fight against climate change

The way societies design, construct, and use buildings is a critical determinant in whether or not we are able to keep the Earth system within safe planetary boundaries. Transforming the buildings sector requires nothing short of systems change, integrating both supply- and demand-side solutions.

Philanthropic actors that want to join in, will need to foster a widespread rethinking of how we approach resource use and consumption in the building sector. The good news is that effective solutions abound. But they do need to be lifted out of the discussion fora of expert communities into mainstream building practices. Doing so at speed and scale is a task at which philanthropy is known to excel. 

Louis Wilß is a Senior Analyst at Active Philanthropy, where he analyses trends, identifies challenges, and explores emerging issues at the intersection of climate and philanthropy. Dr. Johannes Lundershausen leads the Knowledge and Advisory team at Active Philanthropy. He provides Active Philanthropy’s scientific focus on climate change issues.