How to Set a Science Based Net Zero Target for a Multi Asset Portfolio

The methodology behind a science based net zero target was designed with a single relatively stable organisation in mind not a portfolio of a hundred and fifty buildings spanning offices logistics and retail acquired at different times disposed of at others each with a different baseline and a different realistic decarbonisation curve. That mismatch is exactly why so many real estate portfolios struggle to set a target that holds together once someone actually tries to apply it consistently across every asset. Getting this right means understanding both what the standard genuinely requires and where a multi asset portfolio's own structure creates problems the standard never fully anticipated.

This guide sets out the two targets a genuine science based commitment actually requires how to choose an approach that works across a mixed portfolio and the specific challenges scale and diversity add that a single building never faces.

The two targets a science based commitment actually requires

A genuine science based commitment is not a single target. It requires a near term target typically covering five to ten years and setting out a clear reduction trajectory aligned with limiting warming to 1.5 degrees alongside a long term net zero target generally requiring around a ninety percent absolute reduction across Scopes 1 2 and 3 by 2050 at the latest with the small residual neutralised through permanent removals rather than reduction alone. Understanding this two tier structure matters because a portfolio that only sets a distant net zero date without a properly calibrated near term milestone has not actually set a credible target under current standards regardless of how ambitious the headline commitment sounds.

Choosing an approach that fits a mixed asset portfolio

Real estate portfolios generally rely on one specific methodology for calculating their reduction trajectory though understanding why matters as much as knowing which one to pick.

Absolute Contraction the approach most real estate portfolios use

The Absolute Contraction Approach applies a required annual reduction rate to a portfolio's total emissions historically anchored around a 4.2% floor derived from IPCC 1.5 degree scenarios refined as of the most recent update to adjust based on the time remaining between a chosen base year and net zero. This approach suits real estate well because it works at the total portfolio level without requiring a sector specific intensity benchmark that most diversified property portfolios do not have a clean equivalent for.

Why a single intensity metric rarely works across asset types

A portfolio spanning offices logistics and retail faces a genuine methodological problem an office only portfolio does not since energy intensity per square metre varies enormously and legitimately between a data heavy logistics facility and a standard office floor. Applying one blended intensity target across genuinely different asset types risks setting a target that is trivially easy for one asset class and effectively unachievable for another which is why absolute reduction tracked consistently through a governed carbon calculation process tends to be the more defensible foundation for a diversified portfolio than a single intensity figure applied uniformly.

The specific challenges a multi asset portfolio adds

Beyond choosing the right methodology scale and diversity introduce practical problems that a single building simply does not encounter.

A boundary that keeps changing through acquisition and disposal

A portfolio's reporting boundary shifts constantly as assets are bought and sold and a target set against one boundary can become genuinely meaningless a few years later if acquisitions and disposals are not documented and accounted for consistently. This is precisely why properly governed baseline emissions matter so much for a growing or actively traded portfolio specifically since the target only remains comparable if boundary treatment is handled the same way year after year.

Different baseline years hiding inside the same portfolio

An asset acquired three years after a portfolio's official baseline year effectively has its own separate starting point with no historical data reaching back to the original baseline at all. A target that assumes uniform historical data across every asset when a meaningful share of the portfolio was acquired after the baseline was set is building on an assumption that does not actually hold.

Asset types that decarbonise at genuinely different speeds

A logistics asset with a straightforward roof and a large surface area for solar retrofit decarbonises along a very different curve than a heritage listed office building with limited retrofit options. A single portfolio wide trajectory applied without acknowledging this variation risks setting an aggregate target that some assets will exceed easily while others cannot realistically approach information that is only visible through proper carbon hotspot analysis at the individual asset level.

Structuring the target so it survives portfolio change

A target that survives acquisitions disposals and asset type diversity needs a few specific structural features. Boundary treatment for new acquisitions and disposals should be documented explicitly and applied consistently rather than handled differently each time a transaction happens. Asset level trajectories sequenced through a genuine net zero pathway should roll up into the portfolio wide target rather than the portfolio target being set first and asset plans reverse engineered from it afterward. And the underlying data whichever asset type or acquisition date it comes from needs to sit inside the same calculation lineage so a target set five years ago can still be measured against consistently today. Understanding how a governed data process works end to end is what makes a target genuinely durable rather than accurate only in the year it was first set.

A test for your own target as currently set

Take your portfolio's current net zero target and ask three questions. If you acquired a new asset tomorrow is there a clear documented process for incorporating it into the existing target and baseline or would that require a fresh decision made under pressure. Does your target account for the genuine difference in decarbonisation potential between your asset types or does it apply a single trajectory uniformly regardless of what each building can realistically achieve. And could you demonstrate asset by asset exactly how your portfolio wide target breaks down into individual building plans. If any answer gives you pause the target may be technically set but it is not yet structured to survive contact with how your portfolio actually changes over time.

Teams setting or revisiting a target often find it useful to review practical target setting guides and sector specific sustainability insights and to compare approaches with peers through a partner programme where relevant. If you are weighing up tools to support this reviewing pricing and learning more about the team behind the platform is a sensible next step before finalising your target.