Retrofits are business critical. Real estate that fails to meet the evolving demands of codes and regulations related to carbon emissions or changing investor and tenant expectations being stranded or significantly devalued.
Fortunately, with access to more affordable low-carbon technologies, additional financing options and the availability of critical information that can support the business case, the path to decarbonization has never been clearer.
The Policy Priority
Over 500,000 commercial and institutional buildings exist in Canada today, and most will still be standing in 2050 – when Canada’s international climate commitments come due.
The built environment has decarbonization targets outlined in Canada’s 2030 Emissions Reduction Plan and Net-Zero targets.
Meeting these targets requires a retrofit rate of three to five percent annually – yet the current rate is less than one percent
according to Natural Resources Canada.
Other key policy drivers include the Canada Green Buildings Strategy (CGBS) which aims to accelerate retrofits and promote low-carbon materials, and new amendments to the Energy Efficiency Act & National Code updates that raise efficiency standards for HVAC, lighting, and insulation, aligning them with the National Energy Code for Buildings (NECB) and LEED ® benchmarks, to enforce higher minimum performance. In addition, many jurisdictions are integrating retrofit requirements into provincial building codes, ensuring that each renovation triggers a minimum energy performance upgrade.
The Role of ESG commitments
ESG (Environmental, Social, Governance) commitments also help accelerate retrofits and building decarbonization by influencing capital flows, driving regulatory transparency, and reshaping market dynamics.
ESG-aware investors demand low-carbon, energy-efficient buildings. Real Estate Investment Trusts (REITs), developers, and lenders are integrating decarbonization strategies – including retrofits – into their investment criteria to meet these ESG expectations.
Investors, owners, and tenants anticipate the growth of mandatory ESG and climate disclosure standards, as well as regional performance requirements. In fact, the Canadian Sustainability Standards Board (CSSB), in alignment with the ISSB, is establishing requirements for public companies—including real estate entities—to report GHG emissions and climate risks, amplifying the incentive to retrofit building portfolios.
Certification’s role
Retrofits can be complex and costly. Certification provides independent, third-party verification that carbon reduction goals are achieved – not just promised. This builds trust among owners, investors, and tenants who increasingly demand measurable climate action.
Certification can also streamline regulatory and ESG reporting, providing credible, auditable data on emissions reductions. Certifications like Zero Carbon Building (ZCB) Standards and LEED v5 offer recognized methodologies for tracking and reporting carbon performance, and there are many other green building programs to choose from.
Making the case for retrofits
Smart sustainability investments help buildings perform better, delivering lower operating costs and increased tenant satisfaction and asset value. Making a strong a business case for retrofits means addressing capital and financing gaps, while balancing the current and potential value of the asset.
When Canada’s building sector prioritizes building retrofits, aligning with ESG goals, regulatory trends, and tenant expectations, we will unlock these benefits:
- Accelerated retrofit rates: Clear ROI models and financing tools unlock stalled projects and scale retrofits to meet Canada’s climate targets.
- Investments de-risking: Linking retrofits to asset value, ESG performance, and compliance reduces perceived risk for lenders and investors.
- Unlock co-benefits: Improved tenant health, resilience, and operational savings enhance competitiveness and market appeal.
Retrofits Now and the Purpose Retrofit Accelerator is working toward stronger, more standardized business cases supported by robust data, to transform retrofits from compliance-driven projects into strategic investments that accelerate decarbonization.