GUEST COLUMN: In recent weeks, Canada, the U.S. and Europe have set ambitious new targets to reduce carbon emissions. The Canadian federal budget pledged at least $17 billion to help transform our economy.
Meanwhile, Mark Carney, Canada’s United Nations Special Envoy on Climate Action and Finance, has organized a U.N. effort uniting over 160 major investors, with over $70 trillion in assets, to fund net-zero initiatives.
Canada should lead the creation of the coming low-carbon world economy, transforming our energy sector, unleashing climatetech entrepreneurs’ full potential and capitalizing on this momentum to finance and deploy carbon-reducing technologies across a wide spectrum of technology types and in key industrial sectors where we have already built a global competitive advantage.
We have now reached the tipping point of capital pursuing a decarbonized future, leading to a “Greenrush” of impact investment dollars. Investors large and small are scrambling to support innovations that offer the twin prize of reducing carbon emissions and raising financial returns.
Investing in decarbonizing technologies holds promise, but the field is getting crowded. Private and public-sector funding dollars are mostly taking the path of least resistance, flowing toward industries already well saturated with technology.
Canadian investors should seek to make an impact where most others are not – in the real estate sector.
GHG emissions caused by buildings and construction
Buildings and construction account for 39 per cent of global carbon output, with operational emissions from the heating, cooling and lighting of buildings responsible for 28 per cent of that total, according to the United Nations.
Real estate represents the largest asset class on the planet. However, despite progress in recent years, the real estate industry has barely scratched the surface of what’s possible to reduce its carbon impact.
The road to net-zero runs through the built environment. And the vehicle to get us there is proptech. Property technologies – the application of innovative devices and software to bring better efficiency and experiences to those who build, manage and occupy buildings – are delivering prosperity, while protecting the planet.
Proptech companies in North America alone attracted more than $100 billion in venture capital from 2017 to 2020. The intersection of proptech and climatetech represents a unique opportunity to tap into a massive market with propitious timing as the demand moves from the early adopters to the early majority.
The evidence of this growth is already visible, with proptech venture funding on track for its best year ever in 2021 according to data from KBW.
Canada in position to be proptech leader
Now one of the largest segments of the global venture industry, Proptech VCs are backing everything from smart building battery systems to sophisticated energy distribution software and high-efficiency HVAC systems, leveraging advanced materials and machine learning.
Canada is well positioned to become a proptech powerhouse with the global prominence of our real estate sector, tech talent and growing pool of venture capital. To realize on this potential, Canada must ensure its major government investments, including those in the most recent federal budget, fund innovation where it can make a sizeable impact and where our nation has strength and credibility.
This needs to include funding and tools for entrepreneurs and venture capital investors to help scale up our companies and export their proptech/climatetech solutions to global markets.
The question is clear: Do Canadians want to stake our claim in technology to lower the carbon output of buildings’ construction and operations or miss the chance to create jobs, wealth and exciting new ventures?
Depending on how we respond, Canada can fuel and profit from the global drive to realize the decarbonized economy of the future or make “me-too” investments, be technology takers and fall behind the rest of the world.
David Harris Kolada is a Managing Partner at Greensoil PropTech Ventures of Toronto, investing out of a new $100 million venture fund targeted at PropTech firms in Canada, the U.S., Europe and Israel. Canada’s Public Sector Pension Investment Board is an anchor investor.