Meeting Europe’s 2030 climate targets will take more than EUR 3.5 trillion of investment to decarbonise our building stock, with an investment gap of EUR 2.75 trillion – the largest climate investment gap of any sector.

The pace and scale of collaboration and innovation across the built environment and finance sectors needs to exponentially increase to close the gap. Many investors are still grappling with energy performance and only just starting to wake up to the carbon bomb of embodied carbon in building materials. For the sector to meet such ambitious targets it needs frameworks relating to carbon budgets and to benchmark embodied carbon in the built environment. 

Laudes Foundation is supporting partners working to overcome the barriers to investment and shift the flow of capital into upgrading the built environment.

Together our partners are mobilising investor leadership to decarbonise buildings and advocating for strong accountability mechanisms across Europe and at EU level. They’re aligning the metrics, pathways and targets used by investors and industry, creating a shared route to decarbonisation and accelerating action.

This group of partners is working in four areas aimed at shifting investment flows to decarbonise the total greenhouse gas (GHG) impact of buildings:

In October 2021, Laudes Foundation launched Built by Nature, a network and grantmaking fund dedicated to accelerating the timber building transformation in Europe.

Built by Nature’s vision is for a built environment that works in unison with nature. It seeks to radically reduce the embodied carbon in buildings by demonstrating that they can be made of low-carbon timber and bio-based materials, not carbon-heavy steel and cement. Built by Nature also seeks to safely store carbon in our buildings for generations and sequester carbon by championing forest stewardship and regeneration.

Its partners are pioneering critical solutions to the challenges of the timber building transformation, and include Bauhaus der Erder; the Centre for Natural Material Innovation at Cambridge University; the Carbon Neutral Cities Alliance (CNCA); Cities4Forests; and Climate-KIC.

Built by Nature connects key actors across the built environment and forest communities to spark city-scale projects and amplify stories of ground-breaking timber projects and solutions. In close collaboration with its major partners and frontrunner companies, Built by Nature aims to change perceptions around timber construction and reshape the built environment. Leading frontrunners who have joined Built by Nature to date range from giants of industry to start-ups, including: Arup; ASN Bank; Bennetts Associates; BLOC; BoKlok; Buro Happold; CREE Buildings; Ergodomus Timber Engineering; Gallagher; Guallart Architects; Kiss House; Lendlease; Lingotto; Ramboll; Redevco; Timber Finance Initiative; sfääri; Waugh Thistleton Architects; and 011h. By engaging frontrunners with a track record of innovation in, and commitment to, the timber building transformation, Built by Nature is demonstrating to the private sector the solutions it can implement to accelerate change at scale.

Built by Nature’s Accelerator Fund supports solutions that scale timber building and raise the bar on the positive climate impact of building with timber from sustainably sourced forests, providing grants of between EUR 50,000-250,000. Funded projects could include the design of new business models and the collection of business case data; innovations and frameworks to increase the climate impact of timber buildings; regulatory innovations; or feasibility tests for large city-scale projects that start to shift the norm for the sector.

At launch, the fund announced its first three projects. Click on the links below to watch a video introducing each project:

Two years of Covid-19, and an energy crisis that has caused household costs to rise exponentially, have increased awareness of the social impacts of buildings.

The social impact of decarbonising the built environment is also becoming better understood. This was reflected at COP26 in October 2021, which explicitly included the term ‘just transition’ in the resulting Glasgow Climate Pact for the first time. Unless we engage everyone with a stake in buildings in the transition to net zero, including workers and residents, whole communities could be left behind.  

As part of its strategy to enable a just transition in the built environment, Laudes Foundation commissioned Ramboll to research social equity in decarbonisation. Its report ‘Social Equity in the Decarbonisation of the European Built Environment’ concluded that a just transition is vital to avoid a backlash from groups negatively impacted by potential job losses, renovation costs and energy prices. To ensure a just transition, we must actively focus on the rights and wellbeing of everyone involved in and affected by the built environment.  

With our support, the Institute for Human Rights in Business (IHRB) developed a framework to guide decision making throughout the built environment lifecycle, manage risks to human rights and maximise social outcomes. With projects currently being piloted in Bergen, Norway, and Utrecht, Netherlands, this project has started a closer dialogue between social and environmental organisations within the sector. 

Our future support to IHRB will enable a project to align climate and social outcomes in the built environment further, and help establish a global vision for a just transition in the built environment, to enable clarity and greater action. 

Construction industry workers will also play a critical role in decarbonising the built environment. Laudes Foundation is also supporting labour unions in their work at the intersection of social equity and climate.

At COP26, the International Trade Union Confederation (ITUC), a Laudes Foundation partner, led a coalition of workers alongside Building and Woodworkers International (BWI). The federation of national unions represented workers in the built environment and allied sectors, who Laudes will be supporting to lead research and action together with workers in the construction sector to determine the opportunities and challenges within the process of decarbonising the sector.

The growing demand for fashion fibres is being met by unsustainable practices, which increases CO₂ emissions and negatively affects biodiversity and smallholder farmers.

To build inclusive green economies and future-proof the apparel industry’s production systems, we need to transform business models towards more regenerative practices.

Laudes Foundation's goal is to transition to landscape approaches – frameworks that enable businesses to source responsibly, create inclusive supply chains, build producer power and participation, and mitigate climate change through enhanced stewardship of natural resources. To build inclusive green economies and future-proof the apparel industry’s production systems, we need to transform business models towards more regenerative practices.

In 2021, we worked with our partners to demonstrate local landscape approaches, catalysing investments that were otherwise fragmented, and helping create a common narrative for landscape approaches around the world.

For example, Laudes Foundation, IDH – The Sustainable Trade Initiative and WWF India together formed the Regenerative Production Landscape Collaborative in Madhya Pradesh, India, a powerful coalition encouraging more private sector engagement and investment, and meaningful producer participation.

The collaborative is working to bring:

In 2021, it focused on the first Compact in the Chhindwara district of the Satpuda-Maikal landscape – an ecologically sensitive zone and home to the Pench tiger reserve and iconic Bengal tiger. The collaborative received increased interest from businesses, with more than 10 organisations from the food and fibre industries signing letters of intent to join. A secretariat was also established at the state level to anchor the implementation of the initiatives on the ground.

We also helped EcoAgriculture Partners to define a strategy for convening businesses under the 1,000 Landscapes for 1 Billion People initiative (1000L), a network along with Commonland, Conservation International, Landscape Finance Lab, Rainforest Alliance, Tech Matters and the UN Development Programme (UNDP). This work laid the foundation for linking landscape partnerships on the ground, building farmer’s capacity, making landscape-based sourcing relatable to industry at large and driving the adoption of the model at scale.

To help mobilise much-needed investment in landscape approaches, we also provided core support to help establish Landscape Finance Lab, an independent entity helping landscape management programmes secure the much-needed start-up capital required to design and incubate landscapes to become investment ready.

To accelerate the global fashion industry's transition from fossil fuel-based materials to next-generation and circular materials, we need to implement policy changes with the power to push the private and financial sectors to invest in alternative materials.

Laudes Foundation has been supporting our partners' efforts to engage with EU institutions on the green agenda by submitting evidence-based research and building coalitions of frontrunner businesses and civil society organisations that support the equitable shift toward materials that are designed to be more durable, reusable, repairable, recyclable and energy-efficient.

Examples of policies our partners have been seeking engagement on are the European Commission’s EU Textile Strategy Roadmap 2030 and the revision of the Ecodesign for Sustainable Products Directive. These are designed to help the EU shift to a climate-neutral, circular economy.

Our partners, European Environmental Bureau (EEB), Fair Trade Advocacy Office (FTAO), European Coalition on Standards (ECOS) and Policy Hub, represent the views of many civil society organisations and hundreds of apparel and footwear industry stakeholders. They have led the discussions in public consultations on these directives and shared their positions with EU lawmakers, including the European Commission, European Parliament and Member States.

The EU Commission’s package of textile-specific proposals, including the Textile Strategy, a legislative proposal aimed at improving sustainability-related information on products, looking at also preventing greenwashing, and the Eco-Design for Sustainable Products initative, reflect a number of considerations supported by our partners, in order to boost the green transition of the fashion industry. For example,Fair and Sustainable Textiles, the European civil society shadow strategy for sustainable textiles, garments, leather and footwear (prepared by the FTAO in partnership with other civil-society coalitions), has fed into the Commission’s EU Strategy for Textiles Roadmap document for evidence and data collection.

Our partners are seen by EU institutions as trusted interlocutors bringing valuable evidence and contributions to an ambitious sustainable agenda. For example, ECOS presented its latest report, Durable, repairable and mainstream: How eco-design can make our textiles circular, at a European Commission workshop on circular design, setting the scene for the entire discussion. The eco-design approach to textiles and the minimum requirements to ensure textiles are circular and sustainable, as put forward by ECOS, featured as the leading agenda item in the discussion – a notable win in its advocacy efforts.

Looking ahead, we will continue to incentivise the use of circular and next-generation materials through adequate regulatory frameworks. Among the upcoming key vehicles to continue our work are the Corporate Sustainability Due Diligence (CSDD) Directive and social protection and environmental clauses in EU trade policy.

Fashion accounts for 8-10% of global carbon emissions, with materials responsible for 60% of these emissions. More than 60% of fashion fibres are oil-based, and this is projected to reach 70% by 2030.

To move the industry away from the use of oil-based fibres, we need to embrace alternative materials. Next-generation materials – made from renewable sources or waste – could replace oil and wood-based fibres, but that requires investment and building the market to accelerate the uptake of innovation. 

We want to reimagine the fibre system, reducing dependence on fossil fuel-based materials, shifting markets away from old growth (or ancient and endangered forests) and leveraging waste as a valuable resource and future of a regenerative materials system.

In 2021, we worked with a range of organisations to lay the foundation for large-scale, system-level transformation. For example, we commissioned an innovative study by the Institute for Sustainable Communities, the World Resources Institute and Wageningen University & Research. Spinning Future Threads assesses how agricultural waste that is otherwise burned, such as wheat and rice straw, could create fashion fibres. It sparked the beginning of an industry movement that is now gaining momentum, led by Canopy and Fashion for Good, among others.

Recognising the need for investment and to increase investor engagement and confidence, we’ve supported the Material Innovation Initiative’s work on the scientific validation of next-gen materials and on narrative-building exercises that create a bridge between investors, the market and innovations. We’ve also supported the Biomimicry Institute to radically rethink the material system so that it aligns with natural resource cycles, expanding the industry’s view on circularity and sustainability to ensure we begin to ‘design for decomposition’.

Fashion for Good, the global innovation platform to make the fashion industry a force for good founded in 2017 with Laudes Foundation as a founding partner, is helping deepen the innovation ecosystem by orchestrating consortium-based projects to demonstrate the viability of next-gen material innovations to brands. This includes the Full Circle Textiles Project on chemical recycling; the Renewable Carbon Textiles Project on testing innovative biosynthetics; and the Sorting for Circularity projects in Europe and India that are mapping and developing the case for critical supply chain elements that enable textile-to-textile recycling.

Five years making all fashion good

Fashion for Good celebrates its fifth anniversary in 2022, having scouted over 2,800 innovators across the globe and supported over 150 through its programmes, initiating more than 200 pilot projects with 137 implementation cases, and leveraging upwards of EUR 600 million to finance a good fashion industry, together with 22 leading brands and manufacturers from across the industry.

Helping policymakers implement oil and gas phase-out policies will have important consequences for public and private finance, cost and opportunities. Setting clear policy direction provides greater certainty for industry, spurs innovation around low-carbon technologies, facilitates economic diversification and frees up resources to support green growth in developing countries. 

Our work to integrate the price of climate-related externalities into EU policy seeks policy and regulatory interventions to make the costs and risks of climate change and inequality part of regional, national and local government as well as institutional investor, bank and corporate decision-making. It also aims to redirect capital flows towards sustainable and equitable solutions.

This is a gradual process that requires building and accelerating effective influence in places where regulations are debated, proposed and implemented.

The Beyond Oil and Gas Alliance (BOGA) is an example of how we’re helping bring climate and equity considerations together with efforts to engineer a just transition, with the active and growing participation of governments. BOGA is the first joint initiative of governments to tackle oil and gas production, building on policy commitments by several individual governments over recent years to end new licensing of oil and gas. BOGA’s main objective is to raise the global climate ambitions and align oil and gas production with the Paris Agreement goal of ‘well below 2°C, pursuing efforts for 1.5°C' by supporting its members to implement and raise their supply-side commitments. This will ultimately result in important adjustments in investment decisions for private sector stakeholders, given the new realities of cost and opportunities as a consequence of public policymaking.

BOGA was launched at COP26 in Glasgow and is co-funded and founded by Laudes Foundation, KR Foundation, Bloomberg Philanthropies and Sequoia Climate Fund.

BOGA is an international alliance of governments, co-chaired by Costa Rica and Denmark, working together to phase out oil and gas production. The alliance has eight core members, Costa Rica, Denmark, France, Greenland, Ireland, Quebec, Sweden and Wales, and three associate members, California, New Zealand and Portugal. It aims to elevate the issue in international climate dialogues, mobilise action and commitments, and create an international community of practice on this issue. 

While many organisations are working on low-carbon transition in line with the Paris Agreement’s target of maintaining a 1.5°C global temperature increase, according to Climate Action 100+, less than 20% of the biggest corporate polluters have mapped out a meaningful path toward net-zero emissions. Many more do not see inequality as relevant to their business models.

Initiatives that use the power of investor engagement and action to encourage companies to embrace more sustainable business models are beginning to tackle corporate resistance and become an important lever for change.

With the help of core support from Laudes Foundation, Follow This, an organisation convening more than 8,000 small green shareholders in oil and gas companies, is using its collective power to incentivise oil and gas companies to set targets consistent with the Paris Agreement for all emissions.

In 2021, thanks to the votes of institutional investors for the Follow This climate resolutions, Shell, Equinor and BP in Europe, and Phillips 66 and Chevron in the U.S., have all set ambitions to reduce their Scope 3 product emissions – those emissions from the products that they sell.

This was the first time U.S. oil companies had committed to this; the result of Follow This securing a milestone ruling from the US Securities and Exchange Commission (SEC) that U.S. companies must take responsibility for their emissions.

Climate-aligned contracts and law enabling systemic change

In October 2021, our partner The Chancery Lane Project – an independent, collaborative initiative equipping legal professionals with practical tools to rewrite contractual clauses to tackle the climate crisis – launched a net-zero toolkit for lawyers. This provides law firms with new contractual clauses to hardwire the transition to net zero into every legal contract, across industries, practice areas and jurisdictions. The Chancery Lane Project’s clauses now cover 50 climate solutions, 12 legal practice areas and 12 industry sectors.

While 20th century economic thinking has led to more global wealth, its distribution is increasingly unequal and relies on a linear production and consumption model that deepens inequality.

A new paradigm for the 21st century is needed – one that replaces neoliberalism with a new definition of value that enables industry and investors to contribute to a thriving society and planet, supported by a policy framework that creates the right incentives. 

In 2021, Laudes Foundation championed new economic thinking through research and practical interventions. For example, we partnered with the Doughnut Economics Action Lab (DEAL) to work with academics, scientists, civil society, policymakers and business leadership worldwide on creating regenerative and distributive economies. With our support, DEAL’s network has grown to more than 5,000 members, and the cities of Amsterdam and Barcelona have embraced Doughnut Economics to guide transformative action to create systemic change. 

We’ve also partnered with University College London’s Institute for Innovation and Public Purpose (IIPP) to tackle flaws in our current economic system and explore new thinking on the role of the state. Our five-year partnership has helped the institute design and launch the IIPP Policy Lab, which selects, implements and evaluates projects in four areas: public value, digital, place-based and green finance.

In addition – alongside MAVA, Oak, Marisla, KR and Ford foundations – we’ve supported Partners for a New Economy (P4NE), a funder collaborative seeking to fund innovative projects and build communities that bring new thinking and approaches to traditional economics. With our support, its partners are helping seed fund the think tank, ZOE Institute, for example, to catalyse its work with EU policymakers on new ways to incorporate social and environmental considerations into decision-making.

Jo Swinson, Director, P4NE

The fashion industry forms the lifeblood of many local economies in Asia, but dignity and respect in these jobs is often missing and glaring protection gaps can leave workers exploited. Collective action is a critical means of addressing systems change, because when workers organise, they can collectively bargain for better workplace standards and treatment.

Supporting organisations that help workers take collective action can translate into better working conditions and wages and more effective enforcement of laws and policies intended to protect workers’ rights. This is increasingly important as workers have become more reluctant to speak out due to insecurities exacerbated by Covid-19.

Laudes Foundation supports FEDINA, which trains workers and supports the formation of collectives and trade unions in both rural and urban areas that are capable of negotiating with employers.

Bengaluru is the third largest readymade garment manufacturing hub in India that employs about 1.2 million workers, but only 3% of the total workforce is unionised. FEDINA mobilised its workers and helped them form the Karnataka Garment Workers Union (KOOGU).

The union has 2,100 members and successfully secured a collective bargaining agreement with the Shahi Group, one of India’s largest apparel exporters. This improved working condition at the Shahi Unit 8 factory in Bengaluru, ensures, among other things, that workers have reasonable production targets and a full lunchtime break.

Citing financial losses, reduced orders and cancellations as a result of Covid-19, Shahi laid off around 30% of its workers and made unilateral decisions without the union’s input, such as shutting the creche facility and not paying wages during the second lockdown period from March to April 2021.

However, the strong women leaders of the union made the management take back 8% of the retrenched workers, restart the creche facility, and pay the lockdown wages. They also pushed for free and fair elections to the factory committee for Shahi Unit 8, resulting in five union members being elected to a factory committee for the first time in the history of the Shahi Group.