Construction has traditionally been viewed through the lens of cost and schedule. Increasingly, it is becoming apparent that a third dimension is coming: carbon.
You don’t have to take our word for it, look at how legislation is moving. New York City’s Local Law 97 requires most buildings over 25,000 square feet to meet aggressive greenhouse gas and energy efficiency standards by next year. Under Boston’s Article 37, all new projects must meet certain performance levels and the city is also currently implementing BERDO which sets emissions standards for large existing buildings. California got into the act last year with the California Green Building Standards Code, and the EU is rapidly implementing legislation that will have impacts for US companies with a footprint in Europe.
But legislation is almost a lagging indicator, as the rest of the market is charging ahead. Investors believe that sustainability is the future. One of the world’s largest investors, BlackRock’s Larry Fink, wrote in his 2022 Annual Letter that the next 1,000 startups worth $1 billion will be those that “help the world decarbonize and make the energy transition affordable for all consumers.” And investors are putting their money where their mouth is; Morgan Stanley estimates that sustainable investment funds had $2.8 trillion under management in 2022 alone, almost doubling from 2018.
Real estate lenders are also increasingly giving loans tied to sustainability performance. With these, borrowers can increase their access to capital, often at more favorable terms, while lenders can better manage climate risk and meet their sustainability commitments to regulators and investors.
Consumers, too, are driving the trend towards sustainability. 70% of new home buyers say green features are desirable or a “must-have”, according to a 2021 survey from the National Association of Home Builders. Almost 1 in 6 are willing to pay more for an “environmentally-friendly” home, and well over half (57%) say they are willing to pay an additional $5,000 for a home if efficiency features will enable them to save at least $1,000 a year in utilities. The willingness to pay also extends to commercial real estate consumers, e.g. tenants. A CBRE analysis of 20,000 US office buildings found that rent was 31% higher for LEED certified buildings; a premium that still held (at 4%) when holding other factors constant.
Given all of these factors, it should come as no surprise that 80% of construction leaders believe sustainability will be a major, near-term driver transforming the industry.
Governments, investors, and consumers are all pushing sustainability because the built world is the largest single contributor to climate change. The built world is responsible for 40% of global C02 emissions, with concrete, alone, accounting for as much as 8%. In London, construction creates 14.5% of particulate matter in the air, a figure that is likely similar for other large cities. And in the United States, construction produces 600 million tons of waste annually.
Requirements for a Successful Sustainable Contech Solution
Emissions in the built world can be categorized into two sources: The emissions associated with raw material processing and construction, i.e. embodied carbon (accounting for ~30%), and the emissions associated with running and occupying the building, i.e. operational carbon (accounting for the remaining ~70%). So technology solutions aimed at enabling the built world to meet these emerging demands for sustainability will fall into one of these two categories.
But it’s not enough for a sustainability solution to reduce GHG emissions or eliminate waste. Successful solutions will combine a strong climate impact with a significant business benefit that hits the bottom line.
Certainly, governments are providing carrots and sticks that will make sustainability more economically viable, and they will play an important role in the journey to green construction and green buildings. But solutions that can rapidly provide both financial ROI and GHG reduction, regardless of aid, will have the greatest likelihood of wide, rapid adoption.
Suffolk Tech’s Sustainability Investments
So, what does all this mean at Suffolk Tech? We invest in solutions to measure, manage, and mitigate the climate impact of the built world, the single largest contributor to GHG emissions. And the solutions we invest in will outcompete incumbents because they are better, faster, and cheaper.
Here are two examples of the kinds of companies we’re backing in this space.
Construction companies currently rely on diesel generators to provide the power they need to build, but there are plenty of issues: it can be hard to hear over the rumble of these giant internal combustion generators, and nearby neighbors certainly don’t like it. Plus they require substantial maintenance, and, if they break down, work comes to a halt. And, of course, burning all that diesel fuel creates tons of GHG emissions.
Moxion Power solves this noisy, dirty problem with a zero emission mobile battery that provides 75kW of power and over 600 kWh of energy. Moxion manufactures their electric generators and also provides temporary-power-as-a-service to customers in the construction, entertainment/events, and electrified transportation industries. Their battery gensets have the same dimensions, run-times, and performance capabilities as traditional diesel generators, with the added benefits of being clean, quiet, and offering superior load flexibility, all while maintaining a lower total cost of ownership (“TCO”).
Because it’s quiet, workers on-site can hear each other more clearly, which improves safety, and work can start earlier in the day because there’s no noise to disturb sleeping neighbors. And it’s extremely reliable, running on software-defined hardware with no moving parts.
Moxion is also a great example of how Suffolk Technologies provides far more than funding to help a company succeed. When the company went through our BOOST Accelerator, we partnered with Suffolk Construction to put Moxion on a jobsite, providing the company, early in its life, with a real-world jobsite where they could exactly determine the requirements their solution would need to meet.
Where Moxion primarily addresses the problem of embodied carbon during construction, WINT provides sustainability and financial benefits during construction and building operations by reducing water waste and preventing water damage.
About a quarter of the water that enters buildings, construction sites, and industrial facilities is wasted through leaks that go undetected. What’s more, water damage accounts for nearly a quarter (24%) of builder’s insurance claims. Water is also a precious resource for people, agriculture, industry and ecosystems, especially in regions such as the American Southwest.
Using market-tested IoT and AI technologies, WINT detects leaks, pinpoints the source and then provides immediate mitigation by shutting off the water to the area that’s leaking, preventing water loss, reducing water bills, and avoiding serious damage. The ROI is so significant, insurance companies are partnering with the startup so that their policyholders will use it.
Again, Suffolk Tech provided more to WINT than cash. We helped the company expand from Israel to the US and gain a strong foothold in the new construction market. We also helped the company understand first-hand how the handoff process works between an owner and a general contractor for insurance and other critical items. Construction companies are often risk-averse, and few are willing to act as a development partner, so getting that kind of experience as you’re honing the solution is critical to market success. Suffolk Tech makes this happen for our portfolio companies.
There’s a massive opportunity to create ROI while enabling sustainable built world solutions. Suffolk Tech is not only investing in these technologies at an early stage, but is connecting startups with our ecosystem to put their products into real-world applications so they can scale to industry-wide adoption.
Carbon is coming. Suffolk Tech is here to support and invest in the companies leading this transformation.
If you’re building a startup that addresses these or other pressing issues in the built environment, please reach out to our team.
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