4 Levers to Help Scale Net-Zero Carbon and Resilient Housing

The built environment accounts for over one-third of global emissions. In rapidly developing markets like India and Mexico, a surge in housing construction faces a pivotal choice: lock in high-carbon infrastructure or, with the right interventions, enable resilient, low-carbon designs and create millions of green jobs.

When supported by integrated policies, targeted finance and adaptive business models, these markets have the potential to leapfrog to net-zero carbon and resilient buildings (NZCRBs), reducing emissions, strengthening climate resilience and delivering important socio-economic benefits — from lower energy bills to healthier living conditions.

Yet, progress remains slow: NZCRBs make up less than 1% of global building stock, with residential buildings comprising an even smaller percentage. While demand for efficient housing is growing rapidly, fragmented policies, limited financing and pilots that fail to scale still limit progress. By focusing on residential housing where these challenges converge and urgency is greatest, this article aims to unpack the most persistent barriers.

To unlock large-scale solutions and investment, it is essential to first clarify a shared definition of NZCRBs and then carefully map the systemic barriers to overcome.

What Are Net-Zero Carbon and Resilient Buildings?

NZCRBs minimize energy demand, employ renewable energy and are built or retrofitted using low-carbon or recycled materials. They are designed to withstand climate shocks, such as heat waves, flooding and storms, while reducing emissions through the entire life cycle of the building from material sourcing to operation to end-of-life.

There are many types of NZCRBs, including those designed for residential, commercial and institutional uses. Unlike traditional sustainability-certifiable buildings, which primarily focus on reducing energy use and environmental impact, or resilience-oriented buildings, which emphasize physical durability and disaster risk reduction, NZCRBs deliberately integrate both priorities. They simultaneously address decarbonization and climate adaptation, aligning the built environment with net-zero carbon pathways and safeguarding communities against intensifying climate hazards. This holistic approach ensures that homes are not only energy-efficient and low-emission but future-proofed and capable of maintaining safety and livability during extreme events.

The relative balance between the “net zero” and “resilience” dimensions of NZCRBs can differ across geographies. In medium-income, temperate regions with stronger energy policies, like in Mexico and Latin America, the emphasis often leans toward decarbonization, maximizing efficiency, renewable integration and carbon-neutral materials. In contrast, in climate-vulnerable and rapidly urbanizing regions such as India and Southeast Asia, resilience features may be prioritized, which could include passive cooling, flood-proofing and structural durability, with net-zero measures introduced incrementally. This geographic differentiation underscores the importance of context-specific pathways: All NZCRBs share common principles, but their design and implementation must reflect local climate priorities, regulatory frameworks and socioeconomic realities.

While NZCRB design principles can apply broadly, our focus is scaling both net-zero and resilient residential dwellings, given their outsized impact and opportunity. These homes offer clear benefits: lower energy costs, healthier indoor environments and reduced vulnerability to climate risks. However, key barriers persist, such as limited affordability, lack of tailored finance, weak policy enforcement, entrenched unsustainable practices and limited technical capacity — especially in emerging markets.

What’s Holding NZCRBs Back? And How Can Sustainable Buildings Be Scaled?

Smaller developers and building owners often face high upfront costs when shifting to NZCRBs. Energy-efficiency upgrades frequently place the financial burden on owners, while tenants capture most of the benefits. This split-incentive challenge is common in rental housing markets and hampers upgrades. In India, for instance, landlords of low-income rental units are often reluctant to invest in passive cooling or energy-efficient retrofits because tenants capture the utility savings but lack the security of tenure to justify contributing to upfront costs. Similar dynamics have been documented in Mexico’s rental housing sector, where building owners hesitate to finance rooftop solar or insulation improvements without mechanisms to share benefits and costs with tenants.

Risk‑sharing models, such as joint investments among owners, cooperative financing and owner–tenant agreements help distribute costs more fairly. In Europe, green lease arrangements are emerging to align incentives, explicitly linking rent structures to energy performance so both landlords and tenants gain from efficiency upgrades. These innovations tackle resistance and unlock investment, boosting investor confidence, fostering transparency and reducing the initial costs of action.

For residential buildings, pairing inclusive finance and supportive policy frameworks specifically addresses affordability and equitable access. However, policy gaps and weak enforcement continue to slow progress. Both local and national governments play critical roles as market catalysts.  Well‑designed and consistently enforced building decarbonization and resilience policies — integrated across housing, energy, utilities and planning —are needed to directly target regulatory fragmentation and unsustainable practices. For example, the Eco Niwas Samhita, India's Energy Conservation Building Code for residential buildings, sets mandatory efficiency standards for building envelopes, shading and ventilation, helping reduce heat and energy use in low- and middle-income housing.

In Mexico City, while detailed NZCRB‐type standards are less widespread (especially for low-income housing), the city’s complementary technical standards have been incorporating energy-efficiency and sustainability requirements into the building permit regime, especially for larger residential and mixed-use buildings. These are being updated to cover more resilience dimensions as well.

Stakeholder collaboration is often missing in practice, leading to fragmented standards, duplicated efforts and limited uptake of sustainable building solutions. In cities, global developers experiment with pilot NZCRB projects, but without platforms to share data or lessons, results remain siloed, stifling replication and market confidence. Stakeholder collaboration is therefore essential. Cross-sector knowledge hubs that share best practices and facilitate data exchange are crucial for setting standards and supporting government benchmarking for greater transparency and accountability. These platforms turn lessons learned into practice, provide businesses with supply chain and market intelligence, and address technical gaps and market barriers by creating the conditions for NZCRBs to move from pilots to market standards.

The Four Levers to Scale NZCRBs

Against this landscape of challenges, WRI's All in for a Net Zero Built Environment initiative has identified four critical levers for driving transformative change: coordinated action, supportive policies, tailored finance and business model innovation.

Each of the levers is mapped to different barriers. By directly targeting specific challenges like affordability, weak policy signals and lack of technical or financial innovation, these strategies provide a coherent pathway to scaling. While the four interconnected levers are essential for scaling NZCRBs in India and Mexico, the levers can also be applied globally.

1) Commitment and Collaboration

Scaling NZCRBs requires coordinated action across national and local governments, developers, financial institutions, utilities and community groups. City action plans and national roadmaps have proven critical in Europe, and more recently also in Mexico and India, to help bridge policy gaps by identifying retrofit targets and integrating housing, energy and planning policies. These strategies ensure coherence between local ambitions and national climate goals. Knowledge hubs and multi-stakeholder task forces that bring together architects, builders, investors, utilities, regulators and civil society can harmonize standards, track implementation and share best practices across markets. Embedding social inclusion within these structures ensures that vulnerable and marginalized groups are represented in decision-making, leading to equitable and effective outcomes. Without this vertical, horizontal and inclusive coordination, policies risk missing cross-cutting issues, such as aligning building codes with electricity access or linking housing subsidies to low-carbon design.

2) Supportive Policies

Mandatory energy codes for life-cycle emissions and climate-resilience standards accelerate mitigation, while incentives like tax breaks and fast-track permitting reduce compliance costs for builders and investors. Robust codes paired with life-cycle assessments ensure that emissions are addressed from construction through operation and end-of-life, preventing carbon lock-in and enabling a true accounting of environmental impacts. These tools provide a foundation for scaling NZCRBs that remains sustainable over decades. Effective programs often sequence voluntary initiatives to pilot new approaches, gradually transitioning to mandatory codes as supply chains and markets mature. This approach enables innovation at early stages, while safeguards, such as subsidies and social housing, ensure that standards do not exclude low-income communities, due to affordability constraints, as they take effect.

3) Financial Instruments and Mechanisms

Finance is a significant and complex barrier to NZCRB adoption. Residential buildings require substantial upfront and long-term capital, which smaller developers or households often cannot access. Effective solutions include:

• Sovereign green bonds fund climate-friendly buildings, but typically only large developers can access them.
• Blended finance of philanthropic and public funds can reduce risk to enable the participation of smaller firms and affordable housing projects.
• Performance-based investments channel financing toward projects that achieve energy savings and align capital deployment with measurable results.
• On-bill and property assessed clean energy (PACE) financing tie repayments to utility bills or property taxes to reduce upfront cost of construction or retrofit.

4) Business Model Innovations

Pilots often stall without scalable delivery models. Successful approaches feature shared-risk structures such as third-party ownership, joint ventures and performance-based contracts like those offered by energy service companies. Creating enabling conditions for one-stop-shops is also essential, as these entities streamline design, financing and construction, reduce transaction costs and ensure consistent project delivery. Together, these models lower market entry barriers for developers and households, build investor confidence and help move NZCRBs from isolated pilots to market scale.

No One Size Fits All: Coordinating Models, Instruments and Institutions for NZCRBs

Sustainable buildings require significant, long-term investment for both construction and ongoing operation, as maintaining strong environmental performance is an ongoing process. To scale NZCRBs, it is essential to combine funding strategies, business models and supportive policies or regulations in practical ways.

Within the first two years, governments and partners should establish the foundation for scaling NZCRBs by carrying out baseline assessments of residential building stock and emissions, along with gap analyses to identify priority needs. Clear decarbonization targets should then be set and integrated into city and national climate action plans.

Early pilot projects, as seen in Mexico, India and Northern Europe for example, should deploy financial tools such as green mortgages, subsidies for low-income households, and on-bill finance, allowing authorities to test which models are most effective for lowering upfront barriers across different contexts and building types. At this stage, it is also crucial to establish multi-level governance coordination platforms that bring together housing ministries, municipalities, utilities, developers, financiers and communities to ensure alignment and reduce fragmentation.

In the mid-term (3 to 5 years), the focus shifts to institutionalizing these foundational steps. Targets and lessons from pilots must be translated into enforceable building codes, performance standards and fiscal policies that move beyond voluntary adoption. Incentive-based programs, particularly those designed for low-income housing, can scale up proven approaches while ensuring equity. Building institutional capacity for monitoring, compliance and enforcement will be essential to ensure targets are not only aspirational, but achievable in practice.

By the long-term (next 10 years), NZCRB goals should be fully integrated into broader frameworks of urban planning, zoning, ESG reporting and fiscal reform. This period should see the expansion of climate-resilient housing programs, the implementation of life-cycle carbon requirements in planning rules and the full alignment of residential building standards with net-zero targets. International partnerships will be key to support technology transfer, innovation and access to advanced materials and designs. Finally, adaptation and equity must remain at the center of all strategies, ensuring that decarbonization delivers not only emissions reductions but also greater resilience and inclusive benefits for all communities.

Scaling NZCRBs is not just about building homes; it is about transforming entire systems by aligning policy, finance and innovative business models to unlock market-wide change. When inclusive governance is part of the status quo, countries can move from pilot projects to full-scale and widespread adoption.