Editor's Note:Christy Martell is Senior Vice President at IES, a global climate technology company providing software solutions and consulting services dedicated to decarbonizing the built environment. This article reflects the author's personal views.

Buildings are at the heart of the climate challenge. Globally, buildings account for nearly 40% of energy-related carbon emissions, a share that reflects our design and construction methods as well as long-term operational patterns. Decarbonizing the built environment is critical to achieving national and global climate goals, while also reducing operating costs and easing energy capacity demands—considerations that are especially important amid rising energy prices and increasingly strained grid capacity.

In the absence of comprehensive federal decarbonization mandates, a growing number of cities and states across North America are taking proactive action by tightening energy codes and implementing performance-based regulations. From Florida to California, from New York to Colorado, the trend is clear, though the path is uneven: local governments, forward-looking investors, and tenants are demanding better building performance, not just compliance with minimum standards.

IES, Christy Martell
Christy Martell
Image source: IES

For building operators and the AEC professionals they work with—architects, engineers, and contractors—this is both a responsibility and a strategic opportunity. Owners and operators are beginning to demand more from their buildings, and those who can design and deliver higher-performing assets will take the lead in this new landscape.

Compliance is not the finish line

Energy codes have long been a mechanism for improving building efficiency. But by their nature, codes represent a minimum legal threshold. Many codes remain prescriptive rather than performance-based, fail to keep pace with emerging technologies and best practices, and undergo lengthy update and adoption cycles, especially at the federal or state level.

This lag creates a widening gap between requirements and what is achievable. A building that is compliant on paper may perform poorly in real-world operation, especially when occupancy patterns, operational setbacks, and actual climate conditions are taken into account.

Building operators should be able to count on their AEC partners to lead the way. Forward-thinking AEC professionals can help clients bridge this gap through data-driven design, predictive modeling, and whole-life performance analysis—targeting outcomes, not just regulatory checklists.

Returns beyond the bottom line

For building owners and operators, the incentives to go beyond minimum standards are becoming clearer and more urgent.

1. Lower long-term operating costs

Research from the AIAand other organizations consistently shows that high-performance design reduces energy use, thereby lowering utility bills. While capital costs may rise slightly—especially for retrofits or advanced systems—long-term savings almost always outweigh the upfront investment. Efficient building envelopes, optimized HVAC systems, and smart controls can significantly reduce energy intensity, particularly in energy-intensive sectors such as healthcare, data centers, higher education, and multifamily housing.

2. Regulatory readiness

Local ordinances are already raising the bar. In New York City,Local Law 97sets strict carbon emission limits for large buildings. InDenver, performance targets must be met annually or face penalties.Bostonnow requires large building owners to submit decarbonization plans.

The key point is that these rules apply not only to the design phase but also to measured performance in operation. This means owners are increasingly asking AEC teams: Will this asset remain compliant in five or ten years?

3. Stronger asset performance

Sustainability has become a commercial driver. High-performance buildings lease faster, retain tenants longer, and command higher valuations, especially among progressive investors focused on ESG.

Owners want assets that are low-risk, resilient, and adaptable. They are seeking help from architects, engineers, and consultants to achieve these goals. When buildings perform well, all parties benefit: owners get better returns, and operators enjoy more predictable maintenance.

Performance-based design: the new standard

To go beyond compliance, building operators should expect AEC professionals to adopt a performance-based approach from the outset. This means using modeling and simulation not just to meet energy targets on paper, but to understand how a building behaves over time, across seasons, usage scenarios, and changing climate conditions.

Tools such as building performance simulation, whole-life carbon analysis, and digital twins are driving the industry from "designing for code" to "designing for outcomes." These tools enable teams to optimize across multiple variables—energy, emissions, comfort, cost—and evaluate trade-offs with real data.

This approach also improves transparency and alignment with owners and operators. When design decisions are data-driven, teams can manage stakeholder expectations with greater confidence, defend cost-effective choices, and ensure the final product aligns with long-term goals.

Retrofits and portfolio strategies

Most of the buildings that will still exist in 2050 already exist today. For AEC firms working with institutional clients—universities, REITs, healthcare systems—the retrofit opportunity is immense.

Owners who ask their AEC teams to go beyond baseline retrofit standards can unlock deep energy and carbon savings while improving occupant experience and extending building life. More importantly, retrofits offer the chance to align individual building upgrades with broader ESG and capital planning strategies.

Retrofits do not always mean full-scale transformation. Small, smart upgrades, timed with tenant turnover or maintenance cycles, can be phased in as part of a decarbonization roadmap.

The decarbonization trend is clear

Although federal policy in the U.S. and Canada remains uneven, the direction is clear: more jurisdictions are pushing for real, measurable reductions in building energy use and carbon emissions. New standards, including the new LEED v5, place greater emphasis on actual performance and whole-life outcomes.

By partnering with performance-oriented AEC teams, building owners and operators can link sustainability to long-term commercial value.