A report published by the Climate Change Committee in June set out a series of urgent climate change risks while outlining opportunities for their mitigation. The report concluded that policy initiatives currently in place will achieve no more than 20% of the required reductions in emissions by 2050.
Consequently, there are those who now believe it is the responsibility of the people operating within the private sector to front the transition to sustainability and ultimately achieve net-zero targets.
“The past year has seen a host of pledges, promises, and policies emerge to incentivize the transition to the green economy. It is a step in the right direction on paper, but the practical implication of each is difficult to measure,” writes Ding Li, Senior Strategy Consultant at Longevity Partners.
“There are a number of competing guidelines and reporting frameworks for reaching net-zero carbon in the real estate sector, each with differing methodologies and timeframes, making it difficult to work out what these commitments mean.”
“Organisations should proactively audit their operations to set their own carbon reduction targets. It is becoming increasingly straightforward for businesses to begin their journey to net zero. Adopting best practices in ESG will always serve as an advantage in the long term, as regulation and legislation will catch up regardless.”
The role of the property sector
It is estimated that at least 30% of all CO2 emissions generated annually originate from the built environment. A report from the CCC suggests that in the UK, 17% of all greenhouse gases are produced by buildings. In order for net zero to be reached by 2050, the UN Environment Programme has stated that building emissions will need to be reduced by at least 50% by the end of the current decade.
“Policymakers and legislation will demand this sooner or later regardless of business practices; therefore, it is strategic to pivot towards net zero pre-emptively,” writes Ding Li.
“The results of net-zero measures equally generate significant financial returns in the long term. Property developers managing environmental and regulatory risk will drive greater value as they are taking a comprehensive and strategic approach to their portfolios.”
“Indeed, 88% of investors believe companies that prioritise ESG initiatives represent better long-term return prospects. And as a result, assets in sustainable investment products in Europe are forecast to outnumber conventional funds by 2025.”
Sustainability is a priority for most
A poll conducted by JLL on 1,000 senior executive leaders worldwide found that sustainability is one of their top priorities going forward. A further 83% stated that they were looking into ways to innovate and accelerate their sustainability strategies, having acknowledged real estate sustainability as a key priority.
Just 6% said that they currently saw themselves as ‘leaders’ in the field of monitoring and measuring the environmental impact of their properties.
“This decade is seen as the tipping point for climate change. With the built environment responsible for nearly 40% of global carbon emissions, reducing the environmental impact of real estate is a key priority for investors and corporate occupiers,” writes JLL.