In addition to political pressure and legislation, investor and funder sentiment and market sentiment will drive change.
Success can be measured both by mitigating risks from the known and unknown future and building resilience to such risks, as well as by creating positive environmental and social change.
It is estimated that over 75% of the buildings that will exist in 2050 have already been constructed and almost all currently do not meet net-zero emissions standards. While there is much praise for the construction of new green buildings, it is the work required on existing stock that presents the greater challenge and opportunity.
However, there is more to consider than just taking action to improve indoor air quality, energy use, water use and waste management.
All elements of the ESG commitments are relevant. Environmental aspects are relatively easy to identify.
The “social” part includes the health and well-being of occupants (who expect employers to provide more attractive and flexible workspaces) and a building’s impact on the local community (e.g. creating public green spaces, no-contact building access and support for local businesses).
Governance is more difficult to measure but encompasses diversity, culture and reputation and, importantly, to address claims of ‘greenwashing’ by putting policies, processes and targets in place to transparently deliver sustainable results.
Building owners should be aware of global standards including:
- The Building Research Establishment Environmental Assessment Method (BREEAM) – for conducting environmental assessments of projects
- Leadership in Energy and Environmental Design (LEED) – Certification systems for base construction, equipment and in-use projects
- WELL – to evaluate the properties of a building that affect the health of occupants
- Global ESG Benchmark for Real Assets (GRESB) – for setting sustainability benchmarks
It is possible to identify over 30 frameworks and accreditations that can be applied and measured against the ESG impact of real estate, presenting a daunting challenge for those wishing to comply.
Greater effort is needed to ensure older buildings in cities like Glasgow meet net-zero emissions standards
Politicians and investors will need data to measure performance against standards, as there is a global tendency to require reporting of such information (although this will require some level of consensus on what to report and against what targets). ).
In the UK, the Task Force on Climate-related Financial Disclosures will require major lenders and property companies to provide analyzed data on an annual basis.
It is inevitable that buildings that perform poorly will fall in value and be less attractive to occupiers (the brown markdown), while high-performing buildings will attract higher values and fewer vacancies (the green markup).
As a concrete example, if buildings do not meet the minimum standards (e.g. an energy performance certificate rating better than “E” by April 2023), they cannot be rented at all.
Given the legal imperative and investor pressure to improve the property portfolio, why delay? Cost may be a factor – some estimates suggest the necessary work could create a financial burden of over £10bn, not counting any potential loss of income while the work is being carried out.
There’s also the question of who pays – tenants won’t be pleased to see a service fee including the bill for installing solar panels, which may be more expensive than replacing the entire roof of a building, despite potentially covering the cost of the installation accept from EV charging points.
Despite this potential conflict, both owners and occupiers of commercial space will share data on energy consumption and should be aligned with a desire to improve performance, particularly in the current economic climate.
Residential accommodation is of course also affected, but attempts to engage owners/residents have met with limited success (over a third of current public funding for improved building insulation and the installation of clean energy heating solutions has yet to be spent).
The UK rental market is less institutional than some European countries and as such there may be fewer resources available to fund improvements, despite the potential to deliver not only environmental but social benefits. Again, the affordability and return on investment factor can limit appetite for change.
Disappointing, at least for those worried about the impact of climate change and those who want improvements in the built environment, the current consensus that the targets set for transforming real estate by 2050 will not be met Does that mean that there will be a collapse in the UK property market and international investment will look elsewhere, resulting in patches of outdated buildings in UK towns and cities becoming polluted?
This seems an unlikely scenario, but perhaps the government needs to give those who own but don’t occupy property more incentives to improve than just setting (and revising) standards? Perhaps the whole society can benefit from the green bounty if society can afford the investment to generate it.
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https://www.heraldscotland.com/business_hq/23369675.greener-vision-required-build-better-future-scotland/?ref=rss A greener vision is needed to build a brighter future for Scotland