As many of us venture to Cannes, I thought it worth reflecting on a very different gathering in France that took place back in December.
I am, of course, talking about the 21st climate change conference, COP21, at which 195 nations came together in Paris and pledged to reduce carbon emissions, uniting in the collective aim of limiting average global temperature rises to 2°C by 2100.
The building sector represents a staggering 30% of worldwide carbon emissions, so the potential for us to play our part in achieving this collective aim is enormous. However, major changes to how we develop, invest, asset-manage and occupy buildings are needed.
The EU has been at the forefront of these efforts, with many countries already adopting more stringent national laws. The French energy transition law, for example, focuses on efficient design and building management, targeting a 60% reduction in energy use by 2050. In Germany, the EnEV law increases energy performance requirements for new buildings, while in Switzerland laws requiring almost zero-energy new buildings and a reduction on fossil fuels in existing buildings. The UK is also doing its bit with mandatory energy audits of buildings.
As an asset manager, we need to carefully anticipate these regulations and often pre-adjust new developments accordingly.
COP21 amplified the voice of an existing groundswell of international investors, who have continually pressured for change since before the global financial crisis. The statement signed by more than 400 global investors in anticipation of the conference, notarising their desire for a strong worldwide agreement combating climate change, is a case in point.
Often change can be as simple as improving the recording and understanding of the environmental impact of existing investments. In the real estate world, this means monitoring and improving the energy efficiency and sustainability of our buildings, using renewable energy and providing accessible space that promotes the wellbeing of its users.
Most importantly, active sustainability management should not just be about responding to tighter regulation and increasing investor demand. It should also be seen as an integral part of what we as investment and asset managers strive to do every day - improving returns for our partners. By decreasing energy and running costs we reduce obsolescence and increase the long-term attractiveness and marketability of our buildings, which in turn increases their value.
Putting our money where our mouth is, last year we committed to a strategy of achieving a sustainability certification for 75% of our direct property assets under management by 2030. We target the highest standards for our new developments and often pre-empt regulation by going above and beyond requirement. For example, our flagship City development 22 Bishopsgate is the first building in London to adopt the new Delos WELL Building Standard, which focuses on measuring, certifying and monitoring features that affect human health and wellbeing. Furthermore, we continually seek ways to optimise our existing portfolio and thoroughly ‘green audit’ buildings before we acquire them, on behalf of clients.
While relentless urbanisation and exponential population growth present significant headwinds against achieving COP21’s objectives, one thing is certain: the types of initiatives we are talking about today are just a taste of what is to come. This issue will only grow in importance, and we all need to be ready - forewarned is forearmed.
Anne Kavanagh is global head of asset management and transactions at AXA Investment Managers - Real Assets
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