More than 55% of the world’s population lives in urban areas, a figure that the United Nations Human Settlements Programme predicts will reach more than 68% by 2050. At the same time, urban areas contribute to over 70% of global GDP around the world.

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Lindsay Taylor, UK head of delivery, Deepki

Any disruptive factor related to these environments would have a cascading effect on nearly every major sector of the world from an environmental, social and economic perspective.

The paradox, though, is that urban areas are responsible for around 60% of global greenhouse gas (GHG) emissions, meaning they are the prime contributors to climate change, causing the very risks to which they are most vulnerable.

It is essential that metropolitan areas take immediate and effective steps if they are to limit their negative impact on the environment and the people and businesses that exist within them.

Mobility and the 15-minute city

International organisations and policymakers are focused on improving the measurement, classification and reporting of carbon emissions through three scopes (see boxout).

Scope three is the most complex and presents particular challenges for those operating in cities, since they must account for the GHG emissions from both inside and outside their city’s boundaries.

Consequently, limiting an organisation’s impact within the city in which it operates – and by default its reach outside – is a renewed focus for climate and social change proponents.

These include the 15-minute city initiative which was the brainchild of Carlos Moreno, an urbanist and professor at the Sorbonne University in Paris, who argues that residents should be able to access all the services they need to live, learn and thrive within a 15-minute walk or bike ride.

The 15-minute model attempts not only to reduce emissions, but also to improve the lives of those living in urban areas. Easy, quick connections to essential services including public transport, schools and green spaces are paramount to both clean air and a good quality of life.

There are already 16 cities worldwide implementing a 15-minute city-style strategy. Paris and New York introduced participatory budgeting to promote local engagement as a part of their city transformation strategy, while Bogota, Seattle, and Milan are prioritising investments in infrastructure for walking and cycling, with a focus on new urbanism and flexible concepts.

Importance to investors

Investors are increasingly taking the initiative to evaluate companies based on their ESG performance, and many large institutional investors are actively engaged in ESG investing.

Not only do they see the path to net zero carbon emissions as critical to creating a sustainable and profitable portfolio, they also favour social criteria such as diversity and inclusion, workers’ rights, and human rights, when identifying those companies with likely long-term success.

However, recent research from Deepki, covering 250 commercial real estate asset management professionals in the UK, France, Germany, Spain and Italy, reveals one fifth (21%) believe their organisation lacks the expertise to assess asset ESG performance to help develop a strategy to take them to net zero. And given the range of social issues and the potential for subjective interpretations of an organisation’s impact, the challenges in understanding the social element may be even greater for investors.

New ways to measure impact

Deepki Ready™ offers a wide range of features for data collection, completion and analysis. This includes two scoring methods to help investors and asset managers assess these aspects of their real estate portfolio.

The Mobility Scoring and Fifteen-Minute City Scoring tools assess an asset’s amenities and local modes of transportation.

For example, Deepki looks within a 500 m or 1 km radius for transport options such as buses, subways, trams, trains, shared-bike stations and electric charging stations. The more eco-friendly and convenient transportation options surrounding an asset, the higher its mobility score.

Not only do the new tools help assess emissions under the Greenhouse Gas Protocol, they also help asset managers meet the EU’s Sustainable Finance Disclosure Regulation (SFDR), which requires classification of a fund’s ESG impact, with those classified Article 9 having the most positive impact.

Taking Fifteen-Minute City and Mobility Scoring into account could partly contribute to an SFDR Article 9 classification, since they track emissions linked to transportation and their contribution to local communities.

If the world is to prevent what UN secretary general, António Guterres, has dubbed “global boiling”, organisations operating in urban areas must reduce their harmful emissions. And in doing so, not only do they contribute positively to the E in ESG but also the S.

Asset managers and investors are central to financing the green and just transition to net zero, but until now, they have been hampered by a challenge in measuring and analysing an organisation’s emissions. However, innovation from Deepki through the Mobility and Fifteen-Minute City scoring tools represents a breakthrough for positive change in urban areas.

The Greenhouse Gas Protocol Standardisation framework

Born from the partnership of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the GHG Protocol classifies emissions according to three distinct categories or ‘scopes’:

  • Scope 1 refers to direct GHG emissions from sources owned or controlled by the entity: boilers, furnaces, vehicles, etc.
  • Scope 2 includes GHG emissions from the production of electricity, steam, heat, and cooling purchased or acquired and consumed by the entity.
  • Scope 3, also called ‘value chain emissions,’ includes all other indirect emissions that occur in an entity’s value chain as a result of its activities. There are 15 emission factors, including purchased goods and services, business travel, waste disposal, use of sold products, transportation and distribution, investments and employee commuting. In Scope 3, the category Transport / Mobility includes all emissions related to the transport of building occupants.

By Lindsay Taylor, UK head of delivery at Deepki