Expect to see more clients thinking about social value

I, like many, wondered as the pandemic hit us in 2019 whether the industry would turn away from action on the climate crisis as it dealt with a new and acute emergency. But Covid focused minds on the fragility of our planet and our responsibilities to society. Those forces only intensified stakeholder interest in sustainability across all points in the asset life, from initial investor to tenant.

That stakeholder interest, coupled with increased regulation and emerging evidence of enhanced commercial value in sustainable buildings, has underlined the commercial imperative to act. Today, more businesses are clear that long-term commercial value is intrinsically linked to delivering sustainable buildings that are part of vibrant communities and deliver for wider society.

That is not to underestimate the challenge ahead. As UKGBC chief executive Julie Hirigoyen said in a recent issue of Property Week: “The climate emergency remains the most pressing issue facing the built environment.”

The role of finance will be crucial in helping the built environment to transition to net zero in terms of developing both new buildings and retrofitting existing stock. We have seen many real estate businesses align their financing and sustainability strategies over the past couple of years both through lending and debt capital markets.

Last year, $673bn (£511bn) of green and sustainably linked loans were issued globally, with real estate making up 33%. At Barclays, a core focus is helping clients with this type of funding, with a target to provide £100bn in green finance by 2030 and £50bn already deployed by H1 2021. We expect issuance to continue to rise in 2022. The key terms and frameworks in these deals will evolve as clients expand their focus and lenders seek to provide more flexible solutions. I suspect more clients will think about how to bring social value and embodied carbon into frameworks and KPIs.

We will see more innovation across the finance industry too, with new products being launched to support specific sectors and to address issues such as the transition of existing stock. At Barclays, we have a deep commitment to the housing sector and helping our corporate clients in that space with green solutions is very much on our minds.

The Climate Crisis Challenge has a focus this year on the ‘what’ and we aim to show how finance can help and the types of solutions on offer. The conversations the campaign led to last year really helped us to focus on where we can help and we look forward to continuing those conversations.

Jessica Tomlinson is managing director, head of London real estate, at Barclays