While the views concerning the success of COP26 in Glasgow were mixed, the conference certainly increased the visibility of the built environment as a major contributor to carbon emissions and consequently its role in decarbonising. And with visibility comes responsibility.
This change is also starting to be seen within the industry, and many players have already set goals. However, these targets vary significantly in terms of deadlines and the details of what they include. For example, some only focus on operational carbon while others also include embodied – whether this applies to landlord-controlled spaces or also includes tenant-controlled spaces – and if and how offsetting is used to achieve the targets.
This variation reflects the total absence of regulation so far. Instead, the main driver for the built environment to decarbonise has been institutional investors as well as investment managers recognising the business and wider reputation case for change. And while we now have regulatory requirements emerging at city, state and national levels, such as the EU Sustainability Finance Disclosure Regulation at the regional level, we still lack a global standard.
This lack of regulatory consistency makes it hard to measure and act on climate risk, whether in development, acquisitions, operations or, importantly, retrofitting existing buildings. The many tools available produce different outcomes from the same underlying data, which provides inconsistent guidance for decision-making and fails to deliver a clear business case for action.
While a lot is happening across the industry, a co-ordinated response to what is probably the biggest challenge ever faced by real estate is missing, due to the industry’s fragmentation, with even the largest owners owning less than 1% of the built environment.
In order to be heard by regulators and decarbonise efficiently, we need to work together. We know there are many hurdles when decarbonising buildings, ranging from legacy regulation across jurisdictions to insurance issues when using new, innovative materials and valuation practices that do not properly account for the risks of not decarbonising. So, to achieve the targets set and show leadership to other industries, cities and regulators, the industry must join forces and collaborate.
Many useful initiatives have already been taken, but it has proven difficult for owners and managers to navigate these and work out how best to use them. At the same time, it is not clear where the additional gaps are and how we can best work together to tackle them.
The Urban Land Institute is one of the few organisations with global reach and focus across the real estate value chain. We are working to help co-ordinate all built environment stakeholders and those strongly connected to it – tenants, the insurance sector and energy and infrastructure/mobility providers – to provide visibility on initiatives happening across the industry, and at the same time identify the remaining gaps and solutions to resolving them.
We will be consolidating the industry’s approach in Europe through our Fast-track to Decarbonisation programme, which will help the industry scale and speed up the process. Additionally, we offer benchmarking and the sharing of best practice within the ULI Greenprint Center, a worldwide alliance of more than 50 real estate owners and financial institutions. The ULI Net Zero Imperative aims to accelerate decarbonisation at the city scale, offering technical assistance for hard-to-decarbonise parts of the built environment.
This will be a defining year for the industry. With the spotlight firmly on the built environment, when we gather at COP27 in Egypt in November, we have to demonstrate to the wider world that we are decarbonising in a co-ordinated, collaborative and efficient way. Let’s do it!
Lisette van Doorn is Europe chief executive of the Urban Land Institute