While this summer’s weather has provided the opportunity to increase our vitamin D levels, it has also highlighted the challenges we are going to face as a nation in a changing climate – challenges such as fires, drought and flooding.
The sense of urgency is clear in the media, and if businesses act now it will give the UK a chance to meet targets and secure a liveable climate for future generations.
The built environment in the UK is responsible for 25% of total UK greenhouse gas emissions and it is clear that sustainability and real estate trends are accelerating. Investor demands are expanding and we are seeing increasing sustainability and climate change regulation, as well as the demands of tenants evolving. All of these factors combined mean that a greater consideration of ESG and sustainability in the built environment is necessary.
Other key considerations include the UK’s 2050 net zero target, European-driven investor priorities and UK legislation, all requiring absolute transparency over fund sustainability investment criteria. This includes the EU and UK Green Taxonomy and Sustainable Finance Disclosure Regulation (SFDR).
The Global Real Estate Sustainability Benchmark (GRESB) is also driving investor capital flows into enhancing asset ESG criteria to drive performance. Occupiers are signing up to net zero science-based targets and increasing numbers are reporting to the Task Force on Climate-Related Financial Disclosures (TCFD), all culminating in a need for greater consideration of sustainability, ESG and net zero in particular.
The embodied carbon associated with buildings contributes 11% of global carbon emissions and represents 28% of emissions originating from the built environment. As such, when it comes to sustainability and the built environment, net zero carbon in construction is as important as in operation.
Achieving net zero carbon principles by 2050 involves the consideration of the whole-life carbon of the building. If we’re not thinking about the embodied carbon as we develop then we’re going to struggle to achieve targets or, indeed, make the reductions required across the industry to positively contribute to change necessary.
While there will be different players in net zero carbon in construction and operation, a key aspect will be collaboration across the whole property lifecycle and early, open dialogue.
Investors can look to ensure net zero carbon in operation in their buildings by establishing a Green Leasing Strategy across their assets. This ensures there is engagement and collaboration between the occupier and the investor at the very start of the relationship.
Another route to achieve net zero in both operations and in construction is offsetting, but we need to make that a last resort. We need to be looking at fabric first, energy efficiency and then onsite and offsite renewables. Where those aren’t possible, it’s going to be about offsetting.
There has been a lot in the news recently around green washing. One of the ways you can combat green washing is having a solid governance structure in place to address sustainability. So, that’s making sure you’ve got the policies, the processes, the strategy and the targets to be able to transparently deliver sustainable outcomes.
The profile of the social side of ESG is increasing with organisations wanting to ensure that they are delivering responsible business objectives and ensuring they are supporting their workforce, as well as looking to support the communities in which they’re operating.
With net zero at the top of everyone’s agenda alongside climate targets and the Paris Agreement, what’s also important is the other certification standards such as BREEAM and WELL. These standards consider the broader context of sustainability – looking at the materials in use, biodiversity and the wellbeing of the building users.
So, while net zero is incredibly important and increasingly NABERS is the operational performance standard to align with, we need to be thinking about the wider sustainability considerations in the built environment and those certifications are the shorthand way to demonstrate they are being considered.
In addition to the net zero targets of 2050, there’s also biodiversity net gain legislation coming through. By November 2023, all new planning developments need to have a strategy for how to leave the natural environment in a measurably better state than beforehand (by 10%). Further, the EU Social Taxonomy will be, and arguably already is, influencing UK built environment.
Within CBRE there’s an increasing body of work developing to understand the value add or the brown discounts associated with the sustainability criteria within a building. And that’s something we’re very much looking to understand and engage with our clients and stakeholders on.
The hope is that all those involved in decision-making in the built environment are taking the time to think about what is needed to make a meaningful contribution to reduction targets and also how to future-proof assets in this changing climate.
Lydia Dutton is regional sustainability director at CBRE
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