The sustainability impacts of the built environment are being widely discussed, as climate change considerations in construction and real estate gather steam.
Built environments contribute over a third of global carbon emissions, and operational emissions (from heating, cool and lighting requirements) are responsible for 28%.
Hanife Ymer, Head of Sustainability Services MENA at JLL, discussed the impact of the built environment, and its sustainability considerations, on The Business Breakfast at Dubai Eye this week.
When you look at greenhouse emissions, the built environment is a glaring issue. How does one go about solving this issue to reduce emissions, and respond to concerns of climate change, but still stay in your houses and offices?
HF: It's a multi-faceted answer. All stakeholders have to play a role, including government, private sector, and even the residents have their part. We're seeing incredible movement in the built environment we're seeing commitments to net zero coming up almost every week now by major players. That entails having a close look at your portfolio and footprint in terms of the built environment. Most industries, if not all industries, have to look at the building portfolio, and look at how to reduce embedded energy efficiencies.
It's not even just the emissions factor that's playing out. With COVID, there's been some changes in the way people want to work and live. So there is a big innovation part that also needs to play out[in terms of] what the built environment and cities look like not just now, but into the future.
Is it a company's responsibility, or is it something that should be mandated by city or authorities or federal authorities? Who bears the brunt of the responsibility?
HF: I think everyone has to take responsibility when it comes to sustainability. It doesn't matter how big or small you think your role might be, we all have a role to play. Governments can definitely play a key role in incentivising industries to transition.
[This can help] to quantify and value the impacts we are having on the environment, climate change, etc. [It can also help] to transition capital markets to start allocating capital based on innovation, new industries and informed decisions about the total value of a green building versus our building that doesn't have any of the 'sustainability smarts' built into it... There are good examples of where mandatory requirements have pushed the built environment in green buildings specifically to embed energy and resource efficiency requirements. There are other markets where you have a really active investor community that's demanding developers and consultancies in the industry to start looking at this.
Is it more difficult to convert to a greener and more net zero embracing outlook, than from a new build?
HF: There are some challenges with retrofit. One of the biggest challenges is funding. So, there might be less appetite to do [retrofits]. But when you're wanting to do it, and go to market to try and get some funding for that, the financial mechanisms aren't there, or there doesn't seem to be as much appetite for retrofitting buildings from banks, capital markets and investors. But we're starting to see, with just some of the things that are happening in the UK with Mark Carney's work on the Task Force on Climate-Related Financial Disclosures, that they're really looking at transitional instruments. Retrofitting a building is deemed a transitional activity within responding to climate change.
And so we're starting to see banks look at transitional bonds or linked loans to try and create funding opportunities for those who want to retrofit buildings. The takeaway from this I would say is if you are looking at new builds and new constructions, think about the efficiencies and smarts that can be built in now. If legislation doesn't exist now it's probably going to come sooner or later. And if you're going to build a building now, you want to extract as much value as much as we possibly can from that building. So think about the emerging legislation that's coming, try and build those smarts in, and try and extract value out of the long term for the life of that building.
At the moment, [there are] fewer people going to offices and commuting into built environments. Is that a win or a loss when it comes to sustainability and reducing emissions, and just how long is that sustainable at the moment?
HF: There's definitely a lot of evidence to show that emissions have dropped during the COVID pandemic. We've even seen animals come back into the city which has been quite interesting, but the predictions are that once economies start to normalise, we will see those emissions go up again. It's about making sure that governments, investors, everyone plays their bit. We are starting to see increasing pressure on investors not just by social media, retail investors or, investors in pension funds. We want to see our money used in a much, much more responsible way and I think COVID has driven a lot of that social accountability and responsibility of corporations. I think the pressure will not go away.
Even as emissions might go up, I think the pressure to act by all big corporations, investors, and governments will still be there. And again, there is a landscape of increasing legislation that's coming through, and most of it is becoming mandatory. We're seeing the EU obviously tighten up a lot in the ESG sustainability space as well. You could run but I don't think you can hide from sustainability requirements going forward.
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