Welcome to latest edition of Sustainability Matters, a regular wrap of all things ESG from EG to make sure that you and your business is up to date with the latest news, views and opinion about all that is important in the world of ESG in the built environment.
When one of the biggest office landlords in London says that if properties are unable to reach the sustainability standards it has set itself, they may be ejected from the portfolio, you know that ESG is really starting to be taken seriously in real estate.
Great Portland Estates this week outlines its sustainability ambitions for the next decade. It has set itself some tough targets to achieve. A big ambition and one that it knows will come with even bigger challenges. But the firm is up for it. And it knows that if it really is to be a sustainable business it has to embed this ambition into its business, investment and development strategy.
“The sustainability ambitions of business have been a moral question for a very long time. They have gone from being morally right to now being morally right and absolutely economically essential,” says GPE chief executive Toby Courtauld.
“That is driving so many businesses to be considering their futures in a sustainability context much more aggressively than ever before.”
He says that if buildings in its portfolio are unable to meet the standards it has set itself as part of its responsibility to the planet, then those buildings may not have a place in the GPE portfolio going forward.
“Increasingly our consumer, our customer, is going to demand that we do it,” says Courtauld, “and we will begin to see the occupier community differentiate between good space and bad space from a sustainability and wellbeing contribution standpoint. There’s no doubt we will begin to see investors draw that conclusion as well once our customer is drawing that conclusion.”
Retrofitting
Making existing buildings fit for a sustainable future is the big issue facing the real estate sector as a whole. We have more built buildings than we do in development and many of them might be difficult to bring up to standard. But property owners – commercial and residential – need to be encouraged, either by carrot or stick to do so.
The Coalition for the Energy Efficiency of Buildings has called for the development of new financial products to simulate consumer demand for green retrofitting activity.
It wants to see the establishment of lending products such as equity release mortgages, savings products linked to energy efficiency home improvements, green leases and energy service products that will allow housebuilders to recoup investment.
“Stimulating demand for retrofits unlocks energy savings that translate into increased disposable income. Scaling up the retrofit supply chain creates new jobs and opportunities to upskill many in the industry, and encouraging the development of low-carbon new homes locks in financial and health benefits from day one,” says Rhian-Mari Thomas, chief executive of the Green Finance Institute and chair of CEEB.
Clean Growth Fund
Government this week did its bit to encourage the growth of green business with the launch of a £40m Clean Growth Fund. It will provide early stage, seed or series-A funding for UK-based firms focused on green technology across several sectors, including building management. Projects likely to secure funding include those focused on renewable heating and ventilation technologies for homes and commercial buildings.
Business secretary Alok Sharma said the fund would “enable innovative low-carbon solutions to be scaled up at speed, helping to drive a green and resilient economic recovery”.
Lessons from the pandemic
Technology will be key to in the battle to combat climate change. And we will need to see further advances in it if businesses are to achieve their zero-carbon and net-positive targets.
What the global pandemic has shown is that the response and decision making from government and the industry can be swift and include taking decisions they would never have considered before, says Savills’ world research director Sophie Chick.
“Now this innovation and decision making needs to be turned to the climate crisis to address the emissions of the sector,” she says.
The challenge is set.
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