Time for action on COP21

You have this opportunity to take the world. You have to take this opportunity, grasp it, so our planet may live a long time.” Those were the words of French president François Hollande as he urged governments around the world to commit to an agreement to tackle climate change at the Paris Climate Summit (COP21) last December. Commenting on the final agreement, UK energy secretary Amber Rudd said that the deal gave a “clear signal” to businesses to invest in a low-carbon economy. The sentiment coming out of the summit was positive. So now it’s time to reflect on what the negotiations mean for UK business, and specifically the real estate sector. There is much to be done in a short time and numerous hurdles to overcome. The agreement COP21 was a success because it learnt from years of failed attempts to achieve a global agreement. It was based on a bottom-up approach, allowing each nation to submit its own plan to reduce greenhouse gas emissions. However, analysis of the plans shows that we will exceed a 2°C temperature rise – the maximum threshold at which we would avoid catastrophic climate change. So a key element of the agreement involves reviewing the national plans every five years, with a view to ratcheting them upwards in order to meet the goal. Decarbonising the built environment has a significant role to play, given that nearly one third of global emissions can be attributed to energy used in buildings. As emphasised by Julie Hirigoyen, chief executive of the UK Green Building Council: “There is a clear business case for the construction and real estate sector to cut carbon emissions from buildings.” The good news is that the property and construction sectors are gearing up to act. The Global Alliance for Buildings and Construction was launched at the first Buildings Day held as part of COP21. The alliance collectively committed to ensuring that the global building sector will follow the below 2°C path. Buildings Day also saw the launch of the Prince of Wales’s Corporate Leaders Group commitment to deliver nearly zero-energy buildings for new build by 2020, and refurbished buildings by 2030. It was signed by 16 leading European companies, including JLL, British Land, Hammerson and Land Securities. The divestment movement has also picked up momentum, with more than 500 institutions committing to move away from investing in fossil fuels. The parties involved represent $3.4tn (£2.4tn) in assets, including large European institutions such as Allianz and Norwegian Sovereign Wealth Fund. Meeting the target It is encouraging to see businesses rise to the challenge, but how do we ensure the real estate sector can meet the 2°C threshold? Firstly, organisations need to set stronger, science-based, long-term targets. The latest figures from the UK carbon budget Progress Report 2014 reported that building sector emissions reduced by 6% from 1990 to 2013, while average reductions across all sectors was 21%. This was largely attributed to energy efficiencies in the residential sector, with emissions from commercial property being broadly flat. Going forward, JLL believes the industry needs to reduce its emissions by at least 3.5% annually to align with the UK’s 2050 goal. Secondly, the government needs to support the commitment made in Paris. At a time when the UK government has reversed a number of climate change policies – including removing tax relief on renewable energy and the target for zero-carbon homes – our ability to meet the emissions reduction target is seriously under question. Amber Rudd’s message that COP21 provided a “clear signal” will materialise only if government provides a long-term stable policy environment that supports the low-carbon sector. On a more practical note, a skills shortage in the industry presents another challenge. The Energy Savings Opportunity Scheme acutely demonstrated this, with the capacity of energy assessors in the UK stretched to the limit in order to meet the December 2015 deadline. The government’s decision to extend the deadline until the end of January 2016 was in part recognition of this shortfall. The challenge is wider than pure energy professionals – new skills are needed across the whole industry to enable decarbonisation of our new and existing building stock. In recognition of this, JLL launched a sustainability training programme last year designed to upskill its UK employees and provide them with the skills needed to support a low-carbon property sector. Finally, the real estate sector needs to reduce emissions by 2050 to the equivalent of closing 22,000 coal-fired power stations. The Intergovernmental Panel on Climate Change estimates that approximately 29% of the sector’s emissions can be mitigated at net benefit. For the remaining, it will need billions of pounds of investment in low-carbon technologies. Part of the solution will be for investors to put their capital to work on low-carbon assets and technologies, and recognise that managing environmental risk needs to be an integral part of a fiduciary duty to invest responsibly. Action the only option There is no doubt that the cost of inaction to mitigate climate change will be catastrophic – to our economy and society. Latest estimates reveal that our current trajectory of a 6°C warming could result in $43tn in losses from extreme weather events. The whole real estate sector needs to understand its carbon impact, set long-term goals and commit to action. This is the only way we will overcome the challenges we face, so that we can look back in years to come and say we did take the opportunity, and we made the most of it. Emma Hoskyn is a director at JLL Upstream Sustainability Services