EDITOR’S COMMENT “The world is on fire!” unexpectedly boomed the voice of Emily Hamilton, Future Leader and now head of ESG at Savills Investment Management, as she took to the stage in 2019.
That speech, one of 12 phenomenal, emotional and important talks at EG’s first Future Leaders event, was frightening. It laid out just what we were doing to the planet. This week we felt that damage as we sweltered in 40°C – the highest temperatures ever recorded in the UK.
If this week hasn’t been a stark reminder that we need to move from talk to action when it comes to climate change mitigation, I don’t know what is.
More action is needed and it is needed now. And it will be up to businesses and individuals to take that action. Government regulation will be too slow and, probably, inadequate.
News this week that the High Court had ruled the government’s net zero strategy was unlawful is bittersweet. It is a victory for the Good Law Project and Friends of the Earth in showing how inadequate, vague and completely lacking in assurances the strategy is, but a blow for the planet as now government must tighten up the strategy. It has been given an eight-month deadline, but time is ticking and while pessimism runs strongly through my veins (the curse of journalism), I doubt I’m alone in not holding out much hope that this government will deliver anything much better in that time frame.
And with the current (as I write this on Wednesday morning) Tory party leader hopefuls rather lacking in enthusiasm for climate action, can we really rely on our government to do anything useful?
The problem with real action on climate change is that it costs. A lot. The capital needed to make our homes, places of work, shops, sheds and infrastructure more energy efficient is vast. And who is going to pay for that?
We are experiencing a cost-of-living crisis that will undoubtedly force many of us to tighten the purse strings. While throughout Covid and the struggles that brought for many businesses we saw a steadfast commitment to ESG, there are signs it is starting to wane a little.
Profit and purpose pioneer Larry Fink has already signalled that BlackRock might not be quite so focused on ESG going forward and this week, albeit on a smaller scale, the new lot at Palace Capital have done a U-turn on its strategy to buy brown buildings and turn them green. It no longer wants to be an ESG-focused REIT and will instead return cash to shareholders. Why? They don’t say explicitly but I’m guessing they did a little maths on how much it costs to turn a brown building into a green building and had to sit down after looking at the numbers. And, it appears shareholders would rather have the cash than play the long (and probably ultimately more valuable) game of investment. A game that would see their returns diminish for a while – maybe a long while – before lifting again. But when times are hard, money matters more than people or the planet, right?
I’m increasingly of the opinion that this narrative that businesses are being forced to keep sustainability and social impact high on the agenda because of investors and shareholders is rubbish. Investors and shareholders want returns. Many of them want them now, not in a decade.
But the world is on fire and this week’s “freak” weather is not going to be abnormal. This is what we’ve done to the world and it is up to us to fix it as best we can.
This is real estate’s moment to be the hero. To lead by example. To put its hand in its pocket, to take the hit today, tomorrow and for the next five to 10 years so that it provides a built and green environment for the future.
If we don’t do it, who will?
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
