Sustainability ‘moving from theory into practice’
Wise investors and landlords will act now to become ‘greener’ before legislation forces them to, panellists agreed at the PropertyEU Carbon neutral and the future of responsible investment briefing, which was held at EXPO REAL in October in association with Redevco.
‘More regulation and legislation is coming, there is no doubt,’ said Richard Hamilton-Grey, sustainability manager, TH Real Estate, ‘Asset managers and landlords who are proactive can protect themselves from obsolescence risk as well as valuation downgrades in the future.’
The link between the sustainability and the value of a building is not sufficiently articulated now, but the connection will become increasingly clearer, said Kai Bakker, head of sustainability Europe, Cromwell Property Group.
‘As laws stop you from selling or leasing a building that falls below a certain energy performance threshold, there will be changes in valuation,’ he said. ‘There will be more legislative changes coming our way, so it is better to be proactive.’
Things have moved forward and for many companies sustainability ‘now is part and parcel of the business,’ said Hamilton-Grey. ‘It has gone from being the responsibility of a few people in a back room to being top of the conversation in the boardroom.’
Now there is a clear understanding of the issues and of the responsibility all stakeholders have to have a positive impact on the built environment. Yet action at the individual company level is not enough if real estate, which accounts for over 30% of the world’s Co2 emissions, is to improve its track record, panellists agreed.
‘We make a constant choice to manage our portfolio in a way that does not have a negative impact on the environment and if possible has a positive impact, but we also share with others how we are doing it and we encourage them to join us in making a change,’ said Clemens Brenninkmejer, head of sustainable business operations, Redevco.
‘When investors and clients see the first results of our strategy, hopefully they will join us on that journey,’ he said. ‘Then things will move from theory into practice.’
More cooperation is still needed in the very fragmented real estate sector, said Hamilton-Grey: ‘We need to overcome barriers in order to achieve the scale necessary to make a difference.’
The targets set by the Paris agreement are ambitious, as are the goals set by the World Green Building Council of a net zero carbon real estate world by 2030 for new build and by 2050 for existing buildings, but they are achievable, panellists agreed. The ‘net zero carbon buildings commitment’ aims to maximise the chances of limiting global warming to below 2 degrees by drastically reducing operating emissions from buildings.
‘The challenges can be met, even in existing buildings,’ said Bakker. ‘We can have carbon-neutral portfolios by 2040, provided sustainability is on the agenda at every single board meeting.’
A can-do attitude is crucial to promoting change. ‘Sometimes we overestimate what we can achieve in a year, but underestimate what can be done in three years,’ said Brenninkmejer. ‘As a sector we must do more, set a vision and share our experiences. Each one of us can contribute with a piece of the puzzle. We have to keep raising the bar.’
As the discussions on sustainability continue, all stakeholders will become more involved and cooperate more, said Christiane Conrads, head of German real estate desk, PricewaterhouseCoopers: ‘But at the end of the day, I am sorry to say, more regulation will be needed to force people to work together and to meet the Paris objectives.’
Legislation and regulation will push the process along, agreed Bakker: ‘It is the right direction of travel and it will lead to a shift in market behaviour.’