Four expert opinions on how you can accelerate investments in green buildings as well as decarbonize cities.

With the current focus on climate change, carbon emissions and the COP26 summit, we shouldn’t be shocked to learn city centers – including their tall construction and traffic congestion – are responsible for more than 70% of carbon emissions.

No matter if you’re in Mumbai, Glasgow or Boston or Glasgow, you’re likely reading this at home, in an office or in a mall, all of which use up carbon dioxide and energy in quantities that have to be reduced while maintaining public services and enhancing the quality of life for the citizens.

Four experts were invited to talk about their views on how to speed up investment in greener, more sustainable and sustainable buildings.

Rebecca Cameron, Net Zero Carbon Built Environment, City of Cape Town

Government building owners and cities are able to consider multiple perspectives when setting expectations for investments in technology for decarbonization. This includes the direct advantages of savings in costs in energy efficiency, carbon efficiency and energy reduction, as well as the larger socio-economic and utility-scale impacts of these investments like potential for job creation accessibility, inclusion and accessibility to green technology, business development, as well as increased utility effectiveness and flexibility. The most important thing is that these benefits take place at all levels of buildings, from the smallest buildings and precincts , to the city’s utility networks.

Each building is not an island as they all operate within the context of a variety of systems, including social, environmental, economic, and utility. Therefore, it is important to think about the function of each structure within the larger ecosystem of the built environment in cities to maximize the total value of investment in technologies for decarbonization.

The private sector and the cities’ building owners should cooperate on issues of policies, tariff structures, in addition to open-technology standards that enable greater system interconnection and regionalization. This will allow for more flexible and inclusive municipal energy utility systems that are needed to facilitate the expansion in local renewable energy sources. Once this is in place, the private and public sector property owners can help in transforming our cities into more sustainable, climate-friendly and fair.

Find out more about the city of Cape Town’s energy and climate work and how we’re working with businesses and residents through our Let’s Act Campaign and the recent launch of the Climate Change Strategy and Action Plan.

AXA IM Real Assets, Justin Travlos, Global Head of Responsible Investment

The first step to investing is knowing and pricing the risk. The dual effects of climate change and decarbonization are changing the face of investing and altering the broad range of risks that are well-known, from liquidity in assets and reputational risks. As the associated costs of these risks are better understood, investment the pace of activity increases.

To drive decarbonization, the active separation of profit from fossil fuel and carbon reliance is a complicated issue from a strictly cost-based viewpoint However, the trajectory of value is apparent. Assets that heavily rely on fossil fuels or produce substantial emissions will be faced with rising costs, a decrease in availability of liquidity, an increase in obsolescence and limited access to capital from institutions in the coming years. For real property, this means that we must reevaluate not only the impact on operations on the property, but also the actual cost of building this asset.

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In order to accelerate investments in decarbonization, there has to be a greater awareness of the real expenses against which the returns currently must be evaluated.

” — Justin Travlos, Global Head of Responsible Investment, AXA IM Real Assets.

Real estate has always focused on reducing emissions from operations and improving energy efficiency. This practice has led to better returns, typically for low capital investment and these enhancements are now being enhanced by the latest digital technologiesthat can deliver higher efficiency at a lower cost with improved user experience.

However, in order to reach net-zero targets, higher investment and more active involvement throughout the entire real estate industry is required to make the needed adjustments to the building system and the fabric in order to meet ever-higher performance standards. In order to accelerate investments into decarbonization, it requires a deeper knowledge of the actual cost of the returns that must be evaluated. The costs are becoming more transparent as regulations are enacted and disclosure requirements grow.

 

James Middling, Global Sector Leader for Built Environment and David Robinson, Associate for Net Zero & Sustainability, Mott MacDonald

Governance, environmental and social (ESG) value are currently an integral aspect in the property market that is considered by institutional and private equity investors when deciding on assets. But what value can building decarbonization bring to the owners of assets? It is obvious that there is lots.

If it is done properly If done correctly, decarbonization can not only address environmental problems in the global environment however, it also can provide OPEX savings, increase the resilience of your business to regulatory changes and transitional risks, and create greater value for assets. Many people don’t realize that decarbonization also provides more value via less tangible benefits like health and equity, social equity and well-being for building residents and workers.

The rapid growth of sustainable finance worldwide has increased access to affordable financing for building renovations and retrofits. Our studies have proven that a reduction in carbon emissions of more than 50% in commercial buildings could be achievable by implementing upgrades to fabrics as well as lighting and heating/cooling systems, while also ensuring an attractive return on investments. Asset owners can anticipate a rise in rental value as a result of improvements in energy efficiency.

London’s most energy efficient offices have seen up to 12.2% rental rate. Furthermore, various studies that have been conducted in studies from the US market have shown rents that range from as high as 26 percent for commercial properties.

Large asset owners that have corporate strategies for decarbonization can boost their image by adopting an environmentally friendly approach, which can help to attract and retain like-minded customers and employees and the effect of this is not to be undervalued. The risk of being seen as an environmental tyrant could be the most costly of all.

Victoria Burrows, Director, Advancing Net Zero, World Green Building Council

The achievement of the 1.5C targets that are part of the Paris Agreement requires nothing less than a complete overhaul in the ways we design, construct and operate, as well as deconstruct and evaluate our infrastructure and buildings. The financial impact will be massive and sustainable new buildings are expected to provide the equivalent of a $24.7 trillion opportunity for investment for emerging market economies in 2030. Therefore eliminating the barriers to mass market participation is vital.

The ever-changing dimensions of sustainability need to broaden our definition about “green” to be closer in line with those of the UN Sustainable Development Goals, and the increasing social value not only as an issue to be considered, but as an economic driver for both investors and developers. World Green Building Council’s newest most important document, Beyond the Business Case, demonstrates the undisputed, scientifically-proven benefits of investing in the sustainable development of buildings, in both the financial and social value argument.

Making investments in sustainable buildings requires an integrated approach that spans all the value chain components to move from commitments to action and impact. The decision-makers can accelerate the sector’s sustainability transformation by taking advantage of the opportunities in the economy, reducing risk, and encouraging building social value.

With a logical plan, this shift between commitment and action may be speeded up to generate economic benefits for green assets, such as more investment opportunities and enhancing the corporate image by increasing asset value and resilience to investment, reducing the operational and capital expenses and delivering a an investment return to the owner of the asset.