Climate change has been put at the top of the agenda for many businesses with two recent events in particular fixing the focus on action.
First the publishing of the Sixth International Panel of Climate Change (IPCC) Report in August 2021, which in summary declared:
- climate change is a fact of life
- it is a crisis - a code red for humanity
- it is caused by fossil fuels
The IPCC is famously conservative with its findings due to the requirement of needing them to be agreed by 195 countries. Yet the report boldly declared: “Humanity is unequivocally responsible for climate change”. This is as close as we get to scientists screaming at the top of their lungs from tall buildings.
The second event was COP26 and the publishing of the Glasgow Climate Pact in November 2021. The need for action was quite clear with Para 17 of the Pact following the IPCC Report recognising that “rapid, deep and sustained reductions” were needed in global greenhouse emissions to keep the 1.5oC target in reach. The Pact also highlighted a move to measurable mitigation measures rather than vague targets. It may also be surprising to note that this was the first ever mention of fossil fuels in the text of a COP agreement.
The impact of the sustainability zeitgeist is already evident in the rising importance given to ESG considerations, with many investors and lenders now treating ESG risk as investment risk. Indeed, many businesses are now beginning to report performance on an ESG metric and on this basis the “E” is the immediate existential threat. To put it into context, to get to the 1.5oC warming scenario of the Paris Agreement, we need to reduce global emissions 6% per year - the equivalent to a Covid-type disruption event a year for the next couple of decades.
The buildings and infrastructure sector is still one of the largest carbon emitters, directly responsible for 25% of the carbon footprint and rising to 42% when surface transport is added. The built environment has some very challenging issues to address.
“The buildings and infrastructure sector is
directly responsible for 25% of the carbon footprint.
The way forward
With the UK having now legislated for net zero carbon by 2030, as an economy there has been a definite shift in attitudes across the whole value chain, from agents and valuers to architects and developers. Terms such as ‘climate change mitigation’, ‘nature and biodiversity’, and ‘resource circularity’ have become more prominent in the concepts driving real estate development as the sector moves to actioning the ambition of a net zero built environment.
Considering that many developments can take up to eight years from inception to completion, the built environment as an industry cannot be planning steps over the next eight years to halve emissions by 2030. Rather it needs to have a joined up and progressive approach to how it develops now. The UK Green Building Council has recently launched its Net Zero Whole Life Carbon Roadmap – this is a positive step as it aims to establish pathways to decarbonisation to enable stakeholders to make informed market decisions rather than second guessing. This joined up approach is essential.
Along with the shift in industry attitudes, there also needs to be a regulatory and policy shift with flexibility and adaptability being promoted as core attributes of the built environment. For instance, we need to see more integration of a circular economy as part of real estate development. The sector still lags behind other industries in respect of material and component parts being dismantlable and reusable.
In terms of regulation, we need to see less strict uses and zoning regulation, which hinders the adaptability of the built environment. The built environment needs to enable and facilitate supply chains and businesses to decarbonise, not curtail or hinder them.
“The sector still lags behind other industries in
respect of material and component parts being dismantlable and reusable.
Innovation also needs encouragement, and perhaps the first step should be putting innovation in respect of sustainability on an equal footing by changing the procurement rules and giving innovation a more prominent consideration in assessing and awarding contracts, rather than cost analysis.
It is certain that the built environment has an integral role to play in the low carbon transition.
Author: John Palmer, Partner, Real Estate - Shoosmiths
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