With an increased appetite for sustainable commercial property, more must be done to progress decarbonisation, argues RICS sustainability analyst Kisa Zehra
The latest analysis by the International Energy Agency suggests that the buildings sector is not on track to achieve net zero carbon emissions by 2050. Bold initiatives are needed. For one, emissions from the operation of buildings need to more than halve by 2030 to get the sector back on track.
Signatories to the World Green Building Council’s (WorldGBC) Net Zero Buildings Commitment have been rising, however, with members in the group committing to reduce operational and embodied carbon emissions across their property portfolios by 2030, and to advocate for all buildings to be net zero whole life carbon by 2050.
The WorldGBC argues that buildings should also offer wider environmental and social benefits, such as water and waste efficiency, and ensuring good health and wellbeing for its users.
The recently released RICS Sustainability Report shines a light on how the green agenda is shaping trends and practices across the real estate sector. The analysis shows sentiment data from around 4,000 professionals operating across the construction and commercial property spheres. A similar exercise was done in 2021, with this year’s publication allowing us to pinpoint potential signs of progress.
Results of the 2022 RICS sustainability report
The results on the one hand illustrate that the built environment is embracing green approaches. The RICS Sustainable Buildings Index is a measure of occupier and investor demand for green buildings. The index suggests that occupier and investor appetite for green real estate has risen over the past 12 months. The pick-up is seen across the globe and across the broad regions, Asia Pacific, the Americas, Europe and Middle East and Africa.
This seems to be impacting market values. Close to 50% of respondents across the globe note that non-green real estate assets are subject to reductions in rents and sales prices, ie “a brown discount”. Furthermore, the majority of respondents globally reporting an increase in climate risk assessments by investors on their built assets in the past year.
RICS sustainability report identifies substantial gaps
The industry has yet to meaningfully adopt digital tools and processes for environmental assessments. Around 45% of respondents globally report using digital tools and process to complete sustainability assessments on less than half or none of their projects.
Significantly, around 72% of global respondents state they make no measurement of operational carbon across their projects, and around half suggest they do not measure embodied carbon on projects. These results are more or less similar to 2021, suggesting the industry has made virtually no progress in this area.
When asked to pinpoint the principal barriers preventing the sector from reducing emissions, lack of established, standards, tools, databases and guidance are seen as the key obstacles. High costs and low availability of low carbon materials/components and shortage of knowledge and skills were also identified as pressing issues.
How can the industry improve sustainability standards?
A “decarbonisation toolkit” led by standards, tools and guidance could help to address these barriers. The industry cannot do this without collaboration, data and knowledge sharing. The development of International Cost Management Standard by the ICMS Coalition and the Built Environment Carbon Database are important examples of this.
McKinsey suggests that a “culture of innovation” needs to be created across the industry, which is notorious for being slow to change. Upskilling professionals is perhaps just as important and industry leaders need to develop the skills and knowledge to meet market demand and adopt the latest standards and tools.
Government policy will prove to be crucial. Higher building performance standards and building codes can help the industry move forward. This is already high on the agenda for the UK government. The International Labour Organisation estimates that a shift to greener economy could create 24m jobs globally by 2030, an important statistic for policymakers to think about.
Kisa Zehr
Sustainability analyst
Royal Institution of Chartered Surveyors (RICS)
Tel: +44 (0)24 7686 8555
