Sustainability within the built environment
BY SARAH RATCLIFFE BETTERBUILDINGSPARTNERSHIP.CO.UK
Sarah has over 20 years’ experience working in the property sector on sustainability issues. She is CEO of the Better Buildings Partnership, a collaboration of the UK’s leading commercial property owners who are working together to improve the sustainability of existing commercial building stock, aim to deliver market transformation through sustainability leadership and knowledge sharing across the property industry. The BBP has 40 members with combined Assets Under Management (AUM) of over £250bn.
Sarah is a visiting lecturer at The Business School (formerly Cass), a Board Director of the Sustainable Development Foundation and has contributed to numerous industry steering groups and committees.
If 2020 will be remembered for something other than COVID-19, it will undoubtedly be the year in which environmental, social and governance (ESG) issues came of age. Having committed the UK economy to becoming net zero by 2050, the UK Government announced that it plans to make reporting on climate related risks mandatory in line with the recommendations of the Task Force on Climate Related Financial Disclosure (TCFD) and launched their first sovereign green bond. The Bank of England said that it will stress test the exposure of Britain’s commercial lenders to climate change risk, whilst the Net Zero Asset Owners Alliance (representing 30 of the world’s largest investors with over $5trillion AUM) collectively agreed on portfolio decarbonisation targets that follow the Intergovernmental Panel on Climate Change (IPCC) 1.5 °C scenario for the next five years.
Numerous businesses are also committing to climate change targets, the like of which we have never seen before, whether its Microsoft committing to become carbon positive by 2030, KPMG committing to be a net zero carbon neutral organisation by 2030 or the 63 retailers supporting the BRC Climate Action Roadmap to bring the retail industry and its supply chains to net zero by 2040. Climate change has become a competitive issue.
Whilst somewhat esoteric, these commitments are of critical importance to the real estate sector as these stakeholders regulate, invest in and occupy the buildings that the sector develops, owns and manages. The real estate sector has responded with its own commitments, including the BBP Climate Commitment for property owners which has 26 signatories, representing over £300bn AUM and spanning UK, European & global portfolios.
This year the Climate Change Commitment signatories will be publishing their net zero carbon pathways, providing a transparent commentary on the scope of their targets and providing details of their delivery plans. Last year the Commitment signatories published their net zero carbon pathways, providing a transparent commentary on the scope of their targets and providing details of their delivery plans.
The impact of the COVID-19 pandemic on ESG issues has been fascinating to observe and far from relegating ESG to an ‘also ran’, the pandemic has thrust ESG to the forefront of the response, making it a critical component of the narrative on ‘building back better’. The pandemic has also enabled us to exercise the incredible power of collective action and human ingenuity when faced with a global crisis, and the parallels to the climate crisis (from which we cannot isolate) should not be lost on us.
Where we work and how we work will undoubtedly be changed as a result of the COVID-19 pandemic. The purpose of the long commute into the office to sit at a desk has been brought into sharp focus, but perhaps the novelty of working from home and in isolation has begun to lose its appeal, with many people yearning for human contact and the benefits that collaborating with colleagues can bring.
The future of the workplace will certainly become driven by a different set of choices and ESG has a critical role to play in these shifting demands. We know we can work from home, but we need places in local towns and villages for when we need to be with other people (or when the small rooms in which we work become unproductive). We need regional hubs that enable us to work with colleagues without the long commute and its inherent risks. We need city centre locations to be accessible by cycling and walking so that we can choose how we get to work. And finally, we need buildings that are more responsive to occupiers’ patterns of work and that provide a healthy working environment that makes a positive contribution to tackling climate change.
It is clear that environmental, social and governance issues are here to stay, but much more than that, they are set to be a driving force behind decision making in the real estate sector. It’s a big ask and a big leap for an industry that is slow to change and fragmented, but it is clear that the real estate businesses that respond to these challenges and seize the opportunities that this presents will attract the investors and occupiers upon which they survive and thrive.