The private sector have been engaged in strategies, polices and plans that are aimed at making their particular product, service, or whatever, sustainable, climate adapted and green for some time.
Why? Because it’s driven largely by changes in Consumer Preference, a trend that looks set to strengthen year-on-year, so it just positively impacts their bottom-line. Nothing wrong with that at all, long may it continue.
Particular to our market, the property market, the Businesses we house in our buildings look to further enhance their sustainability in response. Their sustainability means increasing pressure on us to build better and better buildings, ones that they can account for within their CSR, through LEED Consulting for example, and help their bottom-line through enhanced employee satisfaction, to name but one benefit of building green.
In regards Urban Space, we Real Estate Developers, Building Owners and Investors, should be relatively proud that we have been leading from the front when it comes to the actual implementation of climate change mitigation and adaptation within Buildings, through still largely voluntary actions, and, albeit, because Green buildings just make financial sense. Our positive role in limiting global temperature increase is a point concurred with by the UNEP Finance Initiative Real Estate investor members SSE, PRI, IIGCC, IGCC, CERES – INCR and the RICS.
However, with buildings still accounting for 30% of Global C02 emissions, combined with the latest research showing the very real peril of being ‘’carbon locked’’ into future emissions that would exceed the carbon budget, and C40’s recent report that building Green infrastructure now is more economical in the long-term, by some margin, it’s time for us to be bold.
Certainly, here at Gebco International, we are doing our bit through delivering LEED Consultancy, Energy Modeling and Fundamental Commissioning at an incredibly affordable price-point achieved by taking the bold decision deploy an innovative business model. Ok, so enough shameful self-promotion, but we are proud of it.
Bold is something we can all do within the private sector, we have the mobility advantage, we can move swiftly. Certainly our Business customers and investors will demand it, and soon. But, only if it makes sense to.
So, certainly, we can decide, as a market, that Building Green no longer is a decision to be made, but is taken as read. We can decide that LEED Certification, Energy Modeling and Fundamental Commissioning are added to the ‘’norms’’ within all building projects.
However, what can aid us trail-blaze further all the while enhancing our clients return?
One way for us to be able to move to this state, is by having a robust and consistent ability to be able to tell our stakeholders, consumers, markets, investors, whomever, the exact scale of the value of our investments, say by having them LEED Certified, into Green Buildings.
When I say, exact scale, I refer to the generation of robust market signals, new taxation models, financial and insurance instruments that make sense to the market and us private sector actors. We need greater access to green finance, enhanced ROI certainty for our investors and our investments. These can only come from clear, deployable, governmental policies and commitments.
Currently, there is a dis-join between the financial services players and the markets they serve, as agreed by PwC:
“A higher proportion of financial services CEOs don’t see climate change as a risk to their business models compared to other sectors, which could highlight a disconnect with the sectors they finance”
As Rachel Kyte, the World Bank’s vice president and climate change representative, advises: ‘’ We have to find ways to bridge the gap in urban climate finance.”
Further to this, clarity on Carbon Pricing is a crucial element to improving market signals.
“Carbon pricing is essential to guide business decisions and investments towards a low-carbon future. . The agreement should lay the foundations for the integration of a carbon pricing system in all major emitting countries,” said Gérard Mestrallet, chief executive of the world’s largest electricity producer Engie.
Ultimately, the financial system itself needs to be adapted to aid the mobilization of private capital towards the green economy.
And this is where, here at Gebco International, we thought COP 21 would step in, specifically around mobilization of private capital towards the green economy. And to be fair, it has, at least in being on multiple agendas of, at times, the slightly bewildering number of committees, alliances, policy units etc.
Each have common themes and synergies applicable to our sector: Urban Space Agenda; Built Environment; New Investment Vehicles; New Access to Capital; Public-Private Partnerships.
In the realm of markets and finance, we have the following:
- The World Business Council for Sustainable Development aims for the creation of stronger market signals, critical to Real Estate Developers, Investors and REITs, through driving forward clear accounting of the externalities that aren’t typically account for in Business as yet.
- The Lima-Paris Action Agenda’s third aim is to look into ways to increase the flow of finance into Urban climate action through the development of innovative economic tools.
- While the Cities Climate Finance Leadership Alliance, is exploring innovative funding models for green buildings ad infrastructure.
- The new Global Innovation Lab for Climate Finance is looking into, amongst other items, the identification of strategies for investments in low-emission, climate-resilient infrastructure.
- We have Pension funds following-suit, Banks, Insurance companies looking at new financial and insurance instruments for green buildings to deal with the carbon already locked in and at the UN Climate Change Summit in September 2014, the insurance sector set the target to double their $42 billion investments in green finance by the end of 2015.
- And the World Bank Group and partners launched the Carbon Pricing Leadership Coalition, whose aim is trying to re-energize the discussion on setting a global carbon price, crucial for real estate investments.
Within the Built Environment, we have:
- The Global Alliance for Buildings and Construction was formed at COP 21. This multi-player alliance includes participants that are responsible for setting building regulations and codes with private and NGO actors in the Green Building space (World Green Building Council for example). On the agenda are financial items, specifically, how to forge the relevant new public-private partnerships and access to funding and are committing to achieve Zero Net Carbon new buildings by 2050.
- Mayors have pledged to spend 10% of their annual budget this year on city resilience.
“Too many cities today are facing a critical shortage of finance resources that they can tap into,” Rachel Kyte says. “Most cities do not generate sufficient fiscal resources, or have difficulties in accessing financial markets. This blocks them from the ability to invest in a resilient, low-carbon way.
- The Building Efficiency Accelerator Platform whose goal is to double the rate of energy efficiency in buildings by 2030. Deploying cutting-edge BIM, Energy Modeling Services and LEED Fundamental Commissioning as standard, will help a great deal.
- Architecture 2030 supported by the International Union of Architects, and The Architects Council of Europe are committing to phasing out carbon intensive architecture in favor of low-carbon buildings.
- Habitat III, will chart a new course to ensure that our cities meet the demands of the 21st century.
On the Investors side, we have:
- The de-carbonization of portfolios is gathering pace via the Montreal Pledge, the Portfolio Decarbonization Coalition and the Divest-Invest Philanthropy Coalition.
“The message has never been clearer: in real estate, smart business managers are investing in sustainability,” said José María Figueres, chair of the board of Rocky Mountain Institute and Carbon War Room.
- The Investor Confidence Project, whose aim is to create a robust financing market to aid the acceleration of building energy efficiency, through new financing schemes that deliver more reliable and financially attractive projects.
- The Institutional Investors Group on Climate Change, which provides investors with a platform to push both public and private realm actors to address climate change via making market signals more robust and intuitive and informing investment practices to enhance long-term investment values.
- More specific to our realm, the Institutional Investors Group on Climate Change’s Property Programme, aims to enhance the engagement with Policy makers to ensure appropriate polices are deployed that maximize environmental benefits, property ROI and decision-making process for property investment portfolios.
These all sound very encouraging, and how these develop will be crucial to knowing the size of the opportunity to Real Estate Developers, Building Owners and Property Investors, and by knock-on effect, us as LEED Consultants, Energy Modellers and Commissioning Agents and, the main point really, global climate change mitigation and adaptation. We will be following up on the outputs of these various actors within this blog as we continue through 2016.
So viva COP 21 and let’s see what comes of it…you know, when I say it out loud, for some reason the inane tune from the even further inane show ‘’Bad boys, bad boys what ya gonna do’’… plays on my internal turn-table….Well, we in the private sector aint half bad at what we do, were ready and willing to do more, gives us the extra financial tools, the market signals, and so ultimately, the Green Building investment transparency, those will generate further incentives and enhanced ROI, and we will build it….and sustainable, green, resilient buildings will come…