Decarbonization of Building Stock Still Lags Goals, Says RICS
While the built environment is going in the right direction, it still isn’t moving fast enough to decarbonize building stock, according to the latest annual sustainability report produced by RICS and World Built Environment Forum. The 2021 report shows a greater appetite for greener buildings and more sustainable projects, but progress isn’t occurring rapidly enough to help reach global net-zero targets.
In 2021, more than 40% of the 4,000-plus respondents to the RICS Global Commercial Property Monitor and the RICS Global Construction Monitor identified client, stakeholder and customer demand as one of the main driving forces behind the Environmental, Social, and Governance (ESG) investment boom. Fifty-five percent more survey respondents cited an increase in occupier and investor appetite for green and sustainable buildings in the past year, with only 6% of respondents reporting a fall in demand for such assets despite the challenges posed by COVID-19.
As demand for greener assets grows, some evidence suggests that enhancing the sustainability attributes of a building can command a rent premium. Half of respondents believe green can charge higher rents compared with non-green buildings. For those buildings that aren’t green or sustainable, 30% of respondents cited that these buildings are given a ‘brown discount’ – discounted rents to compensate for not being sustainable.
However, while 40% of respondents have seen an increase in the number of green leases—landlord/tenant arrangements that encourage or even contractually dictate standards around sustainability—the majority have yet to see green leases become a dominant feature of the market.
Looking at the construction sector, two-thirds of respondents say the top priority for the sector to become more sustainable is through minimizing waste. About half see more resilient construction products, materials and components as a principal concern. Despite 55% of respondents reporting an increase in demand for recycled and reusable materials in the past year, 43% haven’t seen a change.
With the construction sector responsible for around 40% of carbon each year, respondents were asked about their operational and embodied carbon measurement practices. Seventy percent replied that there is no operational carbon measurement taking place in the lifecycle of their projects. Also, more than half don’t measure embodied carbon and for those that do, less than 14% use it to select the materials they use in their project.
“Construction firms, who are at the forefront of dealing with some of the major consequences of climate change, still believe more can be done to achieve net-zero,” said Simon Rubinsohn, RICS chief economist. “ It is clear from the feedback that respondents have a willingness to improve but currently only a third of respondents are measuring their operational carbon output. As material prices rise across the globe and building supplies become scarcer, firms are looking for new solutions that will help make a measurable impact when it comes to tackling climate change.”
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).