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Sustainable Real Estate: Navigating Global Mandates and Opportunities

  • Writer: Lionel L. G. Issombo
    Lionel L. G. Issombo
  • Apr 10, 2024
  • 2 min read

Updated: Apr 11, 2024


The real estate industry is undergoing a transformative shift toward sustainability. Driven by investor demands, regulatory changes, and a heightened focus on health and equity, companies are prioritizing sustainability like never before. In this article, we explore the latest global mandates and their significance for new businesses entering the sector.



1. Linking Sustainability and Financial Performance

  • Key Theme: As industry stakeholders—especially lenders, investors, and tenants—become increasingly sophisticated around environmental, social, and governance (ESG) topics, real estate companies must recognize the material connections between sustainability efforts and financial performance.

  • Implications for New Businesses: - Access to Capital: Demonstrating progress toward decarbonization and future ESG goals is crucial for accessing capital. New businesses should prioritize ESG integration to attract investment. - Strategic Alignment: Aligning sustainability strategies with financial objectives will be a competitive advantage.

2. Going Back to Basics for Decarbonization

  • Key Theme: The sheer volume of sustainability topics can overwhelm companies. New businesses should focus on fundamental practices to advance decarbonization.

  • Implications for New Businesses: - Education: Understand common sustainability terms (e.g., “net zero”) and their practical implications. - Operational Efficiency: Improve energy efficiency, adopt renewable energy sources, and leverage existing tools.

3. Complying with Evolving Regulations

  • Key Theme: The regulatory landscape is evolving globally. Real estate stakeholders must adapt to changes in sustainability reporting frameworks.

  • Implications for New Businesses: - Stay Informed: Monitor regulatory updates related to energy efficiency, carbon pricing, and climate risk reporting. - Transparency: New businesses should disclose ESG performance transparently to meet regulatory requirements.

4. The 10 Green Building Principles

  • Key Theme: JLL and the World Economic Forum have established 10 Green Building Principles to guide the industry toward net-zero goals.

  • Implications for New Businesses: - Benchmarking: Use these principles as a framework to assess progress and set ambitious sustainability targets. - Collaboration: Engage with industry peers and experts to implement green building practices.

5. Post-COVID-19 Interventions6. Implications for New Businesses:

  • Key Theme: Governments and legislative bodies are intervening to accelerate sustainable practices.

  • Three Pillars of Intervention: - Energy Regulation and Carbon Pricing: Encouraging a rapid shift to green energy sources for buildings. - Enhanced Role for Energy Performance Certificates (EPCs): Standardized methodologies and strict enforcement. - Mandatory Reporting of Climate Risks: Based on the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.

  • Implications for New Businesses: - Adaptability: New entrants must align with evolving regulations and integrate climate risk assessments. - Resilience: Building resilience against future shocks is essential.



Conclusion

Sustainable real estate is no longer an option—it’s a necessity. New businesses entering the sector should embrace these global mandates, leverage green building principles, and contribute to a more resilient and equitable built environment. By doing so, they can thrive in a rapidly changing landscape while making a positive impact on our planet and communities.

Remember, sustainability isn’t just a trend; it’s the future of real estate. 🌿🏢


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