Education will bridge the gap between sustainability and real estate
It is widely acknowledged that real estate is responsible for around 40% of global carbon emissions. The need for more sustainable real estate should be an essential and pressing business consideration.
4 minutes to read
We interviewed almost 400 global business leaders to understand how they’re adapting their real estate strategies for the years to come. The below insights are based upon their responses. To discover the data behind the story, get the full picture in (Y)OUR SPACE.
In that light, it’s only natural to assume that sustainability will be a core driver of future corporate real estate strategies. But according to our global survey, there is a clear disconnect between wider corporate sustainability concerns and future real estate strategies, with the latter viewed as having only marginal influence on the former.
Almost 60% of respondents maintain that there is only a partial recognition from their wider business of the role that occupying and utilising real estate differently could have on the achievement of net zero carbon and wider sustainability targets, with a further 15% arguing that there is no recognition at all.
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On top of this, the level of green building accreditations within global portfolios remains low, with a lack of targets in place to raise the game.
Embracing the “green recovery”
Prior to the pandemic, the majority of major cities had ‘green’ agendas on the cards. But, as with many trends, Covid-19 “sharpened the resolve to see them through”.
Dubbed the “green recovery”, redeveloping old buildings (both residential and commercial) to be more energy efficient will be a key driver in building back better. In fact, in March 2021, the UK Government’s Chief Property Officer, Janet Young, outlined the net zero strategy for its £500 billion property portfolio – comprising 300,000 properties, workplaces and public services. Retrofitting the portfolio will be “key to decarbonising” it.
Meanwhile, sustainability linked loans have begun to incentivise the creation of ‘green buildings’, while in places such as Singapore and Abu Dhabi, new buildings require minimum green ratings to be granted approval.
But the journey to build back better (and connect the dots between sustainability and real estate) begins at an extremely low base for many businesses across the world. Some 64% of our survey respondents believe that less than a quarter of their global real estate portfolio is ‘sustainable’ with only 15% of respondents believing that more than half of their existing portfolio could be so described.
This, of course, is a subjective view open to enormous geographical variation and bias. Yet, when respondents were asked to quantify the proportion of their global portfolios that are officially accredited as sustainable via formal accreditation systems such as BREEAM, LEED, DGNB, CASBEE or Green Star, the numbers are even lower. Three-quarters of respondents have less than 25% of their global portfolio with an official sustainability accreditation and just 13% have more than half of their portfolio bearing such credentials.
The evidence base and data to support the business case for choosing sustainable office space needs to be stronger and more transparent. But how?
Education is key
If we are to build back better and ensure businesses to ensure businesses play their part in protecting the planet, sustainable real estate needs to become more prevalent within corporate portfolios. But crucially, that uptake is dependent on raising awareness and educating at all levels, particularly on the following areas:
1. There is an opportunity for office developers to move beyond the ‘green washing’ often evident in marketing collateral. There must be a greater onus on the supply side to sell a sustainable solution to a business rather than simply a sustainable product. Critical to this ‘sell’ is to actually articulate how sustainable buildings can both optimise real estate spend and support wider ambitions.
2. There is an opportunity to build a strong understanding of current accreditation systems, their compatibility and comparability, so that targeted and consistent action is possible across global portfolios. In doing so, practical guidance and hard evidence that clearly articulates the value proposition of occupying an accredited building (in terms of both meeting net zero carbon goals and financial targets) should be readily available, thus supporting an increase in accreditation levels.
3. There is an opportunity for corporate real estate leaders to educate business leaders on the opportunities presented by real estate. For many years, corporate real estate teams have been unsuccessfully seeking to occupy a more elevated position within their organisations which is aligned to the strategic contribution that real estate can make. Perhaps now is the time to highlight exactly how sustainable real estate can help businesses achieve their wider ambitions.
To explore what the future of work means for your business and understand how you can optimise your real estate strategy, step into (Y)OUR SPACE, or get in touch with a member of our team.
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