The body of evidence suggesting a lot more needs to be done to cut real estate's carbon footprint is growing.
Recent alarming reports that Antarctic sea ice has dropped to record lows for the second year running, suggesting climate change may now also have reached the South Pole, is a further warning – if that were needed – of the scale of the climate emergency the world faces.
Far from the ice floats of the Antarctic, the realisation that something needs to be done to arrest global warming, is growing.
The message has also hit home in the real estate industry – one of the biggest producers of greenhouse gas emissions – where moves are under way to cut its significant contribution. With regulators breathing down their necks, and spurred by targets set under the Paris Agreement, property companies have started the complex process of measuring and reporting what they emit.
It is a daunting task. Big firms have hired large teams of ESG specialists to plot their climate pathways and draw up carbon reduction strategies, while many smaller companies have yet to start.
Even the large players, who are ostensibly ahead of the game and making good progress in decarbonising their operations, are not always getting it right. As research highlighted in this issue reveals, many have strategies which, on closer inspection, are skin-deep and ‘very light on detail’. Of all global listed real estate companies, only 10% have set targets for net zero carbon emissions by 2050, the study by Van Lanschot Kempen found. European companies are doing better, but here too there is much room for improvement.
The research confirms findings from others, notably from the Global Alliance for Buildings and Construction, which reported to the UN climate summit in Egypt last November that the gap between the climate performance of the sector and the 2050 decarbonisation pathway is widening. ‘Years of warnings about the impacts of climate change have become a reality,’ said Inger Andersen of the UN Environment Programme. ‘If we do not rapidly cut emissions in line with the Paris Agreement, we will be in deeper trouble.’
At Mipim too, the carbon challenge took centre stage. For the first time, the trade show organised a dedicated zone – Road to Zero - to help the industry accelerate its decarbonisation efforts, where corporates, cities, investors and proptechs were able to showcase case studies and solutions. ESG issues generally were in the spotlight: Isabelle Scemama, global head of AXA IM Alts, delivered a keynote speech on the ‘E’ of ESG, while Cristina Gamboa, CEO of the World Green Building Council, talked about the ‘S’ – an area we also highlight in our March/April issue.
Besides ESG, there was much talk in Cannes on where the market is headed, after a year during which the fallout from Russia’s invasion of Ukraine dealt a heavy blow to investment and sentiment. Signs that a turning point may have been reached are increasing, and in our latest issue we speak to a number of experts who suggest the current phase offers plenty of opportunity – even though market volatility and uncertainty will continue for some time.
It is to be hoped that fresh insights gained at Mipim will help steel the industry for what is (yet) to come.