Preamble
A common set of environmental principles need to be developed for the real estate industry so that decision-making and operations of real estate firms place a high priority on becoming environmentally sustainable. Although there are diverse environmental standards at the building level, company level, and the national government level, the real estate industry lacks a uniform set of sustainability principles. This blog by the Iqbal Institute of Policy Studies (IIPS) presents the principles which will set out the basis for environmental sustainability in the real estate sector.
Research Questions
- What is the current state of real estate and the environment?
- What are the existing practices of sustainability in real estate?
- What can be the future principles of real estate sustainability?
Introduction
Real estate is central to urban development, consumes physical resources, and is a significant source of emissions. These qualities give real estate a central role in creating an environmentally sustainable future. The real estate sector is responsible for more than 20 per cent of the world’s carbon emissions and other environmental impacts including waste production, pollution, water mismanagement, and consumption of other natural resources (Kevin Muldoon-Smith, 2019). There have been efforts made in the past to reduce the environmental impact of buildings, but continued efforts are required to support sustainable development. An effort to lower the current global emission trajectory, support adaptation to climate change, reducing pollution and damage to the natural environment, and promoting principles of a circular economy is needed. Progress can be seen in the form of green building technologies, but sustained and consistent practices are hard to find in the industry. Defining and adopting a clear set of principles would help the sector to contribute to the sustainable economy.
Real Estate and The Environment
The real estate sector uses a great amount of energy and is a big contributor to carbon emissions. The sector consumes more than 40 per cent of energy globally, with 20 per cent of greenhouse gas emissions coming from the sector. There is a projected increase of 56 per cent in building carbon emissions by 2030 (UN, 2015). Buildings also have a significant and growing impact on other natural resources. For example, buildings are expected to use 12 per cent of global freshwater and generate 30 per cent of total waste in the European Union (World Bank, 2018). Socioeconomic forces will make the environmental impact of real estate even more relevant in the future. By 2030, the global population is poised to exceed 8 billion and 60 per cent of this population is expected to live in urban areas (UN, 2018). To fall within the targets decided in the UN Climate Change conference, keep global warming below 2 degrees Celsius, the real estate sector requires stringent targets.
Existing Practices in the Real Estate Sector
It would be wrong to say that the real estate industry has not adopted environmental sustainability in its practice and decision making. Currently, 40 to 48 per cent of commercial buildings globally are “green”, compared to only 2 per cent in 2005 (USGBC, 2021). As a majority of real estate stock is already in existence, it is difficult to make and implement new changes and environmental improvements. Nonetheless, there has been a parallel growth in retrofitting to produce greener properties. This uptake is increasingly driven by commercial factors such as client and market demand. Real estate firms and organisations have formulated statements of environmental policy, sustainability targets, and commitments to reduce carbon emissions, but the actual situation remains dismal. Companies have made policies related to environmental sustainability but have not developed principles or principle-based initiatives. This makes room for the adoption of pre-developed principles which might or might not support all the areas of environmental sustainability.
Organisations are keen to develop new principles for environmental sustainability but remain less supportive of the fact that new reporting methods and requirements would be involved. There are several practices which make real estate sustainable at present. City-scale actions to reduce greenhouse gas emissions, improvements in space and water heating/cooling, the introduction of low energy appliances, and installation of solar PV panels are some of the steps taken all over the world to enable sustainable standards in buildings. Data management platforms are established to identify real estate transformation insights and benchmarks. Smart asset optimisation, predictive maintenance and digital inspection, 3D mapping, material efficiency, and zero waste methods are constantly evolving the real estate industry by making it more in line with environmental sustainability.
Principles for A More Sustainable Real Estate Sector
Five principles can be defined as key for real estate sustainability. It is important that any company or organisation, involved in real estate, should adhere to the best sustainability standards across all their operations. It should be the responsibility of board members of a company to monitor and disclose sustainability performance. The second principle can be to ensure that all decisions contribute to improvements in environmental sustainability at local and urban levels. This can be achieved by working in collaboration with tenants, city governments, planners, and other key stakeholders. A third principle can be to commit to continuous improvement in building standards and construction. The fourth principle should entail tracking the environmental performance of all real estate assets and operations continuously. Lastly, the identification of explicit targets for improving environmental sustainability performance and minimising emissions of greenhouse gases is needed to increase the use of renewable energy sources.
Conclusion
A major portion of urban development is related to real estate. To ensure that humanity is left with sustainable infrastructure and a clean natural environment, sustainable practices must be adopted in the real estate industry. There exist many practices which make the real estate sector environmentally sustainable, but there is a lack of principles which can guide future policy decisions and sustainability. Therefore, the introduction of principles which set a standard procedure for all stakeholders involved is key to the environmental sustainability of real estate in the future.
Key Takeaways
- Real estate is central to urban development, consumes physical resources, and is a significant source of emissions.
- The real estate sector is responsible for more than 20 per cent of the world’s carbon emissions and other environmental impacts including waste production, pollution, water mismanagement, and consumption of other natural resources (Kevin Muldoon-Smith, 2019).
- Progress can be seen in the form of green building technologies, but sustained and consistent practices are hard to find in the industry.
- Defining and adopting a clear set of principles would help the sector to contribute to the sustainable economy.
- The real estate sector consumes more than 40 per cent of energy globally, with 20 per cent of greenhouse gas emissions coming from the sector.
- There is a projected increase of 56 per cent in building carbon emissions by 2030.
- Socioeconomic forces will make the environmental impact of real estate even more relevant in the future.
- By 2030, the global population is poised to exceed 8 billion and 60 per cent of this population is expected to live in urban areas.
- 40 to 48 per cent of commercial buildings globally are “green”, compared to only 2 per cent in 2005 (USGBC, 2021).
- Companies have made policies related to environmental sustainability but have not developed principles or principle-based initiatives. This makes room for the adoption of pre-developed principles which might or might not support all the areas of environmental sustainability.
