We know we need net zero buildings. A lot of them, actually. Part of the answer to mitigating the effects of climate change lies in implementing them at scale. After all, buildings make up 20% of the UK’s carbon emissions. That means that both public and private sectors must implement green buildings into their net zero strategies to achieve the UK’s decarbonisation target of net zero emissions by 2050.
If net zero buildings are so important to mitigating climate change, why aren’t we seeing more on the ground? What challenges are we currently facing and how can we turn ambitions into reality?
These were the questions the panel at the Reset Connect conference earlier this month tried to answer. Moderated by our commercial director, Eleni Polychroniadou, the panel consisted of speakers represented by Canary Wharf Group, Mitie, Savills Investment Management and Hark Systems. Covering the full value chain of the real estate industry, the speakers got into a passionate conversation about net zero buildings in the UK and the key to unlocking growth.
Bringing net zero to the board level
One of the key points of discussion was around who needs to be involved in implementing net zero buildings. As an industry, we still have a long way to go in achieving our net zero building targets. The recent Climate Change Committee report asserted that the UK has had “no sustained” reduction in emissions from buildings in the last decade. For the private sector, decarbonisation is a problem solved at an organisational level. Whilst there is a general movement towards net zero within both public and private sectors, to make impactful change at scale we must get the conversation up to the very top of organisations and to decision makers. And that isn’t happening right now. Emily Hamilton from Savills Investment management noted how there is lots of owner occupier who are willing to collaborate and have conversations around the topic of net zero, but MNC’s are taking a slower approach. Perhaps the problem lies in the fact that we are looking at net zero as a silo and not as a system. We must work within the system to make a smarter and bigger business case for net zero for these key decision makers and MNC’s to implement net zero into their businesses framework.
Communication, communication, communication
A second essential discussion point was around whether net zero buildings are complicated or not. The short answer? Yes and no. The panel concluded that it’s not necessarily the technology that is complicated when working towards decarbonisation but the human element. The definition and benchmark for net zero is constantly shifting and it is these shifting foundations that can be challenging. Without being able to properly understand and communicate net zero buildings, action is difficult. If we want to succeed in implementing net zero buildings at scale, we need to remove the complexity and there needs to be further education of what a net zero building actually is. Data also plays a fundamental role in decarbonisation. We can’t manage what we can’t measure. There is currently a is data gap in the market for the built environment. We need to refine the right data and present it in a way people can understand it.
Finance drives action
The third pillar of discussion centred around finance. When looking at the net zero building ecosystem, it is clear we need financiers in the room as they hold the key to action. Bringing different stakeholders throughout the green building ecosystem together isn’t commonly done but it’s essential to implement net zero buildings at scale. The difficulty the financial industry faces is around certainty and size of the potential investment. Investors are currently nervous as there is not enough certainty about what return they will see for net zero buildings. Therefore, we must work on communicating not only the definition but the value of what a net zero building can bring. There are different risk profiles for investment and it’s on us as a community to show the value of net zero buildings in light of climate change. The financial industry is increasingly interested in green assets, but the amount being financed needs to increase exponentially. Finance is also focused on metrics. We need to clearly quantify the impact of net zero buildings so investors can further see the value of net zero. This is where third party certification schemes like EDGE can come in useful.
Is the future bleak?
The panel ended with an important question from the audience: are we looking at a doomsday scenario or are there pockets of inspiration around the world? And the resounding answer was that despite the challenges, the future is bright for net zero buildings.
Sophie Goddard from Canary Wharf Group explained that what is going on with sustainable finance is exciting and investor interest has the power to change the current landscape. Indeed, New Financial has recently published a report presenting that green finance in Europe has grown rapidly to more than €300bn last year alone. At the same time, as pointed out by Eleni Polychroniadou, companies around the world are decarbonising whole portfolios of buildings, such as Lidl Hellas in Greece, Fibra Macquarie in Mexico, NEO Offices in the Philippines and many more. Countries are seeing incredible growth spurts, like Colombia which has achieved a 20% market penetration of green buildings in all new developments. We need to use these examples to lead the way for a greater market transformation towards net zero. Pradyumna Pandit from Mitie asserted that we are not good at celebrating successes. We need to highlight wins in the industry to get more action.
Whilst net zero seems like a daunting challenge, it is not impossible. We know what the challenges are and now we must break down these barriers that are stopping net zero being adopted on a wider level.
“The developed world is so slow in the uptake as we our rooted in our thinking. Emerging economies are leapfrogging over our previous mistakes by taking a market wide approach, issuing government incentives, getting banks involve and local construction industries on board. Change is possible when looking at the key drivers and working together.”
Eleni Polychroniadou, Commercial director, Sintali
How to drive change
Communication: We must demystify net zero and present it in a way that removes complexity.
Collaboration: We must move within the existing system and bring these conversations up to the key decision makers.
Change: We must be bold. To make change, we cannot be afraid of disrupting the old ways of doing.
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