Environmental, Social and Governance, the buzzword causing ripples across all sectors, is manifesting itself as an integral part of businesses. Traditionally businesses used to resort to CSR which was considered a sort of “nice to have” in the reporting. With the climate change posing an existential threat to the planet, pressures are rife from across wide group of stakeholders; investors to regulators, employees to customers, NGOs to govt bodies, which together have brought immense sense of climate responsibility and accountability, amongst businesses. This trend is seen across all sectors be it power, transportation, industries, construction, or others. Real estate can be considered an amalgamation of different sectors given the very nature of the industry by virtue of which emissions from these sectors get bundled to real estate. It is precisely for this reason this sector is responsible for over a third of global emissions and hence is under enormous scrutiny. Real estate firms are beginning to demonstrate their climate leadership through various sustainability strategies that spans a wide spectrum from simple energy efficiency to a full-scale net zero program and are often riddled with enormous challenges. Opportunities provided by these very challenges provide the very silver lining, to facilitate a transition in this sector.
It is against the above backdrop that ESG in general and “Environment” in particular is growing in prominence and firms are resorting to climate strategies and ESG reporting to articulate not only their achievements but climate aspirations too. However, the need of the hour is to lay greater emphasis on true ESG actions on the ground than glitzy reporting. A net zero strategy in real estate calls for a comprehensive assessment of its greenhouse gases, which can commence in a modest way to include scope-1 and 2 emissions and gradually proceed to include scope 3, as we gain in experience and maturity. Clear identification of the emission sources, the data owners, and of course the data quality is a crucial step in the ESG journey. This is followed by a critical evaluation of all the decarbonization levers available at our disposal, that can be integrated in a judicious manner across all the phases of the real estate development namely design, construction, operation and of course the wider community management. One should be conscious of the fact that a net zero journey is hoping on several emerging technologies that are chugging along design, development, demonstration, and deployment phases. Not all technologies may come to fruition and hence a certain limit of uncertainty is bound to exist in our projections.
In the design phase, a comprehensive integrated design process encompassing passive and active design strategies greatly facilitates achieving an optimized design. There are several proven strategies and tools to deploy in this vital phase of the project, which should be fully exploited to our advantage. Emission reduction strategies in the construction phase include efficient construction waste management, recycling of materials, advanced construction technologies, bio diesel, and use of renewable energy. Innovation and an open approach in the design and construction phases unlocks new possibilities in the decarbonization journey. As the idiom “proof of the pudding is in the eating” goes, the real performance of sustainable design and construction is known and demonstrated ONLY in its operations. Hence the real estate development should have a comprehensive data collection, monitoring and management program to ensure that the facility always operates at the highest efficiency level. The role of supply chain in the scope-3 emissions cannot be over emphasized and it is important to engage this sector and nudge them into sustainable practices. This is a subject that is gaining increasing traction as businesses explore innovative ways to engage with the supply chain and help embrace sustainability in their operations.
ESG targets comprising time bound emission reduction plans are essential to a credible decarbonization journey. An ESG report that encompasses a well thought out ESG strategy (with Governance, Risk Management, Metrics and Targets), credible data, genuine achievements and aggressive but reasonable targets is well received by the stakeholders and lends enormous credibility to such reports. This is the only way to put to rest the ugly green washing practice that is assuming astronomical proportions. I wish the readers all the very best in their journey.
