COMMENT The UK’s built environment is not just key to its economy, but to the wellbeing of its citizens. However, the built environment is responsible for around 25% of our greenhouse gas emissions and is therefore an obvious focus for government measures.
Those measures are of course fundamentally important – the subject of energy and environmental efficiency is so large as to blind even the most committed environmental activist such that it is difficult to know where to start. In addition, the current generation of management can probably survive with the extent of climate change they will see in their lifetimes, but greater impact and hardship will be felt by the future leaders, and they are ever more cognisant of it.
Businesses are already being held accountable for their contribution to climate change, but we are now seeing that accountability broaden to use of, and impact on, natural resources. In 2015, at the request of the G20, we saw the creation of the Task Force on Climate-related Financial Disclosures to improve and increase the reporting of climate-related financial information, enabling better and more informed governance, risk management and making of strategic decisions. TCFD is now well-known in most large corporate boardrooms and the disclosure requirements that follow for publicly listed companies help inform environmentally minded investors about where to place their investments.
Lesser known is the more recent creation of the Taskforce on Nature-related Financial Disclosures, established in 2021 by a group of financial institutions and corporates. It published its draft framework in November 2022 and is expected to publish its full framework in September this year. TNFD recommends the disclosure of the impact of the relevant business on land and natural resources – for example soil fertility, air quality deterioration and waste disposal and pollution – and to develop appropriate mitigation measures to limit/eradicate these impacts. The intent is that TNFD biodiversity and nature-loss data will complement companies’ existing climate disclosures.
Pace of change
This mounting pressure to reform and to publish the impact organisations have on the environment and natural resources brings with it a real opportunity to explore creative solutions. And by embracing energy-efficient technology, the industry is delivering ever more sustainable buildings. Increasingly, this is being driven by a climate-conscious next generation demanding more from homes and workplaces. End users are actively seeking out spaces designed with sustainability and wellbeing in mind, not only as a result of their moral obligations but now also increasing government regulation and investor and boardroom demands.
In this regard, stakeholders are increasingly looking at their existing stock and development projects through a green lens and pushing the boundaries on what can be achieved. Sophisticated solutions are being designed by climate-conscious project teams that perceive real value in providing a sustainable legacy. Although that value goes beyond immediate financial returns, it is also clear that where “green” is done well it commands a premium. That fact has seen significant investment in green initiatives and a willingness, in many circles an imperative, in the industry to do better.
The pace of change has been staggering and has tangibly transformed our landscape in a relatively short space of time. If the current trajectory continues, buildings of the future will be unrecognisable to the stock that was developed at the beginning of this century, and they will be the product of a new generation of developers, designers and end users who have the vision to achieve sustainability goals that currently seem beyond reach.
Cross-industry responsibilities
Current regulation is not about prohibition: it is about the need to transition and the crucial requirement to start now. Recent events have highlighted the importance of energy, food and water security – we must start changing our behaviours now to ensure these resources remain securely available for future generations. Of course, no one business can do it on its own: the mutuality of the requirement to achieve greater energy efficiency and reduced impact on the climate and natural resources is rapidly becoming a bilateral requirement of supply contracts across the industry.
The EG Future Leaders project presents an opportunity to support those who will be tasked with rising to the environmental challenges our planet faces. By putting diversity at its heart and giving a voice to under-represented groups, EG Future Leaders also presents an opportunity to think about and solve these challenges.
Our future leaders are members of a generation who have grown up during a time when our understanding of climate change has evolved from being a nebulous concept to the most significant challenge that is facing the world. Although their task seems daunting, if they can combine their expertise in real estate with their sustainability credentials and their ability to think differently, the future will look reassuringly green.
Will Deeprose is a partner at Clyde & Co
