As discussions on environmental activism gain ground in corporate boardrooms, the chatter has to translate into emissions reduction targets to go with pledges made to reduce their impact on climate change. (Photo: Samuel Isaac Chua/EdgeProp Singapore)
SINGAPORE (EDGEPROP) - Businesses globally are embracing the business of sustainability. In an emissions-heavy industry such as real estate though, the business of sustainability does present certain challenges, given the space’s heavy carbon footprint but attitudes are changing across the Asia Pacific.
Following the release of JLL’s flagship sustainability report for real estate in the Asia Pacific, it is evident that financial and non-financial value generated through green strategies has made sustainability a critical pillar for business success. In fact, 83% of real estate occupiers and 78% of investors in the survey accept that “climate risk poses a financial risk”. This marks a transitional movement for the region’s real estate sector.
The business of sustainability
With real estate being a huge contributor to the carbon footprint of a business, it is no wonder that many are demonstrating a heightened responsibility towards evaluating and implementing change within their real estate portfolio as part of their sustainability agenda. At the time of the report, two-thirds of corporate occupiers and half of the investors polled have already incorporated carbon emissions reduction as part of their enterprise sustainability strategy.
This is good timing since governments are beginning to introduce subsidies that encourage and reward sustainability-forward corporations. One example is the launch of the Green and Sustainability-Linked Loan Grant Scheme by the Monetary Authority of Singapore (MAS) this year. The first of its kind globally, the loan scheme will support businesses of all sizes to obtain green and sustainable financing by defraying the expenses of engaging independent service providers to validate the green and sustainability credentials of the loan. In doing so, this scheme will further encourage banks to develop green and sustainability-linked loan frameworks to make such financing more accessible to SMEs.
Decarbonisation of the built environment requires society-wide buy-in and mobilisation of resources across multiple stakeholder groups (Photo: Samuel Isaac Chua/EdgeProp Singapore)
But it isn’t just governmental efforts that are driving the sustainability agenda. In just the first six months of 2020 alone, a record $20.9 billion of sustainable fund flows were recorded in the US, just shy of the annual record of $21.4 billion in sustainable fund net flows set in 2019. And that is only set to grow further. All this points to a rise in ESG investing — an approach that considers a business’ environmental, social and governance activities alongside its financial metrics in the evaluation process — which helps explain why sustainability is increasingly becoming a core focus amongst corporate leaders.
The unignorable youth factor
Another contributor to this heightened awareness of the importance of climate change is the youth of today. The growing climate change conversation amongst youth hit an inflexion point in 2019. The youth-led climate strikes of 2019, with one paper estimating over 6 million people globally participating in the movement, marked one of the largest climate strikes of all time and demonstrated a clear directional shift in generational thinking. This seismic outpouring onto the streets of major cities around the world, coupled with the pandemic that followed soon after, would serve to accelerate the adoption of sustainability-focused initiatives and strategies put into place by businesses.
Beyond the critical environmental considerations that demand this shift in focus, there also exist two simpler motivators for businesses to start on their sustainability journeys sooner — those same protesters and their generation will soon be joining and making up the bulk of the future workforce, and with that, grow to be key consumers with disposable incomes.
As JLL’s report also found, the sustainability agenda push is coming not only from external and regulatory pressures but also from within: eight in 10 occupiers and seven in 10 investors agree that employees in the future will demand green and sustainable spaces.
This multitude of voices can be daunting for businesses that have yet to embark on their sustainability journey, but they shouldn’t shy away or get intimidated by the prospect of change.
Another contributor to this heightened awareness of the importance of climate change is the youth of today (Photo: EdgeProp Singapore)
For starters, always plan around being measurable. While a low carbon footprint is not only great for the environment but also the corporate bottom line, businesses do not want to get called out for paying lip service only, especially with the increased scrutiny placed on businesses globally to match pledge to action. As discussions on environmental activism gain ground in corporate boardrooms, the chatter has to translate into emissions reduction targets to go with pledges made to reduce their impact on climate change.
Even simple measures such as adopting sustainability practices across office space, water-efficient fixtures, smart lighting, efficient appliances for the pantry, indoor plants and ergonomic furniture can provide the advantage of a green office and sustainable business that employees can rally around. These adoptions can also be the building blocks that help you access green funding and sustainability-linked loans for your business, whilst also meeting some of the needs for a sustainability-focused workforce.
Businesses can also actively engage with their employees in contributing towards making the office space more sustainable through simple initiatives like printing on both sides of the paper, adopting an office plant, saying no to zero use plastic, recycling waste, and eliminating the use of single-use plastics and disposable tableware.
Looking beyond the immediate, it is important to recognise that significant change can best be brought about by public-private partnerships that are collaborative and purpose-led as the race to net-zero carbon continues to gather speed.
Decarbonisation of the built environment requires society-wide buy-in and mobilisation of resources across multiple stakeholder groups, thus the importance of public-private partnerships will be paramount in achieving this goal. With sustainability becoming a dominant global economic risk with the power to transform business, industries and society, this is certainly no fad, and the time for change is now.
Kamya Miglani is the director of research at JLL Asia Pacific (Photo: JLL)