1 OCT. 2019
In September 2019, government and private sector leaders at the United Nations Climate Action Summit in New York recognised the urgent need to accelerate climate action, responsibility and collaboration.
The European Union is committed to reduce its greenhouse gas emissions and to become a low carbon area. This is expressed through a number of initiatives and a political commitment by all Member States to the 2030 climate and energy package, including a 40% reduction of greenhouse gases, a renewable energy share of 27% and an energy efficiency increase by at least 27%. However, these targets will not be met without significant action in the building sector. According to the UN, the global built environment industry is responsible for over a third of all CO2 emissions and consumes a third of all energy.
RICS is convinced that our profession is uniquely placed to find solutions to this global challenge, in particular, boosting sustainable finance initiatives and transforming the building sector into a low carbon, circular and efficient industry.
A unanimous call for further availability, reliability and transparency of data reflecting the sustainable impact of a building and a common standard for sustainable finance was the most important message which came across from European policy makers, investors and real estate industry at a conference hosted on 19 September 2019 by RICS, INREV and GRESB.
European players discussed the key role of real estate in Green finance and assessed the progress made since the launch of the EU sustainable finance action plan one year ago.
The presentation of the results of the 2019 annual GRESB Real Estate Assessment showed a very positive rise in the scoring of the environmental, social and governance (ESG) performance of real estate portfolios and assets across Europe. GRESB score for the global real estate sector has improved again from 68.4 in 2018 to 72 in 2019.
Martin Spolc, Head of the Sustainable Finance and Fintech Unit in the European Commission's Directorate General for Financial Services, highlighted the advances made in Europe thanks to the sustainable finance high-level Technical Expert Group (TEG) appointed to deliver the first classification system – or taxonomy – for environmentally-sustainable economic activities. A list of economic activities with performance criteria for their contribution to six environmental objectives. This is also one of the most important contributions of RICS, as a member of the TEG representing the real estate industry.
Taxonomies are used in the investment industry and are demonstrated to help drive capital towards sustainability objectives.
RICS Global Research Assistant Fabrizio Varriale shared his experience as a TEG member, underscoring the widespread interest to make the taxonomy a reality: “Data availability and consistency emerges as a stumbling block in the process towards full implementation of transparent sustainable finances. In this context, the role that RICS can play in facilitating consistent data management through standards to promote a common measurement is essential.”
Martin Spolc informed that a political agreement between the Council and the Parliament on the taxonomy regulation is expected before the end of the year, with the aim to bring transparency and clarity to the market.
According to APG asset managers and Norges Bank investment management, investors with extensive real estate portfolios can make a big difference to lead the change towards a green carbon economy, however, without an improvement to reliable data and a common standard for measurement that reflects the actual implications of investing in green there is always a high level of risk. That is why one of the most expected EU initiatives is the Taxonomy on sustainable finance.
Frank Hovorka MRICS, Innovation and technical Director at FPI, stressed the importance of remembering that investing in sustainable assets should be seen as a real opportunity and not as a risk, if valuers can show investors the so-called “green value”.
He insisted that data need to be improved and shared with investors and homeowners, mentioning that RICS is also working in collaboration with the European Commission on an EU Building Passport to communicate the “value” of a building. “Gathering good data about all life cycle of a building in one place would be ideal to keep all relevant stakeholders informed via a single digital passport for buildings to reinforce transparency,” he said.