COP26, what’s happened so far and looking forward to the built environment day
COP26 is nearing its finale and 11 November is the critical day for the property industry as the focus is on all things relating to the built environment.
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At the beginning we published our high-level analysis of how the world of real estate is adapting and how property markets will look in the future. Here, we recap of the conference so far and look at on key considerations for tomorrow.
Taking stock so far
There has been some important developments and announcements. A deal to cut coal use, an agreement to reduce methane emissions and pledges on deforestation are among some of the major headlines, even with some key players omitted these are great steps forward. Number-crunching of revised pledges made in the run-up to Glasgow, before these, suggested that the world is on track to limit global warming to 1.8 or 1.9C – albeit this is higher than the 1.5C agreed in Paris.
Around 40 of the world’s largest asset managers pledged to cut carbon emissions by between 30 – 65% at the outset of the conference. This comes as big UK firms will have to set out detailed plans of how they will transition to net zero by 2023 under proposed Treasury rules.
As Lee Elliot notes real estate can play a pivotal role in firms ambitions for net zero. “When it comes to addressing the climate challenge, there is some road to run in aligning stated corporate targets with real estate strategy. Closing the gap is a responsibility for all in the real estate sector,” writes Elliot.
Sustainable finance is becoming a key focus as COP26 enters its final stages, and a coalition of 18 countries led by the EU and China, which represents 55% of global GDP, has announced a common taxonomy for sustainable finance standards. The UK, having been an early adopter of Green gilts and other green finance initiatives, is fast becoming a world leader in this area.
We discuss sustainable finance for real estate in our Active Capital research and the formation of GFANZ, the Glasgow Financial Alliance for Net Zero, will see more funds directed to the arena. GFANZ is a group of 450 firms representing $130 trillion in assets which have now committed to net zero carbon emissions by 2050. Institutions will redirect loans and credit from traditional emitters, such as oil and gas, towards renewable energy or to a mortgage product that subsidises highly efficient homes. This could help the residential sector with our Global Buyer Survey finding that 22% saw cheaper mortgage finance as an incentive to buy a more energy efficient home.
All eyes on property
The built environment and construction sector accounts for around 40% of global carbon emissions so it is unsurprising that a day has been dedicated to the sector. In July we hosted a webinar on how to build a sustainable net zero city, we expect the key themes of setting a deadline, retrofitting first and financial incentives to feature heavily in discussions.
The residential sector poses one of the biggest challenges accounting for almost two-thirds of the sectors emissions in the UK. Whilst commercial real estate has been making strides towards clear objectives and value for sustainable buildings, Kate Everett- Allen asked is the residential market playing catch up? The question is likely to crop up at COP26 too.
The day will see the publishing of the UK Green Buildings Council (GBC) low carbon roadmap. Which will be one to watch regarding the future direction of policy assessing the whole life cycle of a building.
Retrofitting was discussed in our webinar as the first way to think about improving a building’s carbon footprint when looking at the whole life-cycle approach, this will likely feature in the roadmap. For something a little more futuristic, listen to our October Intelligence Talks podcast which included how robots can help retrofit the nation’s housing stock.
Heating our buildings will be another line of dialogue, in anticipation we highlight our Intelligence Talks podcast, which in August looked at the role hydrogen could take in decarbonising heating in buildings. The UK has begun taking steps to address this with the recent Heat and Buildings Strategy and Future Homes Standard, but funding and practicalities will be pivotal. Some have already started to take place, as reported by the Times, and we expect more in this arena and hopefully looking at a more global level.
Check back on Friday for our summary of the day.