COP 27 – what it means for real estate
Weather and climate have come under sharp focus as the battle to reduce global carbon emissions continues.
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Held from 6-18th November in Egypt, a number of world leaders and delegates have flown into the African country to talk about 1.5°C global warming scenario by 2100, reparations, economic implications and more.
Real estate progress must accelerate
The need for decarbonisation within real estate has been a hot topic for a number of years. In the UK alone, Decarbonising public buildings will cost £25-30bn, according to government figures.
The European Commission estimates that 70% of existing buildings need to be retrofitted in order to meet carbon reduction goals.
As part of the decarbonisation day on day five of the summit, India committed to prioritising a phased transition to cleaner fuels and slashing household consumption to achieve net zero emissions by 2070.
Farming impact
Crucial to climate change ambitions, farming and agriculture is now taking a prominent role at COP 27.
Perhaps the biggest announcement was that the UN’s Food and Agriculture Organisation is set to create a plan that would show how the food industry and farming can align with the world's goal of capping global warming at 1.5 degrees Celsius.
Jonathan Hale, head of ESG consulting at Knight Frank, comments: “Our real assets that comprise land and farming offer great insight as to how our ecosystems and demand for food form a holistic part of the action plan to tackle climate change. They also ensure our biodiversity can thrive with economic benefits and support a long-lasting road to a nature positive recovery ensuring adaptation and the importance of habitat restoration receive the attention they deserve.”
Andrew Shirley discusses the focus on farming at COP27, the ‘Adaptation and Agriculture day’ and more in his rural update.
Greenwashing concerns
Greenwashing, another contentious topic from last year’s annual summit has been highlighted again at Cop 27.
Will increased scrutiny surrounding green washing lead to better behaviour and more truthful net-zero goals?
UN High Level Expert Group on Net-Zero Emissions Commitments of Non-State Entities have spent seven months monitoring climate commitments of banks and big businesses.
The report was released at the conference on 8th November, aiming to draw a line under false claims of progress against climate change.
According to Accenture, around one-third of the world’s 2,000 biggest firms by revenue now have publicly stated net-zero goals.
Of those, however, 93% have no chance of achieving their targets without doing much more than they are now.
Jonathan adds: “Within real estate regulations such as SFDR (delegated regulation from Jan 23), UK SDR (under consultation) and the EU taxonomy framework are all pushing assets in the direction of offering greater transparency and accountability to support investor decision making.”
Green energy transition
Russia’s invasion of Ukraine has had a huge human and economic impact around the world.
This has influenced many countries to move towards renewable energies, breaking their dependence on carbon-heavy fossil fuels that have traditionally dominated energy usage.
The latest Emissions Gap report from the UN Environment Programme laments that progress since Glasgow (COP26) has been disappointing.
The report finds 0.5bn tonnes have been shaved off last year’s 17bn - to 20bn-tonne gap between where the annual rate of carbon dioxide emissions would need to be in 2030 in order to limit warming to 1.5°C, the limit set to slow global warming.
Emission trajectory estimates that if every national climate goal for the end of this decade were met, including those conditional on climate ‘reparations’, then average global temperatures would rise by 2.4°C by 2100.
Financial reparations
A critical issue surrounding this year’s conference is the growing demand from developing nations for compensation for loss and damages they are incurring brought on by acute weather events.
Britain has opened the door to paying climate reparations by supporting talks at the Cop27 summit.
Significant focus will be on how the international finance community can align on its reporting and evaluation of ESG metrics in the public stock markets to leverage the investor community.
Jonathan concludes: “We must continue to support those nations through a ‘just transition’ and ensure that where our consumerism has a broader footprint, that we enable mechanisms to support recovery from the effects of loss and look to stimulate and offer regulatory advice on growth.”
The private sector has an opportunity to support the transition of developing nations seeking reparations with investment in infrastructure, including renewable energy projects and regenerative agricultural systems.
Boniface, Abudho, Africa research analyst, looks at the abundance of opportunity available for renewable energy investors in Africa as he puts forward the case for the continent being part of COP discussions.
What has changed?
The big question remains: can the countries at the climate summit get anything done?
Reuters reports negotiators are still far apart on strong climate deal.