Avison Young's commercial real estate blog
Exploring new climate themes, policy, and progressNovember 7, 2022
A COP27 Q&A with Avison Young ESG leaders Jon Gibson + Wesley Thompson
This year marks the 27th annual climate “Conference of the Parties” or COP27. As the world’s leaders gather to reflect on the last 12 months and discuss the challenges and opportunities for the future, we speak with Jon Gibson, Global Director – ESG and Wesley Thomson, EMEA Director ESG to see what they expect from COP27 this year.
COP27 is happening this month in Egypt, what are the key themes that the attendees will be exploring?
Jon: There are six official themes for this year’s conference. They are Adaptation, Finance, Renewable Energy, Net Zero, Loss and Damage Compensation and Biodiversity. While they will all inspire healthy conversation, we can also expect that regulation and policy will intersect all discussions as a demonstrable sign that countries are making progress.
It feels like we haven’t heard that much about COP27 in the media this year, why do you think that is?
Jon: Usually there would be prolific media coverage in the lead up to a conference like this. There is no doubt that our attention and concern has been redirected to short term concerns with news about political tensions and shifts, the economy and cost of living crisis dominating the media.
It’s ironic and a little surprising that this year we’ve had some of the worst storms, floods, and heatwaves in living memory, but the conversations about acting to reduce our emissions and adapt our built environment seem to be fading into the background.
Wesley: We still rely on governments to do the long-term thinking and investment for us on global issues like this, but business has a huge part to play too. It’s reassuring to see entire sectors like real estate continue to drive towards higher standards of energy efficiency and carbon performance even in lieu of the usual media attention around a conference like this.
Following last year’s COP in Glasgow, many companies (including Avison Young) have made Net Zero commitments. What do you think ‘progress’ will look like across the board this year?
Jon: Last year’s COP was focused on spurring commitment and a call to action to encourage more countries to make more ambitious commitments.
I think this year the conversations will give us better clarity around where the main challenges and opportunities lie, for example which industries, regions, sectors (finance, energy) are excelling or struggling to make progress. Action plans and what to do in each of those areas will be front and centre for country leaders.
Wesley: I certainly think companies are getting more granular and prioritised with their action plans, following their initial commitments and targets for Net Zero. We are also seeing many companies start to expand the scope of their targets and emissions reduction to address supply chain and scope 3 emissions.
What do you think are some of the biggest challenges facing countries and companies who set targets in Glasgow?
Jon: A COP meeting is mainly about country and governmental level action as an international collective. I think political will and implementation of policy and regulations remain a key challenge for world leaders. However, progress in this area is moving in the right direction. In 2022, disclosure regulations, standard setters and anti-green washing policies have progressed and, in some cases, become formal regulations. Governments also need to embrace their role in enabling private investment to help solve the big challenges. This aspect will need to be harnessed at much greater scale.
Wesley: While companies may have set targets, there are challenges around creating long term action and investment plans. CEOs and business leaders are constantly evaluating the cost vs risk vs benefit and weighing up competing priorities especially as we prepare to enter a tough economic period. There’s a sense that within certain industries, many are looking to their peers and waiting for someone to make the first big move.
Do you think there will be any big surprises or announcements this year? Care to speculate?
Jon: In the same way we saw huge announcements from the finance sector at COP26, I believe we’ll see more announcements and commitments by other sectors. However, publications such as the recent emissions gap report and the focus on anti greenwashing shows there is still a lot of work to do, and I feel a more realistic COP with less hyperbole will mark this conference out.
How do these ongoing global climate discussions impact real estate markets?
Wesley: As a sector responsible for up to 40% of emissions the built environment is key to demonstrating it is an enabler of the transition to a zero-carbon future.
As governments implement timelines, penalties, and tax incentives to support a transition to a more sustainable world, we’re likely to experience an increased sense of urgency from our clients as they look to us for guidance to navigate these evolving regulations and capture some of the immense market opportunities..
What does the renewable energy opportunity look like for the real estate industry?
Jon: This is one bright spot of news and opportunity. The energy, finance and real estate industries coming together to solve this issue is where the true opportunity lies. As planners, funders, and managers of real estate we sit right in that nexus and can play a very important role.
Wesley: I feel progress has been made in terms of the mutual understanding across each sector and I expect that to continue, delivering investable and scalable opportunities and results.
With fossil fuel consumption set to peak in 2025 – the outlook for renewable uptake is good and real assets can play a part in that future. It also helps that governments too are recognising the opportunity. The US Inflation Reduction Act offers many real estate owners the opportunity to roll out renewable technology at scale. The financial incentives, combined with the higher energy prices offer compelling returns and shorter paybacks on capital outlay.
Jon: In terms of our own commitment to reduce the emissions of our workspaces to net zero carbon by 2040, our target is to procure 100% of energy from renewable sources across all occupied buildings globally and engage our landlords to do the same. We also advise clients to explore renewable generation opportunities, incorporated into both new and existing buildings.
What are the key takeaways for Avison Young and our own ESG strategy from the COP27 themes?
Wesley: We will be keenly watching COP27 conversations around adaptation, climate resilience, net zero targets, interim milestones and the generation and procurement of renewable energy – given the impact and opportunity of these areas on our industry and our clients.
Jon: As we evolve our own strategy accordingly, we’re focused on building towards supporting a Just Transition – which is about moving toward a greener economy that is fair and inclusive to everyone, creating decent work opportunities and leaving no part of society behind.
If COP27 could achieve one thing this year – what would you hope for?
Wesley: Transitioning our society and our planet to a carbon-free future is an enormous challenge. But we have the technology required – and we’re starting to see governments and leaders put measures in place to support this transition.
Jon: Every action we take now will reduce the risks we face from future climate impacts. So, our hope for this year’s COP is that we start to see some true collaboration, action and investment from companies, industries, and governments to fast track the implementation of solutions we already have access to.
To sustain a healthy economy, we need a healthy environment. Let’s do all we can.
Why we can’t just have nice things March 28, 2023
Banking sector stress elevates real estate uncertainty March 22, 2023
Exploring new climate themes, policy, and progress November 7, 2022
UK service charge increases – where can occupiers save now and where could additional costs bring added value? August 24, 2022
For greater workplace success, build inclusive team cultures and champion your LGBTQ+ colleagues June 30, 2022
Will Ultra-Low Interest Drive Cap Rates Down Further? March 25, 2020