Avison Young's commercial real estate blog
Good COP or bad COP: what happens now will make every differenceNovember 22, 2021
Key takeaways, actions, and what we must focus on as the world’s largest climate conference comes to a close.
COP26 recently wrapped up in Glasgow.
After days of dialogue and conversation, the event passes with many wondering if the lessons imparted, and plans activated, can create enough inspiration for meaningful action, or be forgotten as the memories fade.
Will the resulting months’ work and progress prove this was a good COP (inspired? Action-inducing?) or bad COP (unfulfilling? barely moving the needle on the work that must be done?).
After all, how do you measure the success of a COP conference, if not in the lasting impression it leaves and the opportunities it provides to do better for ourselves and our planet. If the event’s collective feeling is any indication, we may have some way to go from here.
The general mood coming out of Glasgow seemed to be one of disappointment or at best indifference. Whether this stems from progress made falling short of our high expectations, or the failure of countries to reach critical agreement on the key issues on this occasion, it is difficult to gauge. At minimum, we've all learned a lot more about the process of COPs, of what can be achieved between 192 countries, and where its limitations as a geopolitical process lie, perhaps giving way to more spirited and positive paths forward in the future.
How we reach our ultimate aims:
In falling short of our goal to date, what actions did countries align around to help us get back on track?
Did the Glasgow Climate Pact put us on a path to limit temperature rises to 1.5 degrees? Quite simply, no. The goal missed this time around. It didn’t deliver enough, and it certainly didn’t deliver on the hope accumulated in advance, contributing to the sombre tones of wishes to be much farther along than we are, of trying to maintain hope against failed progress to date.
We aligned in agreement that there is still a way forward. Here is a summary of what was agreed upon:
- Increased pledges from countries would add up to limit temperature increases to an average of 2.4 degrees rise, dropping from 3 degrees pledges made in Paris in 2015.
- Countries agreed to revisit and strengthen their current emissions targets to 2030 in 2022.
- 80% of global emissions are now covered by net zero targets in 154 countries, a rise from 30% only two years ago
- China and the US agreed a side commitment to boost cooperation and work together on climate action.
- Many countries agreed to phase out the use of coal power and to put an end to international finance for coal.
- Internal combustion engine car sales would aim to meet zero emissions by 2035 in some markets and in all countries by 2040.
- 100 countries agreed to end deforestation by 2030 covering 85% of the world’s forests.
With goals known, what must be done to take action in a meaningful way? Where to we go from here? All of these commitments are nothing without real action, something which needs to follow urgently. The time for talking and deliberating, an issue frequently exposed at COP 26, is over. Right now, there is a huge gap in policy and planned action. Over the next few years we will be able to gauge progress against these commitments. However, time to measure progress is also known as a precious commodity.
Some countries and sectors are already on a pathway to decarbonise. The announcement by Mark Carney that 450 of the world’s biggest financial institutions, responsible for 40% of all global assets, have plans to reach net zero (worth some $130 trillion), caught the eye. It is a clear signal of intent by the capital markets, which has the scale and ability to drive a real systemic shift. Again, the real impact will be in what follows with credibility to be earned and evidenced. In more institutions taking similar stands, and in following up with real plans and progress, across each and every one of the built environments where we live, work and play.
The focus for CRE remains the same: cities and the built environment have the power to lead the way
What did COP 26 mean for real estate? It reaffirmed its importance to prioritizing our futures.The momentum and focus have shifted on to how we decarbonise buildings, moving on from agonising over when and how fast. If we start with cities, leaders are in no position to be hanging around for laggard countries to sign up to a global climate agreement, with all the governance challenges entailed. Cities account for two thirds of global emissions and are set to accommodate 70% of the population. It should come as surprise to no one therefore that the battleground will be won and lost at the city level, and not on the success or failure of multilateral global agreements.
Those responsible for the built environment will continue to lead the transformation, this is where genuine optimism and innovation can be found. Momentum will continue, but with each of us taking steps forward, close to home.
A number of publications and initiatives were announced by the real estate industry, including the publication of a built environment whole life carbon roadmap. The debate increases in sophistication and it is clear the mainstream industry has arrived at the table. The time to harness this change is now. But how do we meaningfully mobile and get there? In a few critically key ways:
- Radical collaboration (a phrase used by the CEO of UK Green Building Council) across the industry is required and between the public and private sectors. Solutions and challenges need to be widely shared and building owners, occupiers and supply chain partners need to come together in the spirit of partnership if we are to reach the common goal. Not a single company can tackle this alone. A huge programme of learning and development should be foundational and be made core across the sector in every discipline. Hyper transparency on the solutions and honesty on the challenges is needed. The thinking should be open-sourced and broad-reaching.
- Energy efficiency and reduction in energy demand remain the top priority for buildings. Building codes and standards will continue to improve the bar set for new buildings where such regulations exist. Lifecycle replacement and refurbishment of existing buildings will need to go beyond business as usual if they are to retain their value in the medium term. Those buildings that don’t demonstrate continual improvement or the ability to be retrofitted to meet future standards risk facing what is known as “stranded asset” risk.
- Data drives decisions. More people are waking up to the difficulty and cost of acquiring good quality data to measure building and portfolio performance. Metering and monitoring needs to be paid for and we need to figure out how we accept and manage those costs. Assessments and benchmarking which help to prioritise action and support the business case, relies on quality data. A proliferation of platforms, net zero carbon frameworks and ESG reporting standards isn’t helping here. Consolidation in this space is much needed and my hope is a coalition of building owners, investors and industry bodies will build on recent conversations to drive this and have it gain the priority it deserves.
- Leadership and policy. Only 35% of countries currently have building codes which mandate energy standards in buildings. This absence of meaningful policy, or the policy gap, needs to be corrected. Cities and businesses can take a lot of the heavy lifting, but we will need either national policy and financial levers (taxes, subsidies) or more devolved powers from the state to facilitate this and support an increased retrofit drive of existing buildings. According to the IEA the renovation rate needs to increase from 1% annually to 2.5% by 2030. This is a huge opportunity.
We can get there, but the built environment needs both a single voice on the global stage and a common language to turn all of these needs into regular industry mainstays. It is clear that there is willing and desire to do what is necessary, but for action to be harnessed we will need all of these elements to fall into place, quickly.
It should provide a call to assembly for all to consider what impacts could be readily activated to move closer to ideal targets, and for those with a longer runway, what steps can be taken today to lead toward a much brighter tomorrow and more encouraging conversations ahead.
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