9 MAR 2020
Building a more sustainable global economy is vital to tackling the challenge of climate change, reducing our collective carbon footprint and the environmental impact of rapid population growth and urbanisation.
The built environment sector has a pivotal role to play, given that building construction and operations account for 36 per cent of global final energy use and nearly 40 per cent of energy‐related carbon dioxide emissions. Our professionals are therefore uniquely placed to have a global impact by helping clients deploy capital in projects with more sustainable outcomes.
For this reason, RICS has been engaging with global policymakers and institutions to ensure our profession is firmly embedded in the drive towards a more sustainable economy.
To achieve the EU's 2030 targets agreed in the Paris Agreement, there remains a staggering investment gap of approximately €180bn per year. Defining what is sustainable finance is a first step towards channelling much-needed investment into low carbon and climate-resilient developments.
It provides performance criteria for an activity’s contribution to six environmental objectives:
This webinar, held on April 2nd, was hosted by EU TEG members Sean Kidney (CBI) and the two Convenors of the EU Taxonomy Buildings Group, Ursula Hartenberger and Fabrizio Varriale of the Royal Institution of Chartered Surveyors (RICS).
Ultimately, this classification system creates a common language between companies and investors, providing confidence that investments are having a positive environmental impact.
As a member of the Technical Expert Group, RICS has led the built environment strand of the work for the past 18 months, helping define what is “green” for the buildings sector – a recognition of RICS’ extensive body of work on sustainability at a global level. The International Property Measurement Standards (IPMS) have also been adopted to ensure a consistent metric for floor measurement within the framework.
By enabling owners and developers to access dedicated “‘green’” financial products, the Taxonomy will stimulate investment for renovating less energy efficient buildings, for constructing new energy efficient buildings, and for improving the operation of existing buildings.
Those who do not demonstrate best practice in line with the new criteria may lose competitiveness and the ability to brand their economic activities and products as “‘green”’, and the demand from investors that entails.
The inclusion of professional services, such as those related to energy assessment as eligible under the Taxonomy should create more business opportunities for professionals working in this field. But it will have a broader impact.
Having a clearly defined set of criteria for sustainability characteristics will help many professionals such as facility managers, valuers and brokers to consider these in their daily work and during conversations with investors and financing institutions.
The creation of a common language for green investment is a major achievement - it means we can say with confidence that we are delivering sustainable places for people to live and work.
Meeting eligibility criteria for new constructions, renovations and acquisitions may result in additional project costs. However, these are likely to be offset over time by expected energy savings and the wider benefits (on health, comfort, value preservation, risk mitigation, etc) associated with high-performing buildings.
Demonstrating eligibility with the Taxonomy criteria may also incur costs, especially when criteria are based on several technical parameters. However, these have been largely based on international standards (such as the International Property Measurement Standards) and EU regulations to simplify implementation.
Once the Taxonomy becomes part of EU regulation, it will directly affect companies and institutions offering financial products in the EU, companies who must already provide non-financial statements, and EU member states certifying sustainable financial products (such as “green bonds”).
However, the Taxonomy has the potential to impact the built environment beyond the EU. From the beginning, the criteria for buildings have been designed to be globally relevant and with in-built flexibility on options for demonstrating compliance, meaning they can be applied globally.