The 28th annual United Nations Climate Change Conference (COP28) starts in Dubai this week. COP28 will bring together world leaders to discuss how to limit global warming and tackle the impacts of climate change. Given the severe and undeniable impacts of climate change witnessed this summer, we anticipate two weeks of intense debates and challenging negotiations.
Paris Agreement Stocktake
COP28 will represent the first stocktake of the 2015 Paris Agreement. We are at a critical juncture - seven years have passed since the Paris Agreement, and we have another seven years until 2030 but it is clear that the world is some way off meeting the overarching goal to limit global warming to 1.5°C. Expect this stocktake to add to the irrefutable evidence that more needs to be done.
To implement the Paris Agreement, every real estate asset owner, stakeholder and investor must recognise that they have a fiduciary duty to manage ESG risks. Failure to acknowledge and act on these risks will hurt long-term returns, undermine economic stability and be detrimental to efforts to combat climate change.
The Sustainable Markets Initiative is set to play a strategic role in the COP28 Business and Philanthropy Climate Forum and may significantly impact the real estate sector. The Initiative advocates for accelerating the provision of finance for sustainable projects and sustainable impact investing in real estate is gaining traction with investors. The impact on the sector is multifaceted, presenting challenges to property owners to invest to meet new energy efficiency standards, whilst also offering opportunities as market actors, from large institutional investors to homeowners, are expressing a preference for sustainable assets. This shift reflects concerns about high-emitting properties increasing costs and their diminished desirability among the climate-conscious.
The real estate sector is expected to face increasing devaluation for unsustainable buildings and those with limited climate resilience, boosting the demand for new or retrofitted green buildings. We must prepare for a future where the financial performance of an asset might be starkly impacted by our increasingly changing climate.
COP28 will place a spotlight on accountability. Tangible progress is needed and this can only be achieved through transparency, disclosure, and most importantly, accountability.
Sustainability reporting is moving from being largely voluntary to becoming a regulatory requirement. Several mechanisms are already in place to ensure that companies are setting targets and reporting progress towards achieving net zero. These include the Greenhouse Gas Protocol, the Science Based Targets Initiative and the Taskforce for Climate-Related Financial Disclosures.
However, the journey towards climate accountability is a complex process that needs to become more streamlined. Interoperability is key here. While no single system can address all the challenges, the various systems in place should be able to connect and work together seamlessly. The data used for these protocols should be based on science-based targets and align with the data used by financial systems to increase transparency and accountability.
Focus on Net Zero
The COP28 Presidency has also launched a charter to mobilise and encourage the private sector to take bolder action and commit to greater credibility and accountability in their net-zero emissions pledges.
The UK’s first Net Zero Carbon Buildings Standard brings together net-zero carbon requirements for all major building types, based on a 1.5°C trajectory. This standard is championed by leading industry organisations and will provide a much-needed benchmark standard for decarbonising the built environment, applying a single methodology for net zero to new and existing buildings. It may have a profound impact on the sector.
Built Environment Day
‘Multilevel Action, Urbanisation and Built Environment / Transport Day’ on 6 December will bring buildings to the forefront of the climate agenda by focusing on how to address carbon emissions from buildings and demonstrating how the built environment (and the built environment industry) can form part of the climate solution.
The industry, which accounts for 11-13% of global GDP and 7% of global employment, has immense potential for transformational change- according to the IPCC, building sector mitigation policies could reduce greenhouse gas emissions by 80 to 90% and assist up to 2.8 billion people out of energy poverty.
To achieve this transformation, COP28 will need to address how we can accurately report carbon emissions throughout the construction process and within supply chains. With advancements in technology and expertise, this should all be possible. As more companies make ambitious commitments to decarbonise their buildings and operations, we are clearly moving in the right direction. Collaboration at all levels is key to this.
COP28 is expected to be a significant milestone in our journey towards a sustainable future. It's a call to action for all sectors, including real estate, to step up their efforts in combating climate change. Whilst much has been made of the politics, COP28 provides an essential forum to address the increasing risks threatening the planet. It's an opportunity for us to come together as a global community and take bold, decisive action.
Let's look forward to COP28 with optimism and a firm commitment to make a difference.
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