Urgent Call to Operationalize Climate Change Strategies in the Real Estate Industry

The real estate industry accounts for 40% of global carbon emissions and energy use, making it a major contributor to the impacts of climate change; and, thus, should be a leading force in mitigation efforts. Now more than ever, the sense of urgency to address climate change in the industry is incontestable.

A survey on the current trends in the property sector reveals that 82% of buyers make investment decisions based on Environmental, Social, and Governance (ESG) elements. The property sector is centrally positioned to mitigate the impacts of climate change and create environmental resilience for future sustainability. Experts and analysts provide various insights on how the property industry can operationalize strategies to reduce its carbon footprint and alleviate the effects of climate change.

One way to address climate change in the property industry is to create performance-based standards in ESG and zoning codes to enable sustainable advantage and value. McKinsey & Company, a global consulting expert, suggests three actions for the real estate industry to deal with the looming climate crisis. The suggestions are: integrate climate change risks into asset and portfolio valuations, decarbonize, and create new sources of value and revenue streams for tenants, investors, and communities. Another step that the industry can take is to unify and create industry-wide norms that promote quantifying climate risks in valuations and property-related decisions.

In 2021, we witnessed an acceleration of climate change effects, including devastating floods, terrifying wildfires, extreme heat, face storms, and droughts across Europe, America, Asia, and other parts of the globe. Industries that have been lagging in creating concrete steps to tackle climate change, such as the property industry, are gearing up to the task

Weaving sustainability into the decisions and valuations of the real estate industry is no longer a corporate façade but a necessity, imperative in eliminating the adverse effects of property development on the environment and mitigating the impacts of climate change. We are optimistic that corporates in the real estate industry will respond positively to the climate change trend, and effect practical solutions to environmental problems.