COP27: We have seven years to turn this around

JLL’s Guy Grainger reflects on this year’s climate conference and what needs to happen now

There may have been fewer world and business leaders attending COP27 in Egypt than at last year’s event in Glasgow but the need for action was clearer than ever.

As far as the built environment is concerned, it’s official. UN figures show our sector’s emissions are at an all-time high. Operational energy-related CO2 emissions were up 5% on 2020 levels and 2% over the pre-pandemic peak in 2019.

Around the world, the transition is still too slow - and it's also happening in a very disorderly fashion.

At the same time, the pressure to act is growing. Corporates and governments are being challenged on the credibility of their net zero plans. Saying you will do something is no longer enough.

The science is telling us that, on the current trajectory, we will reach a point of no return (1.5 degrees) by 2030. As a result, 2050 targets alone are not cutting the mustard. Near-term targets and evidence of actual carbon footprint reductions this decade are more important. There is currently an intention to action gap.

The role of real estate in a net zero future is increasingly acknowledged. As a result, cities and real estate were on the agenda on a daily basis in Sharm El-Sheikh. In particular, the relationship between finance, buildings and city regulation was top of mind.

Favourite quote: “We are on a Highway to Climate Hell with our foot on the accelerator”, Antonio Guterres, UN Secretary General.

Most memorable event: Being locked down in the airport for the arrival of Air Force One – I’m glad Joe Biden came.

Moment of despair: Finance Day – the story from the banking & insurance industry lacked credibility, accountability and urgency. I saw no evidence that they are doing this today, but I’m sure that in the next 12 months a material gap will appear in the cost of finance, depending on whether their customer is making a speedy transition or not.

Moment of inspiration: WBCSD Dinner – being surrounded by progressive business leaders who are transitioning their business models quickly to incorporate total impact, not just financial returns. This is not being driven by customers or capital or regulation but by personal leadership. The result; a motivated workforce.

Biggest difference between COP27 & COP26: It was noticeable how many more young people (under 25) were in the restricted government area, making their voice heard in a direct, intelligent and uncomfortable way.

Where next?

The world is looking for proof of action and systematic change from the real estate industry.

The next COP in Dubai will establish whether companies and governments are holding true to their promises. Will they show accountability or be accused of greenwashing?

We need to implement solutions now that will make a tangible difference. Retrofitting existing buildings is critical. Globally, over 1 billion square meters of office space needs retrofitting by 2050, according to JLL’s new research Retrofitting Buildings to be Future-Fit.

In developed countries, retrofitting rates must triple from barely 1% of buildings per annum to at least 3% per year. Many owners are electrifying buildings, installing smart metering, engaging more with occupiers and improving energy efficiency. It will be a significant undertaking but it’s the only way to avoid the risk of more expensive finance, illiquidity and a ‘brown discount’. On the upside, there are record rents being achieved for net zero buildings in multiple geographies.

Energy is another area where we can make huge strides forward. Encouragingly, investment in renewables is now higher than in fossil fuels for the first time - but investment into clean energy needs to be four times higher to meet targets.

There is already a well-trodden path from trailblazers in our industry who have transitioned buildings to net zero carbon in every asset class. And, without exception, they have shown resilient value creation in the process. For companies who are yet to formulate clear plans, the Green Building Principles that JLL created with the World Economic Forum provide a roadmap for companies to decarbonize their real estate portfolios.

Today we have the tools and technologies we need to decarbonise. So, let me ask you this. Is your business taking enough action? Or is your business part of the problem? In the absence of global regulation, the international business community can be accountable for the changes that are needed – and we only have seven years to turn this around.

This article was first published by EG on 22 November 2022

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