In the climate debate, we all know that you as an individual are statistically blameless. Your personal decision to switch off the light, ride your bike, eat less red meat, changes nothing. At best, your thoughtful, altruistic decisions create a world that is (very) marginally less bad. And we also know that your decision making process is complicated by externalities, as you make choices often at some perceived cost: others might be willing to use scarce resources if you aren’t, thereby gaining some sort of competitive advantage in life. A kind of prisoner’s dilemma, climate edition.
Even when decisions by individuals are taken collectively and therefore have some greater weight, they pale in comparison to those taken by corporations and governments. A widely circulated report, for example, concluded that just 100 companies – the so-called Carbon Majors – are responsible for 71% of global emissions since 1988. So does personal accountability really matter?
Thankfully, there is growing conviction that it does. That big, undesirable outcomes are made up of individual choices, taken one by one, one day at a time, person by person. Overeating on any one occasion produces limited harm. But the damage after repeated indulgences is undeniable (eventually, early death).
In the same way that habits always are born from small choices, the individual climate decisions we are making now are casting the die for society in generations to come. Positive choices – however small – can lead to a collective undertaking that truly can have lasting system change.
Applying this to the property industry, the built environment contributes around 40% to our total carbon footprint – hugely significant. At this meta level, collective accountability can have the power to transform. Yet solutions are fragmented and dispersed. Small decisions taken at an individual property, set against a backdrop of a seemingly infinite number of other individual properties each with their own imbedded issues that need solving, fall into the “marginally less bad” category.
Even big, positive decisions – headline-grabbing large low-carbon schemes and urban redevelopments – still might only make relatively small, incremental steps towards reducing overall carbon emissions. Take London. Of the roughly 300 million sq ft of office stock, we’re only building around 5 to 10 million square feet of brand-new space per year (only a part of which is highly sustainable). So, we’re just not building enough new green buildings to move the needle.
Because of this, we believe that to really make a difference we must focus on dramatically improving the sustainability of existing buildings that make up the vast majority of the built environment. Ensuring that the average building on the average street is doing everything it can to reduce its carbon footprint is essential if we are to meet the zero emissions target by 2050. The every case, not the special case.
And that brings us back to those pesky individual decisions by individual building owners.
To be sure, there are significant economic barriers to upgrading the average building on the average street. Physical constraints and economic barriers abound. Again, taking central London, it can be possible to achieve a £20 to £40 per sq foot increase in rents off the back of a deep refurbishment, leaving plenty of room to spend a few pounds on carbon reducing strategies. But elsewhere where rents are lower and operate in a tighter range, a refurbishment may only generate a rental increase of a £2 to £5 per sq foot, putting pressure on every penny spent on capex and making the economic case for sustainability improvement flimsy.
So what can be done as a landlord and investor with this type of building? Actually, quite a lot.
Take energy use. Sign up today to a 100% renewable energy supply. Go do it, right now. The respected IRENA recently reported that renewable energy costs hit new lows in 2018 and have crossed a threshold where renewables are now the cheapest option in many markets, so it’s a good financial decision above all else. You can also save money and resources by converting to energy efficient LED lighting – now at cost parity to traditional lighting – and installing low flow water taps. On-site solar has come into its own, payback periods having fallen to around five to six years. At a number of our refurbishment projects, we’ve installed high tech double-sided solar panels, ideally suited for the UK’s mixed climate as they increase panel efficiencies to 23%+ by generating electricity through reflective light.
Ensuring all cleaning products are eco-friendly, implementing best practice in recycling, supplying keep cups for employee takeaway coffee, encouraging lower-carbon commuting through better cycle facilities and cycle purchase schemes. All of these are quick, incredibly cost-effective measures that can and should be introduced by responsible landlords today. In and of themselves these individual decisions are small may not seem like much, but the power of aggregation will make a significant impact. If the 99% of real estate stock that has hardly been touched implemented all these measures, the effect would be profound. Collective, individual decision making at its best, leading to wholesale system change.
As an industry we must not sit on our hands. We have the creativity, talent, innovation and wherewithal to prevent the impending climate disaster – and we must act.