Real estate leadership needed in face of rising climate cost

When it comes to ESG and net zero carbon the real estate industry needs to progress from mere disclosure and reporting to real business cases in order to demonstrate leadership and credibility to investors, future tenants and building users, according to JLL’s global head of sustainability and ESG Guy Grainger.

Grainger also said the industry should look to leading indicators. “We need to create the data of the future. That makes the business case and you can see that playing out in the marketplace in different sectors, in different locations.

“There is a lack of supply of net zero carbon buildings and the demand is only increasing,” Grainger told Real Asset Insight’s Richard Betts. He added that the value upside “is probably better than we anticipate.”

“But it’s future value. You cannot expect valuers who are asked to look at historic data to predict the future.”

He pointed out that as buildings account for between 60% and 80% of carbon emissions in cities they are in the crosshairs as far as city policy making is concerned and while the US emphasis in on incentives, the theme in Europe is often taxation and regulation could become more extensive.

“All the leading indicators are that climate change will cost businesses severely, either in direct damages, uninsured buildings or actually in terms of capital or demand.”

“The question is, what’s your response? Because if you are dependent on lagging indicators or historical cycles, you will not necessarily see what’s coming in the next five years, which is pretty material.”