REAL ESTATE & SUSTAINABILITY
What is the Relationship Between Sustainability and Real Estate?
Real Estate advances sustainability by including environmental, social, and governance factors in the risk and value associated with real estate management, investment, and financing decisions.
Real Estate plays a major role in advancing sustainability considering that 75% of infrastructure needed by 2050 hasn’t been built and today buildings contribute 30% of the world’s greenhouse gas emissions (Harvard TH Chan School of Public Health).
According to the International Energy Agency buildings consume 40% of the world’s energy and produce 30% of the world’s greenhouse gas emissions. The agency goes on to say that to meet global climate targets “all new buildings and 20% of the existing building stock would need to be zero-carbon-ready as soon as 2030”. Moreover, people spend 90% of their time indoors the air quality of which plays a fundamental role in public health. Finally, the access to safe, affordable housing is a critical social safety net for human society. Pew Research suggests 49% of Americans consider “the availability of affordable housing a major problem.” Clearly meeting these housing challenges includes but also goes beyond existing frameworks such as US Green Building Council’s Leadership in Energy and Environmental Design (LEED) Program.
In short, real estate majors and professionals can play a critical role in meeting the Sustainable Development Goals (SDGs). This major is one that has some of the greatest ability to impact not only the environmental aspects of sustainability/ESG, but also social and economic equity components as well.
Sustainable real estate can ensure that social and environmental impact are optimized throughout the real estate development, financing and management process. Professionals will be knowledgeable of these opportunities and emerging platforms like GRESB that provides ESG data to real estate investors and managers.
Why Sustainability Needs Real Estate
Sustainable real estate is important because of the large impact the built environment has on the planet and human communities–and because investors, tenants, regulators, and other key stakeholders are increasingly requiring it.
Sustainable real estate development and investment, when approached correctly and with the proper level of careful analysis, can have a number of financial, social and environmental benefits.
Sustainable real estate makes financial sense. According to the UN Environment Program’s report Sustainable Real Estate Investment and World Economic Forum’s Environmental Sustainability Principles for the Real Estate Industry:
- New buildings can be designed “to use 30-50% less energy than required by most 2005 energy codes”
- A range of studies suggest 4 – 18% higher occupancy rates for sustainable buildings
- Similar studies show a rent and price premiums of 4 – 10%
- Lower costs of capital since such buildings are more popular and less expensive to operate
Sustainable real estate is also better for people. These same reports suggest:
- The benefits of improved indoor air quality and
healthier workplaces are “estimated to be worth US$17-30bn a year, with additional savings of US$20-60bn from improved employee productivity” - Affordable housing increases local spending power, increases tax revenues, and ensures safer, more cohesive communities (Forbes)
Finally, the environmental and climate benefits can be enormous. UN and WEF reports explain:
- Raw material, water and energy consumption can be cut from 12 – 30% or more
- Solid waste generation and diversion can be cut by 40%, and zero waste buildings are becoming common
ADVANCE YOUR KNOWLEDGE OF REAL ESTATE AND SUSTAINABILITY
Learn what sustainable real estate is all about and its importance
Learn the important things to know in this field
Learn how sustainability fits into your courses
Learn how sustainability relates to your career