Why half a degree is a big deal
On 15 Mar 2019, thousands of school children in more than 100 countries around the world have once again abandoned their classrooms to strike against climate change. Their action was inspired by Swedish teenager Greta Thunberg, who first staged a school strike in front of the Swedish parliament on 20 Aug 2018. Greta has recently been nominated for the Nobel Peace Prize for her climate activism.
The world has already witnessed a temperature increase of 1°C and is on track to exhaust the carbon budget associated with 1.5°C by 2040. By 2100, it is likely we will find ourselves approaching 3°C or even 4°C above pre-industrial levels. However even if we reach 2°C of warming, the limit set in the Paris Climate Agreement of 2015, the effects will be much more devastating than the target of 1.5°C.
It is still possible to prevent the world from warming more than 1.5°C, however this is becoming increasingly improbable with leaders such as Donald Trump denying global warming and claiming climate change is a “fake science”. In order to achieve the 1.5°C target, we would have to cut greenhouse gas emissions by 45% by 2030, compared to what they were in 2010, and by 2050 we will have to reduce emissions to zero.
According to a new report by the Intergovernmental Panel on Climate Change (IPCC), we have just 12 years to moderate CO2 emissions and limit global warming to 1.5°C above pre-industrial levels or face droughts, floods, extreme weather events and trapping hundreds of millions of people into poverty. The report highlights the need for rapid and significant changes in four big global systems; energy, land use, cities and industry.
What has it got to do with us?
The president of the International Union of Architects, Thomas Vonier, pointed out that current practices in the built environment are unsustainable. It is a major consumer of energy and natural resources, a large producer of waste. However it is also the industry with the most cost-effective means of reducing carbon emissions, so will be an important catalyst for change in the wider economy. Vonier believes that architecture and design is crucial in helping solve issues created by humans1. The U.K. government’s Technology Strategy Board has estimated that approximately 45% of whole-life carbon (WLC) emissions in the United Kingdom come from buildings; 27% from domestic buildings and 18% from commercial buildings.
Tools like Building Research Establishment Environmental Assessment Method (BREEAM) measure day-to-day (operational) carbon emissions but ignore embodied carbon which relates to the building’s physical properties and makes up between half and three-quarters of a building’s lifetime carbon emissions.
Limiting temperature rise to 1.5°C requires a reduction of emissions from buildings by 80-90% by 2050 at a global level. More advanced economies need to take the lead and achieve zero carbon. The U.K. Green Building Council’s “Advancing Net Zero” programme is a collaborative drive to achieve a net zero-carbon built environment by 2050 - by designing sustainable buildings and retrofitting existing stock that are fit for the future. 3
Architects and developers have a responsibility to think about all the materials they are using and their wider impact and are increasingly concerned with a far more efficient lifetime use of resources and the need to avoid buildings becoming obsolescent – as well as making use of low-carbon materials and the re-use and recycle agenda.
According to a Fannie Mae report, green features such as energy efficient light bulbs, low-flow toilets and environmentally friendly heating and cooling systems significantly cut utility bills for apartment renters. On average, renters saved about $145 per year, while landlords saved $33 million on utility costs across 200,000 buildings and usually recovered their full investments in the green projects in six years.4
In our own real estate portfolio, we have managed to achieve substantial savings through simple measures. For example, we have been able to save 10-25% of operational energy use through efficient lighting and controls optimization. Whilst it is critical that the real estate industry significantly increases its efforts to limit carbon emissions and therefore avoid the worst impacts of climate change, it will also be necessary for real estate investors to develop investment guidelines that consider the likely impacts of climate change in the coming decades. It is expected that areas that are highly vulnerable to climate change will start to lose value.
The way we build can exacerbate inequalities and affect health but also contribute to sustainable communities and quality of life for all – not just for the wealthy or fortunate. We believe our responsible and impact investing capabilities are a way to tackle these urgent issues.
Investing involves risk, principal loss is possible.