As we look ahead, 2022 will be the year of transformation and part of a transition period. On the one hand, the challenge of assessing which pandemic-driven changes will be permanent and which are more temporary. On the other, there is the possibility of further market disruption. The major sustainability trends shaping the commercial real estate market will influence companies’ decisions throughout the year.
Here are the top 6 real estate sustainability trends that will play a big role in how the real estate sector will move forward.
All eyes on sustainability
Sustainability is increasingly becoming an intrinsic part of business process as well as a growing part of our day-to-day life. Many businesses have already put their sustainability targets in place. The focus now will be on implementing action plans and strategies –and most importantly, reporting back on progress.
A recent Microsoft research surveyed 1707 UK-based business leaders, each from different organisations. Respondents were asked for information about their organisations’ climate and broader environmental sustainability plans. Of the organisations surveyed, 45% have set net-zero targets for 2050 or sooner and announced them publicly.
According to Deloitte, 61% of UK consumers have reduced their usage of single-use plastic to demonstrate their commitment to sustainability, 45% are buying local goods and 49% bought more seasonal produce.
No tolerance for “Green Wash”
The public understanding and scrutiny of sustainability commitments are at their peak and will impact organisations that fail to comply. It is understandable that businesses are reluctant to expose their limitations when it comes to environmental policy, however, those who shy away from robust tracking and communication risk their customers voting with their feet and their pound notes.
Focusing on the “S” in ESG
There is growing focus for business on ESG which broadens the scope of Sustainability. The need for measurement and regulation of the “S” in ESG is firmly on the radar. For the real estate sector, this includes human rights, diversity, and health and wellbeing considerations.
Investors are also aware of the social issues and they are searching for solutions that direct capital toward building more resilient communities, reducing inequality and generating positive social outcomes. The “S” in ESG may be more difficult to understand and quantify, but it can make significant impact on trust and effective stakeholder engagement.
Supply chain sustainability
Companies committed to achieving their sustainability and ESG targets need to look at supply chain performance in all areas going forward. As these initiatives continue to be a top priority in 2022, many companies will search for answers in their supply chain and increase pressure on their partners to become more socially and environmentally responsible.
Having a sustainable supply chain is a responsible part of managing business and can also help to align with existing and prospective clients.
Energy transition
As the Climate Emergency hits and energy prices soar, the demand for renewable energy sources, innovative energy storage solutions and transition to electric vehicles gathers speed. The price of renewables derived energy will continue to decrease and reliability will increase, driven by technological improvements and large-scale adoption.
As organisations adapt to this new reality many are driven to develop energy policies for the first time. As for investors, the current uncertainty presents opportunities across all parts of the low carbon economy value chain.
Digital Transformation
There is growing consensus that data science will revolutionise the sector in the next decade. Proptech is growing fast, with the number of firms created increasing 3 fold between 2000 and 2018. Further evidence of digital disruption is the move by digital giants Amazon and Google into the real estate market. To take advantage of the efficiency gains of digital technologies, users and owners of real estate need to be aware of the value of the data they are generating.
In conclusion...
From pledges to action. 2022 is the year of looking forward to shaping the future. Investors will look after companies that take real steps towards sustainable actions. As awareness grows, we all find ourselves asking "What am I doing to contribute to a greener and more equitable future?”