Sustainability is becoming an increasingly important issue in the real estate world. Sustainability development is an ongoing economic development approach strategy that needs to conserve local surroundings and enhance the quality of life. Sustainable development will enable economic progress and natural quality to achieve the goals of continuous human welfare. Suppose the sustainable development strategies were practised seriously. In that case, it will be able to preserve the environment, save resources, increase the local business growth and make the community less vulnerable to pollution threats.
Developers who can produce environmentally friendly projects will have a significant advantage in the years to come as a growing number of investors look for sustainable property developments.
There are numerous definitions of sustainability, but it is generally characterised as designing buildings and developments with a shared environmental effect.
This involves everything from the construction materials to how the finished development is managed. To be sustainable, property development must meet current requirements without jeopardising future generations’ ability to meet their own.
The complete life cycle of a project must be considered when developing a sustainable property. From the sourcing of materials to the eventual demolition or decommissioning of the development, developers must consider the environmental impact at every stage.
To be sustainable, property developments must be designed with an eye toward long-term resilience. They should be able to withstand changes in the environment and continue to function properly for many years into the future.
The ESG Test
ESG stands for Environmental, Social, and Governance.
Clients interested in investing in commercial real estate are now increasingly able to measure the ESG performance of individual developers.
Karen Clarke-Whistler, principal with Toronto-based ESG Global Advisors and former chief environment officer with Toronto-Dominion Bank, said most large investors in Canada have sustainability ESG teams who view real estate as “an opportunity area” because of its well-developed ESG program and because “sustainable real estate is a really big component of green bonds and some of the new capital-market innovations.”
“For commercial real estate, 2022 will be the year that ESG transitions from the ‘what’ to the ‘how,’ or from the ambition to the execution,” stated Paul Morassutti, vice-chairman of California-based real estate firm CBRE Group Inc., in the company’s 2022 Canada Real Estate Market Outlook. “The ambition is a net-zero world by 2050 and the execution is about integrating ESG factors with financial factors into the investment process.”
The fact that almost 40% of annual CO2 emissions result from building operations and construction has spurred shifts in the real estate and development arenas, with many sector participants committing to more sustainable practices.
Developers and REITs (real estate investment trusts) set net-zero targets for their operations and new buildings and developments.