The real estate sector is increasingly taking strides towards a sustainable approach to growth in the built environment. India is committed to reducing its carbon intensity by 45% by 2030 compared to 2005 levels, and a pledge to bring down projected CO2 emissions by a billion tonnes by 2030 requires active contribution from the Indian real estate sector too. Aiding the ongoing initiatives in this direction, real estate developers are adopting measures to limit carbon and other hazardous emissions as they continue to build their real estate footprint. Developers are integrating sustainability in their operations and construction practices as they realize the impact of built environment on the surrounding ecosystem. Achieving environmentally sustainable growth while building excellent tenant experiences creates value for multiple stakeholders, including developers, occupiers, investors, and the society at large.
Sustainability has come into the mainstream in the overall real estate ecosystem and the relevance of green buildings is only increasing. Delhi NCR’s commercial office real estate inventory constitutes 45 – 50% share of green buildings (with varied certifications). Initiatives such as sustainable design, conserving natural resources, switching to greener construction technology, optimizing water usage, using solar energy, waste composting, and water harvesting are being adopted by various developers.
Practices by the large commercial developers
Large CRE developers in Delhi NCR are taking various measures towards achieving the objective of sustainability and playing an important role in the transition to ‘low carbon’.
DLF is complying with Green Buildings norms to be energy efficient by encouraging the use of renewable sources of energy (solar and wind energy) for operations. The developer has seemingly achieved reduction in energy consumption by using energy-efficient lighting and equipment and the use of HVAC systems. Smart grid / smart building technologies, high-efficiency equipment, and appliances are installed in buildings across its portfolio. All sites across DLF’s rental portfolio have been zero water discharge for the last three years. Responsible sourcing of construction materials (locally sourced, low-carbon materials) is another area that is a focus for the developer.
Brookfield, with IGBC-certified properties across its portfolio in the city, is working towards a net-zero carbon future by 2050 or earlier. To achieve this, the developer has given a huge thrust and has set targets for energy efficiency as well as water, waste, and emissions management.
The office portfolio of Embassy Office Parks in Noida has eco-friendly buildings with measures targeted at water conservation as well as waste management, increased use of renewable energy, and simultaneously ensuring a sustainable supply chain with ESG-specific clauses in contracts.
Tata Realty, is among the leading developers to acquire the WELL Health-Safety Rating for its operational portfolio of commercial projects across Gurgaon, Mumbai, and Chennai through the International WELL Building Institute (IWBI). It has laid emphasis on practices like waste management and optimum use of energy. This includes both the construction phase as well as operations phase. The buildings are designed to ensure an overall less carbon footprint.
An increasingly responsible approach to growth as well as operational aspects by real estate developers is creating benefits for the long-term as sustainability comes to the forefront in a manner in which businesses are run.
ESG (Environment, Social, Governance) has increasingly been at the forefront in commercial real estate globally. As per Cushman & Wakefield’s publication, The Edge (Volume 7), 39% of global energy-related carbon emissions come from the built environment and approximately two-thirds of the global building area that exists today will continue to exist in 2040. The impact is already being felt as many regional standards require buildings to reduce their carbon emissions substantially within the next 20-30 years, eventually reaching net zero. A research study by McKinsey found that ESG can help combat rising operating expenses and impact operating costs by as much as 60%. Much of the built environment can be optimized for enhanced social and environmental benefits, and the CRE market needs to act. In fact, institutional investors are also laying a greater emphasis on ESG practices as part of their selection criteria while choosing investments.
To conclude, sustainable building designs, as well as operational aspects are key factors that are decoupling developers and buildings from the rest. These quality assets will be known to create a positive social impact on the surrounding ecosystem. It will have a strong bearing on the premium associated with such buildings and will help attract marquee occupiers as well as institutional investors.
Socially responsible growth through multiple green initiatives will have a positive impact on the climate, overall well-being of building occupants, and will generate a premium for the real estate developers. The journey towards a ‘greener tomorrow’ has already begun and will only scale to greater heights.
To know how ESG is making a crucial impact on the real estate industry across the globe read the “The Charging Ahead” Issue of The Edge magazine.