For companies to get started on setting up compelling sustainability targets, one would benefit from studying compliance in detail where recent changes such as the Business Responsibility and Sustainability Report (BRSR) guidelines by SEBI are attempting to cover some distance through regulation. Other gaps are being assisted by government incentives while the rest can potentially be bridged using contractual mechanisms to bring complaint partners on board and strive to create sustainable value chains. Shared efforts with the supply chain including major manufacturers is already giving rise to collaborative dialogues such as on potential ‘decarbonization of cement’ which are in nascent stages. Industry led interventions that have gathered recent momentum include standard carbon assessments and material standards with the Bureau of Indian standards etc. The biggest challenge especially for real estate lies in the operations phase where an industry mandate for setting up Science based targets for emissions reduction requires a long term focus for achieving results.
In the real estate value chain, it is pertinent for companies to integrate sustainable thinking across the life cycle from due diligence to final handover and customer use.
ESG focus is fairly advanced in developed markets and it is only a matter of time before this becomes widespread in India. We’ve seen specific focus on asset classes like commercial/office realty especially on the funding side with several funds (foreign direct investors, institutional investors etc.) evaluating ESG performance as base hygiene during their diligence process prior to deployment. Sustained investor focus on green real estate has also contributed in driving improvement in ESG performance across the industry. Independent ratings agencies such as the Global Real Estate Sustainability Benchmark (GRESB), Morgan Stanley Capital International (MSCI) and the Dow Jones Sustainability Index (DJSI) have created robust comparison frameworks for the sector. On the residential side, consumers are beginning to ask for green rated projects with a specific focus on translation into resident living experience and efficiency.
Real estate development is a resource intensive enterprise and herein lies the gap. With ongoing challenges of Climate Change, we need to ensure that we not only do everything to minimise damage to the environment but find ways of conserving resources and seek solutions to reverse these adverse impacts particularly in sectors contributing to the problem. Globally the real estate sector accounts for nearly 40% of world’s energy consumption, 30% of raw material use and 33% of the related global greenhouse gas (GHG) emissions. On the social side, it is the second largest source of employment source in India with the ability to significantly impact livelihoods and lives. The sector therefore requires a sustainability framework across People, Process, Partnerships, Product, Profit and Planet for a comprehensive approach towards the Environmental, Social & Governance (ESG) parameters. Company level focus on ESG goals including emissions, water, waste, diversity, human rights, compliance, health and safety have the potential to translate to meaningful industry and country wide positive impact. Construction and demolition waste is a key area of industry wide focus which requires research and mapping to help address complex problems and ensure that ESG performance remains at the forefront for the industry. As we solve for these challenges, we should ensure the health, wellbeing, upskilling and livelihoods of our construction workers.
Development may be our right however, sustainability is our shared responsibility. Real estate development is a resource intensive enterprise and herein lies the gap. Climate change must be considered and Integrating environmental, social and governance goals into the real estate business value chain is the right and responsible thing to do. This does not contradict business viability, rather sustains and enhances it in the longer term. Overall ESG performance is also a key contributor to brand values and teams are translating these commitments into customer communication underscoring our environmentally and socially responsible delivery. Sustainable development is a responsibility as is communicating the rigour of our development journey to the customer.