海角视频

With COP29, the 29th United Nations Climate Change Conference, taking place this month, we talk to Duncan Price who leads 海角视频鈥檚 sustainability and climate change advisory services, about how decarbonisation can provide a real return on investment for businesses.

The business case for decarbonisation is clear. Effective strategies for transitioning to greener operations and assets bring better business outcomes and performance in a world in which climate change mitigation and resilience is increasingly at the top of everybody鈥檚 agenda.

Many corporates that made well-meaning, values-based decisions to decarbonise in the previous decade, are now reaching the point of needing to demonstrate a return on investment. All too often, as initial decarbonisation targets approach, businesses are forced to push back their goals, impacting their reputation and their capacity to show real returns. After years of putting sustainability into business, increasingly, organisations are having to turn their attentions to how they put business into their sustainability.

There is increasing evidence that green assets are more valuable than brown assets.

This makes 海角视频鈥檚 role as a trusted advisor more important than ever, with deep technical knowledge and experience of developing net zero pathways, but also of delivering them across our range of engineering disciplines. COP29, the 29th United Nations Climate Change Conference, will be held in Baku, Azerbaijan, from 11 to 22 November 2024. This conference is a pivotal event for advancing the goals of the UN Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. A key focus will be on mobilising financing for the decarbonisation.

According to the UN Environment Programme鈥檚 Emissions Gap Report 2024, failure to increase ambition in new climate plans and start implementation immediately would put the world on course for reaching average temperature increases of 2.6-3.1C, bringing debilitating impacts to people, planet and economies.

In recent years, several major corporations around the world have had to scale back or retract their climate commitments due to various challenges, with a troubling trend of corporations reneging on their earlier climate commitments, often due to economic, logistical, or political pressures.

Net zero future

Duncan Price, who leads 海角视频鈥檚 sustainability and climate change advisory services, says amid this shift, it is more important than ever for clients to be guided through the business case for a sustainability pathway, whether at a project level, a fund level or an enterprise level.

鈥楢t the project level 鈥� of a particular building or asset, such as a heat network, for instance 鈥� it tends to be about project internal rate of return (IRR), or simple payback period, or net present value. But then there鈥檚 the valuation of the asset itself 鈥� what somebody is prepared to pay for the asset at the point of transaction. There is increasing evidence that green assets are more valuable than brown assets. It鈥檚 highly variable by market, but the long-term trajectory is pretty clear in most of the markets we鈥檙e operating in. That鈥檚 particularly the case in prime, tier-one cities, with strong regulation in place on embodied and operational carbon, either now or imminently. Where you鈥檝e got city policies driving decarbonisation, there鈥檚 a cost of having an asset that is not decarbonised.

鈥楾he challenge is that valuation is a snapshot of what the market sentiment is right now. Taking the UK as an example, there鈥檚 a prescribed way that valuers do that, set down by RICS (the Royal Institute of Chartered Surveyors). But there鈥檚 a new version of the guidance coming out next year, which will allow the surveyor to gaze into the future a little bit and see some of the value at stake around decarbonisation and operational efficiency, but also the changing nature of the regulatory and taxonomy landscape.鈥�

We bring together big-picture strategic thinking about that future, coupled with deep technical expertise in delivering projects and turning commitments into action.

The business case for decarbonisation needs to take in a range of elements. Duncan says there will be 鈥渃arrots and sticks鈥� when it comes to decarbonisation incentives. 鈥淐arrots鈥� include simple occupier demand, particularly when it comes to attracting occupiers who are signatories to the Science-Based Targets initiative, through to finding operational efficiencies in terms of lowering the cost of running assets, and wanting to send a clear message to their own employees or potential employees about their commitment to decarbonisation. The 鈥渟ticks鈥� will involve meeting compliance with local laws and regulations.

鈥楩or example, in New York City, Local Law 97 is imposing a penalty on landlords for the carbon emissions of the buildings they own,鈥� he adds.

At the fund level, our experts do a lot of work to support institutional investors in aligning their business case with decarbonisation goals.

鈥楾here are funds where the asset manager has a mandate to improve the performance of that fund, with particular net zero carbon targets. There are also bespoke, highly-targeted funds that have certain rules around how they鈥檙e managed. In the European context, they tend to be regulated by the EU taxonomy and sustainable compliance regulation. Article 9 funds, for instance, are all about being able to demonstrate growth, yield and return for their investors as well demonstrating all those specific environmental and social outcomes.鈥�

Then, at the company level business case, there are also different ways of putting a value on decarbonisation in terms of ESG metrics.

鈥榃e see examples from our client base of companies that have taken a leading position and are absolutely convinced they鈥檙e doing better as a result of their net zero alignment,鈥� Duncan says.  鈥楾hey鈥檝e carved out a niche and built a strong reputation. They鈥檝e got experience and insights 鈥� so they鈥檙e ahead of the valuers and they know their market. Good examples would be Derwent London, Empire State Realty Trust and Aviva Investors.鈥�

According to , more than 450 firms have committed $130 trillion to achieving net zero, through the Glasgow Financial Alliance for Net Zero (GFANZ). These commitments include decarbonising global assets over the next 30 years. However, the issue鈥檚 scale cannot be underestimated. According to the Carbon Risk Real Estate Monitor (CRREM) and the Global Real Estate Sustainability Benchmark (GRESB), only 15% of global assets align with the Paris Agreement鈥檚 1.5C target. It is estimated that 37% of buildings globally will need to be decarbonised by 2030, which presents a significant challenge for the real estate sector.

Recent highlighted the urgent need for the built environment sector to accelerate its decarbonisation efforts. According to its analysis, carbon emissions from the UK built environment fell by 13% between 2018 and 2022, which is significantly less than the 19% reduction required to stay on track with the UK’s net zero pathway. The UKGBC鈥檚 report underscores that the industry must nearly double its rate of emissions reduction to meet the 2025 targets set out in their Net Zero Whole Life Carbon Roadmap.

鈥楢t 海角视频, we bring together big-picture strategic thinking about that future, coupled with deep technical expertise in delivering projects and turning commitments into action,鈥� Duncan says. 鈥楾hat makes us an invaluable partner for our clients.鈥�

Springboard to action

The COP29 Presidency aims to enhance ambition and enable action by ensuring all parties commit to ambitious national plans and transparency, while also addressing the critical role of finance in reducing emissions, adapting to climate change, and addressing loss and damage. This inclusive approach seeks to ensure that everyone’s voices are heard and that the outcomes are based on shared solutions. Duncan believes working together as an industry will be crucial to ensuring the business case for decarbonisation is clear.

Clients need help planning how they鈥檙e going to get [to net zero], partly by doing pilot projects and learning, then sharing that learning across the industry.

鈥楾here was an initiative called The Buildings Breakthrough launched at COP28, which was focused on doubling energy efficiency by 2030,鈥� he says. 鈥楾o do that, there needs to be clarity and simplicity of the rules 鈥� what is best-in-class in terms of ESG taxonomy or net zero building. We鈥檙e starting to get an alignment of international standards, which is great. Leveraging that for new regional standards and benchmarks will also be key 鈥� such as the recent arrival of the new version of the UK Net Zero Carbon Buildings Standard. That saw 350 organisations coming together to define what a net zero-aligned building should look like. It鈥檚 a long way from delivering all building stock against that standard, but at least it sets a common standard of language.

鈥楥lients need help planning how they鈥檙e going to get there, partly by doing pilot projects and learning, then sharing that learning across the industry, he adds. 鈥楧emonstrating tangible progress between 2025 and 2030 is going to be absolutely critical. That means making the business case for decarbonisation at every level.鈥�