Unlocking the Cross-sector Future of Green Buildings
The built environment plays a crucial role in the broader decarbonisation effort of cities
Mahesh Ramanujam, CEO of the Global Network for Zero, explains what asset owners in the built environment, across the public and private sectors, can do to step up their green and sustainable buildings progress.
SmartCitiesWorld (SCW): What is the Global Network for Zero’s mission?
Mahesh Ramanujam (MR): The Global Network for Zero’s mission is singularly focused on unifying everyone towards achieving zero emissions as a primary metric. Our goal is to have a positive impact on people, the planet, and profit through this endeavour. This means not only addressing scope one and two emissions generated directly or indirectly by an organisation but also tackling the more complex scope three emissions.
Scope three emissions present a challenge because they involve emissions throughout the entire supply chain, making it difficult to define boundaries, assign ownership, and determine who should bear the cost and responsibility of reducing these emissions.
The Network is designed to assist organisations in navigating this complex journey. We provide the necessary tools, support, and guidance, working in collaboration with a broader implementation ecosystem. By doing so, we aim to help organisations find effective solutions and achieve scalable accomplishments in their efforts to reduce emissions within their enterprises.
SCW: What are you seeing across government and industry with regard to how those scope three boundaries are beginning to be defined?
MR: I think there is a growing shift towards defining boundaries more concretely, and this involves striking a balance between activism and pragmatism. Activism is essential to mobilise people and create awareness, but it’s pragmatism that ensures long-term sustainability. Businesses, governments, and organisations, in general, are unlikely to adopt practices that don’t demonstrate value over time.
In the current economic landscape, characterised by inflation and uncertainty, it’s even more crucial to provide a clear roadmap for sustainability efforts. Sustainability can undeniably be profitable, but we must also ensure that profitability remains sustainable in the face of evolving challenges.
“Activism is essential to mobilise people and create awareness, but it’s pragmatism that ensures long-term sustainability”
The key here is to approach the market with a pragmatic mindset, offering solutions that are realistic and can be integrated into existing operations. When we present practical solutions, the market is more likely to embrace them, and this, in turn, allows us to hold them accountable for their sustainability commitments. This approach is at the core of the Network’s advocacy efforts, and we believe it’s the path to meaningful change and progress.
SCW: How does the built environment fit into the broader decarbonisation picture? Climate action is a global challenge being fought at the local level – does that tie in with what you’re seeing at the Global Network for Zero?
MR: The built environment plays a crucial role in the broader decarbonisation effort, and it’s a subject very much aligned with the mission of the Global Network for Zero. When we talk about the built environment, we’re referring to buildings, both commercial and residential, which contribute significantly to emissions. In fact, about 40 per cent of emissions are associated with the built environment, and approximately 33 per cent of energy usage is attributed to buildings.
It’s important to tell the story of your building’s journey towards sustainability to inspire others
It’s important to clarify that not all these emissions are directly generated by the real estate sector, but because buildings serve various purposes and are used by many industries, we often include them in this category. However, there is a lack of clear understanding in the market regarding which emissions are direct or indirect, and this sometimes unfairly places the entire responsibility on the real estate sector.
One thing that’s worth highlighting is the substantial progress made in new construction over the past few decades, where sustainable building practices have become mainstream. Building a green, sustainable structure is now the norm, and consumers and employees alike are more conscious about the importance of the spaces they inhabit.
However, the challenge lies in existing assets. There are millions of buildings worldwide that have not seen significant upgrades or changes in their emissions profile for years. These existing buildings represent a golden opportunity and a significant challenge for the built environment. If we are to effectively reduce the 40 per cent of emissions attributed to this sector, we must focus on these existing structures, which account for roughly 97 per cent of the problem, if not more.
We need to overcome several barriers to address this challenge. Cost is one significant factor, as is the capital required to make improvements. We’ve often approached sustainability with an all-or-nothing mentality, requiring buildings to be net-zero from day one. This approach hasn’t worked for everyone, and it’s essential to create a roadmap that encourages incremental progress and meets people where they are in terms of sustainability. Education and access to affordable technology are also vital components of this journey.
“Sustainability in the built environment is not just about doing the right thing; it’s about creating a more resilient and profitable future”
Our approach at the Global Network for Zero is to make sustainability cost-effective by focusing on incremental steps, not demanding immediate net-zero compliance. We aim to raise awareness and demonstrate that decarbonisation is not just an environmental responsibility but also a sound business strategy.
We’re making the case that decarbonisation is a business case, whether it’s reducing property taxes, lowering insurance costs, attracting investors by having a green portfolio, or improving rental rates and tenant retention. Sustainability in the built environment is not just about doing the right thing; it’s about creating a more resilient and profitable future.
Buildings also play a critical role in the broader context of supply chains and ESG considerations. By encouraging incremental changes in the supply chain and focusing on the “E” (environmental) aspect of ESG, we can drive significant positive impacts throughout various industries.
A lot of the infrastructure in the built environment falls under the purview of local authorities, whether they own it or regulate it in some way – how can the portfolio holders of those existing assets balance that incremental approach with the pressures from authorities, especially when they often have more stringent climate action goals that the private sector and even central government?
Heat pumps and efficient cooling have gained traction due to their energy efficiency advantages
It’s a complex issue and there’s been a significant shift in how regulations and climate action goals have evolved over the years, especially when it comes to the built environment. Back in the early days, organisations like the US Green Building Council were primarily pushing the market beyond the minimum standards, advocating for higher levels of sustainability.
However, a significant shift occurred between 2008 and 2020, with a more substantial focus on regulations and mandatory disclosures. This shift was largely driven by the ESG revolution, where people began to recognise the holistic benefits of environmental improvements. The triple bottom line approach, which considers people, planet, and profit, has now been translated into the ESG framework.
Mandatory disclosures and stringent rules didn’t arise out of nowhere; they emerged because there was a growing validation of available technologies and economic cases for sustainability. It also became a competitive issue; if one building owner embraced sustainability, it made others look like laggards in comparison.
“Building a bad building is a sin, but not talking about a good building is a cardinal sin”
Now, when it comes to the balancing act between portfolio holders of existing assets and the pressures from local authorities, the incremental approach remains effective. This approach allows them to prioritise actions within their portfolios efficiently to meet compliance requirements. For instance, there are numerous cost-effective strategies available, such as energy efficiency measures, retrofitting to LED lighting, or installing heat pumps. These investments align with the incremental approach and also assist in achieving mandatory compliance.
Local authorities and regulations serve as guideposts for these portfolio holders. They can use these requirements to seek capital investments, either from their own budgets, investors, or by borrowing money. The crucial point here is that the incremental approach helps them stay ahead of compliance deadlines and avoid last-minute emergencies.
However, the dynamic tension arises from the uncertainty of whether organisations will proactively act or wait until the last moment. The reality is that once they start acting, they often realise they are further behind than they thought, but they also discover they can achieve more than they initially believed.
The key message here is that incremental progress is about getting started on meaningful actions today, not perpetuating lethargy. It’s about making the invisible aspects of sustainability visible, turning them into actionable steps, and ultimately scaling those actions. In other words, it’s about embracing sustainability not just as a regulatory requirement but as a genuine opportunity for improvement, both in terms of environmental impact and long-term business benefits.
SCW: What would you say are some of the solutions asset owners in the built environment should look to as a priority to pick some of the low-hanging fruit in their decarbonisation efforts?
MR: First and foremost, renewable energy stands out as one of the top priorities. Renewable energy sources offer a significant opportunity for rapid decarbonisation. Financing options are widely available, and there are cost discounts in the market. Despite tariff-related challenges, the supply of renewable energy technology is abundant. It’s a well-established and accessible solution that asset owners should explore, especially given the financial support and incentives available.
Secondly, heat pump technology has proven to be highly beneficial globally. Heat pumps and efficient cooling have gained traction due to their energy efficiency advantages. Additionally, heat recovery technology is on the rise, addressing not only energy efficiency but also indoor air quality concerns, which have become increasingly important post-Covid-19. These technologies offer tangible benefits and should be considered, particularly for existing buildings looking to improve their sustainability.
Another area that should be considered is sustainable building materials. There is a growing range of sustainable and green building materials available in the market that not only reduce emissions associated with production and transportation, but also contribute to lower scope one, two, and three emissions. The sustainability footprint of many of these products has improved significantly. and are increasingly cost-competitive, eliminating the need for a premium price tag. Asset owners can reduce operational costs, secure better financing terms, and attract tenants and consumers by incorporating sustainable materials into their projects.
Building a bad building is a sin, but not talking about a good building is a cardinal sin. Asset owners should communicate their experiences, share their business cases, and highlight how sustainability initiatives are benefiting employees, customers, and investors. It’s essential to tell the story of your building’s journey towards sustainability, as it not only showcases your commitment but also inspires others to follow suit.