Top 10 real estate sustainability trends to look out for in 2022

Real estate advisor Savills has identified 10 trends which it says will be of increasing importance for investors in 2022. Some of these trends derive from resolutions made at the 2021 United Nations Climate Change Conference held in Glasgow, UK, while others reflect the developing sustainability landscape.

1. INTEGRATED SUSTAINABILITY

All businesses will be expected to have sustainability woven into the fabric of their organisations. Dedicated experts are needed more than ever, but there is also a growing requirement for sustainability to become a part of everyone’s day-to-day job description.

2. ZERO TOLERANCE FOR GREENWASHING

The public understanding and subsequent scrutiny of sustainability commitments has never been higher. The expectation for honesty and accountability will impact organisations which fail to comply.

3. DISCLOSURE AND REPORTING

More and more countries will be following the UK to make sustainability reporting and disclosure mandatory. Data will be needed to meet the pledges made at COP26. The UN-backed non-profit Science Based Targets initiative (SBTi) is set to help companies collect more comprehensive inventory of their emissions, avoiding greenwashing.

4. SUPPLY CHAINS

At present, many companies exclude their supply chains although they typically account for 80% of Scope 3 emissions. The trickle-down effect of sustainable supply chain management has the potential to significantly raise standards.

5. ENERGY RISK MANAGEMENT

Globally, as the world shifts to a lower carbon economy, moving away from coal, there will be an increase in the uptake of gas and nuclear power. The price of renewables-derived energy will continue to fall and reliability will increase, driven by technological advancements and widespread adoption. As organisations learn to cope with this new reality many will be driven to develop, for the first time, energy policies which include energy security and prices within corporate risk registers.

6. LOW CARBON TRANSPORT

A huge push is coming to decarbonise transport and electric vehicles are leading the way. Following the COP26 declaration to sell only cars and vans with zero emissions by 2040, more manufacturers will be shifting to electric cars. This should lead to the acceleration of EV infrastructure.

7. DEFORESTATION

COP26 delivered on a groundbreaking pledge to end deforestation by 2030. While there is currently no alignment, framework or clarity on how this will be achieved, the importance of nature for maintaining the world economy may inspire investors to consider the loss of biodiversity and deforestation as a systemic risk.

8. REGULATING AND MEASURING THE ‘S’ IN ESG

Traction is building on the clearer measurement and regulation of the social element of ESG. This may include human rights, diversity and inclusion or health and wellbeing considerations in real estate.

9. STANDARDISATION

There are over 400 sustainability standards, benchmarks and certifications which organisations can voluntarily choose to adopt, creating a complex and confusing landscape for many. To cut through the confusion, a streamlining is expected to be called for by many industry players.

10. ENGAGEMENT, NOT AVOIDANCE 

For some, sustainability strategy has pushed for an avoidance approach to risk. For example, selling less sustainable assets. However, there is an increasing awareness that this merely shifts the problem and does not help reach decarbonisation and sustainability goals. Investors and asset managers will need to engage with occupiers to address these issues.