The Paris Climate Change Agreement

The Paris Climate Change Agreement

It is said that around 30% of the total carbon emissions worldwide can be attributed to buildings! Construction and Real estate companies have long since realised this but now after the Paris Agreement, attention has been focused on how the industry should react. 

 Turkey  implements the Paris Agreement 

Turkey had some initial reservations and so did not ratify the Paris Climate Agreement in 2015 although it did sign the agreement. This changed on the 10th of November 2021 when the President declared that Turkey would implement the Paris Agreement as a developing country and within its own national framework as long as by being party to the agreement it would not affect any social or economic development.  

How can Real Estate be sustainable? 

It’s a tricky balance between Real Estate sectors and construction companies that must be addressed and soon.  Steps taken so far include the use of environmentally friendly construction materials and energy efficiency strategies. In most developed countries there is a real move to complete the ‘Green Transformation’ amongst architects, project designer and construction and real estate management. Many of them are rewriting their sustainability policies to reflect this. 

It is mooted that investors are now more than ever looking to real estate and construction companies to be working with sustainable materials and using innovative methods to ensure their new building are ‘green’. Suggestions are that existing building that do not meet the sustainability criteria should be demolished and replaced by new environmentally friendly construction or where it is possible the existing building be brought up to date if it proves to be economically viable. 

ESG or Environmental & Social Governance 

ESG practices can have a powerful impact on the performance of an investment. Today most institutional investors are not interested in only the financial results achieved by a company. Instead, they expect them to safeguard society by utilising sustainable, environmentally friendly and responsible investments. In this regard, if a company wants to remain permanent in this new world, then they have to adapt to ESG processes. 

How can we incentivise this process? 

It is anticipated that buildings will have maximum energy efficiency and contribute to energy production. This means that buildings can meet their own energy needs but produce more than they consume and then sell the excess energy back to the energy grid.  Another step is to use environmentally friendly construction materials. Some buildings are increasing their biodiversity with innovative green planting schemes. What is sure to happen though is that those companies that produce buildings which are environmentally friendly, will be rewarded by incentives applied to interest rates within the financial system and the opposite will also be true. Companies that do not move with the times will surely become disadvantaged.