Going Green!

By Gurjot Bhatia, Managing Director, Project Management, CBRE India

Gurjot BhatiaGreen buildings -efficient in the use of energy, water and materials – all the while providing quality air supply. Green buildings, are, in fact, becoming more and more commonplace in commercial real estate dialogues. Beyond environmental factors generating demand for green buildings, we’re now seeing various technological, regulatory and financial forces at play, all working in concert to build a strong business case for integrating green features into a building’s development. Multiplying volumes of wastage and carbon emissions have caused rising temperatures, worsening air quality and the depletion of natural resources. While these signs from Mother Nature have ignited the conversation about a need for sustainable properties which alleviate environmental damage, it is the simultaneous technological developments which have enabled a course of action – from on-site renewable energy generation and water recycling to enhanced building automation systems. Office occupiers are now equipped with the tools to not only monitor but also to actively reduce consumption. Aside from improving occupants’ health and comfort, the adoption of energy and water reducing initiatives has translated into cost savings through reduced

"The velocity at which green buildings are proliferated across Asia Pacific will hinge on a combined effort from all industry players"

facilities management costs and future maintenance costs. Additionally, technological advancements have vastly reduced the capital outlay required to invest in energy projects. Since 2010, the installation and electricity generation cost for solar photovoltaics in China, India and Japan have plunged over 70 percent.

Behind the scenes, investors from REITs and funds are also fueling the demand for green office buildings. Environmental, social and governance (ESG) factors are increasingly being adopted alongside financial performance in the evaluation of an investment vehicle’s performance, pointing to the rising prominence of corporate social responsibility in business. According to Standard Chartered 2017 India Highlights, it recorded more than 19,000 employee volunteering days as only one of its many sustainability milestones socially achieved. Cognizant’s Environmental Stewardship plan implements initiatives under their Go Green program for improved facilities design and Green Brigade programs for environmental awareness amongst several other factors.

According to a recent report by Bloomberg Intelligence in India, ESG and sustainability-focused, ExchangeTraded Fund (ETFs) should continue to grow based on niche themes such as low-carbon, climate and gender. Besides, there is strong research evidence of ESG investing in delivering superior returns since companies with strong sustainability scores demonstrate better operational performance and are less risky. For instance, observed over a long-term period (Sep 2007- Jan 2019), the 35-member MSCI India ESG Leaders Index, providing exposure to companies with high ESG performance relative to their sector peers, has outperformed the 78-member MSCI Index which measures the performance of the large and mid-cap segments of the Indian market across 80 constituents. HDFC, Infosys, TCS, Axis Bank, HUL, ICICI Bank, HCL Tech, M&M, Bharti Airtel and Wipro are the top ten constituents of the ESG index in India.

The growing embrace of green buildings has also been mobilized by way of governmental incentives and regulations. Whilst the rating systems for green performance are standardized differently from country to country, the overall essence in the region is to propel real estate owners and occupiers toward the adoption of green buildings through delivering cost savings.

From a technical standpoint, it is simpler to incorporate sustainability into a building’s design, construction and operations before its development, rather than retrofitting existing features.

What’s become apparent is that the concept of a green building is not a fixed concept; rather, it is a spectrum. In an age where information is abundant, mere monitoring won’t suffice. The measures taken in response to this information will be what renders green buildings impactful. Further, the velocity at which green buildings are proliferated across Asia Pacific will hinge on a combined effort from all industry players. For example, higher level governmental incentives and regulation need to be paired with efforts by city authorities to upgrade the electrical infrastructure in such a way that allows for the generation of renewable energy. And for office investors and developers, the ability of their green buildings to reduce consumption meaningfully will depend on the occupiers’ ability to spread awareness internally. As an encapsulation of concerted efforts from multiple parties – the future of green buildings depends, too, on you.

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