Development may be our right, however, sustainability is our shared responsibility. Real estate development is a resource-intensive enterprise and herein lies the gap. With the ongoing challenges of Climate Change, we need to ensure that we not only do everything to minimise damage to the environment but find ways of conserving resources and seek solutions to reverse these adverse impacts, particularly in sectors contributing to the problem. Globally the real estate sector accounts for nearly 40% of the world’s energy consumption, 30% of raw material use and 33% of the related global greenhouse gas (GHG) emissions.
On the social side, it is the second-largest source of employment source in India with the ability to significantly impact livelihoods and lives. The sector, therefore, requires a sustainability framework across People, Process, Partnerships, Product, Profit, and Planet for a comprehensive approach towards the Environmental, Social & Governance (ESG) parameters. Company-level focus on ESG goals including emissions, water, waste, diversity, human rights, compliance, health, and safety have the potential to translate to meaningful industry and country-wide positive impact.
Sustained investor focus on green real estate has also contributed to driving improvement in ESG performance across the industry. Independent rating agencies such as the Global Real Estate Sustainability Benchmark (GRESB), Morgan Stanley Capital International (MSCI), and the Dow Jones Sustainability Index (DJSI) have created robust comparison frameworks for the sector. On the residential side, consumers are beginning to ask for green-rated projects with a specific focus on translation into resident living experience, efficiency, and related benefits.
It is imperative to ensure independent assurance and public disclosure of all ESG performance data. Sustained focus on setting up both Occupational health & safety (OH&S) Management system as well as Environment Management systems (EMS) and securing ISO certifications for construction sites further strengthens sustainability performance beyond mere initiatives.
For companies to get started on setting up compelling sustainability targets, one would benefit from studying compliance in detail where recent changes such as the Business Responsibility and Sustainability Report (BRSR) guidelines by SEBI, are attempting to cover some distance through regulation. Other gaps are being assisted by government incentives while the rest can potentially be bridged using contractual mechanisms to bring complaint partners on board and strive to create sustainable value chains.
Shared efforts with the supply chain including major manufacturers is already giving rise to collaborative dialogues such as on potential ‘decarbonization of cement’ which are in nascent stages. Industry-led interventions that have gathered recent momentum include standard carbon assessments and material standards with the Bureau of Indian standards etc. The biggest challenge especially for real estate lies in the operations phase where an industry mandate for setting up Science-based targets for emissions reduction requires a long-term focus for achieving results.
Construction and demolition waste is a key area of industry-wide focus which requires research and mapping to help address complex problems and ensure that ESG performance remains at the forefront for the industry. As we solve these challenges, we should ensure the health, wellbeing, upskilling, and livelihoods of our construction workers.
Enabling access to entitlements and social protections can strengthen gaps in the informal construction worker ecosystem highlighted in these COVID times to ensure that the sector moves from a secondary source of income to primary employment of choice. Integrating environmental, social and governance goals into the real estate business value chain is the right and responsible thing to do. This does not contradict business viability, rather sustains and enhances it in the longer term.
About the author: Anubhav Gupta is the Chief Executive Officer Vikhroli, Chief CSR & Sustainability Officer, Godrej Properties. He is also the founder of GPL Design Studio.