The real estate and construction sector uses up 43 per cent of global energy production. The energy consumed by the industries to produce myriads of building materials causes massive emissions of greenhouse gases into the atmosphere. Thus, the sector becomes the biggest contributor to global warming.
Since the sector is conducive to invariably increasing housing needs, the world requires a new equation to battle the worst climate change partially caused by the sector. Readdressing ESG (Environmental, Social and Governance) values in the industry could pour oil on troubled waters.
The ESG model in real estate warrants sustainable environment protection, the sociability of real assets, safety of the construction crew and the capacity of real estate companies to ensure post-development property management.
I would encourage investors to realize ESG elements while making financial decisions. It may, in the long run, enforce the property tycoons to consider fair play while architecting, developing and managing housing and business districts.
Government should mandate investors to realise ESG elements while architecting, developing and managing housing and business districts
According to the European CFO Survey 2020, a bit more than half of the real estate companies in Europe consider ESG measures. They are more responsible business doers and the rest of the world could follow their footprints in this regard.
To what extent are the real estate conglomerates socially responsible? According to the US Department of Labour, around 900 workers die on construction sites in the United States every year. It equals 20pc of total workplace fatalities. Upwards of 175,000 occupational injuries are in addition to this.
Just imagine the condition of safety at construction scaffolds in developing and underdeveloped countries where obsolete technology, unskilled labour and least safety measures hamper the way forward.
As per Pakistan Social Sciences Review, STFs (slips, trips and falls) are the key contributors to the total number of fatalities in the construction industry. About 6pc of Pakistan’s total workforce in construction suffers from workplace injuries and fatalities because of governance failure. This is why ESG values have become inevitable in the construction segment specifically.
The ban on conventional brick kilns in Pakistan in the last few years is an appreciable step. Brick kilns in developing and underdeveloped countries are playing havoc with the environment emitting millions of tons of carbon dioxide annually.
Around 19,500 brick kilns across Pakistan emit monoxides and dioxides of carbon, sulphur and nitrogen which are detrimental to both man’s health and the environment. Bio kilns are being installed to mitigate the release of poisonous gases. Pakistan’s provincial governments invariably require the brick entrepreneurs to shift to zigzag technology to make the kilns environment-friendly.
Enabling the industry to consume less energy and squeezing the demand for superfluous building materials could lessen the emission of greenhouse gases. The replacement and recycling of contemporary building materials are perhaps much needed milestones to be achieved.
The world’s construction glass manufacturing industry emits 88.5 million tons of poisonous gases every year. Research is being done and technological advancements are about to invent carbon-free glass manufacturing methods. Despite this fact, glass is considered to be a micro contributor to climate damage. Increased use of glass in construction could therefore be encouraged.
Being the most frequently used building material, concrete is an unbridled enemy to the human environment. Its production takes poisonous oxides and dioxides into the air. Apart from constituting 8pc of global emission of carbon dioxide, concrete induces scarcity of fresh water at the local level and imparts soil erosion. It heats up quickly and lets the heat passage into the interiors, thus requiring more energy to settle indoor temperature.
Nature always pays off its debt. The damage the world does to the climate while constructing superstructures comes back in the form of catastrophic Tsunamis and erases the same high-rise buildings from the face of the planet.
The world needs to install a thousand trees to combat one skyscraper’s net contribution to global warming. It is disturbingly true! Installing more trees under social forestry initiatives and inventing newer building materials could contain the environment for the generations to come.
The incorporation of ESG standards in the real estate sector has got momentum in recent years. The essential operational strategy finds its roots in the consideration of ESG factors which bolster the sustainability of real estate investments.
Worldwide, efforts are being poured to decarbonise real estate assets. The Securities & Exchange Commission of Pakistan has already issued corporate social responsibility instructions to be practised by the listed companies.
On the other hand, conventional building materials production units are hardly registered on the Pakistan Stock Exchange, the implementation of these standards is, therefore, a fairytale.
Development authorities at the governmental level could chalk out clear bylaws for the construction segment. These regulations could be considered while sanctioning the launch of new housing societies and commercial projects.
There could be a stipulated threshold of deforestation for domestic and commercial use. Minimum service delivery standards could be met by the realty developers. General labour rights could be protected at the workplace. Affordable housing could be made available for all. Keeping the social factors aside could harm the real estate sector and its stakeholders.
The author is a socio-economic analyst. firstname.lastname@example.org
Published in Dawn, The Business and Finance Weekly, June 27th, 2022