Six key takeways from COP26

COMMENT Having spent a number of days at COP26, I thought it would be useful to share some key takeaways, beyond the headline-grabbing hyperbole. I was there as part of the senior leadership from the property sector, having been advocating for radical change in our industry for more than a decade, and to launch Cadworks, Glasgow’s first net-zero office and the city’s most cycle-friendly building. But what did the conference do for Glasgow, real estate and the planet? 1The winners Glasgow was the big winner. The city shone during the two-week conference. Great weather and plenty of sunshine helped, but so did the well-oiled city machine where transportation infrastructure worked flawlessly, the thousands of protesters who rightfully came to have their voice heard were treated with respect, the vibrant city centre was on full display. Open and welcoming cultural centres, the engagement of a progressive local government, all symbols of a city in its ascendancy. I think the legacy of COP26 will be positive and enduring for Glasgow. 2The losers Simplicity. For the built environment at least, there was no overarching, clarifying, “A-ha” moment. A number of important initiatives were launched but government in particular was quiet in terms of the property sector, which of course is responsible for 40% of the carbon problem. Many of us there were hoping for a set of clear, harmonised actions designed to keep the planetary temperature increase below its current 2.7°C trajectory. This did not happen, and the patchwork policy quilt persists for property. While there were no all-encompassing new policies from government, I was encouraged to see the clear focus on hard-to-abate sectors of carbon and steel through new government procurement policies, and the significant announcements in the financial sector which will drive capital into low-carbon property investment strategies such as ours at FORE. 3The leaders It is an ongoing theme of ours that local leadership, including business as well as civic government, will drive urban transformation in the world in which federal politicians and policymakers are off fighting bigger battles on the economic and geopolitical stage. COP26 was a clear demonstration that there has been a penny-drop moment for the private sector. I  was amazed by the number of private sector companies present, the senior leaders who were there, and the passionate conviction with which they spoke about the existential threat of climate change and the social purpose that is enveloping their firms. In public and private conversations, the business sector has clearly come out of its shell and, as demonstrated at COP, with or without government it will be taking the reins to transform faster and more boldly than perhaps anyone had expected. Regardless of the watered-down final statement from COP, businesses are on the move. 4The relegation zone I continued to be surprised that some property industry stalwarts were noticeably absent from COP, in particular industry bodies that have historically asserted leadership and influence both in terms of policy setting and through developing and advocating practical tools for industry professionals and building owners. This vacuum of leadership has been taken up by green-leaning players such as the Better Buildings Partnership and UKGBC, and more locally by general actors such as the local Chamber of Commerce in Glasgow and the Race to Zero coalition. The absence of the industry old guard from the pitch is likely to send them permanently into the relegation zone. 5Painkillers v vitamins With so many large property asset owners present, I had the opportunity to learn directly about their strategies for the tens of thousands of carbon-intense assets in their portfolios. Many of these assets will become unsellable and unlettable, either through government action or through market force, probably much sooner than anyone anticipates. On podiums and in side conversations, my peers were challenged about this stranded asset risk: whether these assets will be modernised or sold, how decisions will be taken and plans implemented, building by building, street by street. And not only how, but if it is even possible. From what I heard, while there are initiatives being considered, there are few – if any – detailed plans in place to deal with potentially stranded assets; nor have these assets even been fully identified within large portfolios. Treating the inevitable pain that will be inflicted by stranded assets certainly will be a growing theme going forward, as much as will be giving the booster shot to positive green initiatives.  6Embodied carbon Much of the focus to date has been on the carbon generated from occupying and operating buildings. COP signalled that attention has undoubtedly turned from operational carbon towards the carbon that is created from the construction and deconstruction of buildings, which typically represent more than half the problem. There were a number of key initiatives rolled out at COP, not least of all the UKGBC whole-life carbon roadmap, which sets clear, actionable steps that asset owners need to take to minimise carbon comprehensively over the lifespan of a building. We expect to see embodied carbon rise further up the agenda, which will drive innovation capital from new builds towards retrofits, already a key focus of FORE’s strategy. Onwards into 2022 with a sense of urgency – and hope. Basil Demeroutis is managing partner of FORE Partnership