However, widespread adoption is still a long way, and this can be attributed to the lack of industry-wide guidance, transparency, legal complexities, and split incentives. While the beginnings of change are already evident, India still has a long road to travel on the green lease continuum.

Global occupiers lead the way in sustainable practices

Global occupiers and institutional landlords are at the forefront of sustainable practices, with GCCs accounting for over three fourth of the overall green leasing activity in India. Moreover, it comes as no surprise that the two largest GCC markets of Hyderabad and Bengaluru lead the adoption of green leasing practices, accounting for 64% of the overall green leasing in India.

Waste management, energy efficiency and data sharing are key aspects

Green leasing clauses mainly focus on waste management, energy efficiency and data sharing aspects, with waste management and recycling obligations finding their way into most green lease agreements and some standard lease agreements as well. Energy efficiency is an important instrument towards reducing a building’s carbon footprint and hence, multiple clauses are centred around it.

“Sustainability has now firmly been incorporated into the board room agenda. Various strategies are being devised to reduce carbon emissions from the built environment, and green building certifications and green leases play a crucial role in this endeavor. The Indian market is making significant strides towards sustainability and the increase in green-certified office penetration from 39% in 2020 to 53% in 2023, is a clear indication of this progress. However, environmental performance results will still be lackluster if the building is not operated efficiently. Given the important role of occupiers in ensuring operational efficiency, moving from ‘traditional leases’ to ‘collaboration based green leases’ that enable data sharing and active collaboration between building owners and occupiers, is the need of the hour”, said Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

“The office segment saw the last two decades focus on Green Buildings. We believe this contributed to India reducing its GDP emission intensity by 33 percent between 2005 and 2019, achieving the target 11 years in advance. Next target is to reduce GDP emissions by 45% by 2030 and achieve net zero emissions by 2070. The realty sector will play a key role in this mission and The next two decades are going to see the focus move to Green Leasing. Green leases, accounting for around 15% of overall leasing today, are bound to reach around 15-20% penetration within the next 1-2 years. As both parties, landlords, and occupiers realize the benefits of green leasing, we believe a significant rental arbitrage to the tune of 10-15% will soon be visible between green and non-green leases”, said Abhishek Kiran Gupta, CEO & Co-founder, CRE Matrix.

Outlook

Looking ahead, green building certification will become a de-facto requirement for prominent occupiers in their selection of office spaces. As occupiers integrate environmental, social, and governance (ESG) factors and net zero carbon (NZC) targets into their decision-making, the green lease contract will play a crucial role. It will go beyond basic energy conservation ambitions to include clauses related to social value and good governance. Occupiers and landlords will engage in active mission-aligned collaboration throughout the life of the lease with measurable goals and corresponding KPIs to ensure desired outcomes. Importantly, a building’s value will increasingly rely on its environmental performance, and collaborative green leases will be a critical part of asset management strategies.

Also Read: Godrej Properties sells over 600 homes worth INR 2,600 crore at the launch of its project Godrej Aristocrat in Gurugram

The post Green Leasing Flourishes in Real Estate Industry, Quadrupling its Share in the<br>Post-COVID Era: appeared first on Square Feat India.

Sustainability and ESG Reporting

The climate change crisis and its far-reaching consequences have made clear the urgent need for standardizing, measuring, and accounting for sustainability as a part of organizations and their businesses.

This has led to a transformation in organizational operations and practices where now “Environment Friendly” has evolved from a mere catchphrase to a board meeting agenda. Given the necessity and significance of climate actions being taken up, universal guidelines are required to measure the impact of practices followed such that businesses can be held accountable. ESG Reporting is one of the most widely accepted set of criteria encapsulating the accounting of environmental, social, and governance practices.

ESG has become an important metric in the market – companies with good ESG performance are proven to have lower risks, higher returns, and are more resilient in times of crisis.

India has introduced new ESG reporting requirements for the top 1,000 listed companies in the country by market capitalization. The Securities and Exchange Board of India (SEBI) stipulates that the disclosure must be made through a new format, namely the Business Responsibility and Sustainability Report (BRR) which is mandatory from FY 2022-23.

Buildings & Built Environment and ESG

According to a report by WorldGBC, the built environment (capturing buildings and infrastructure) represents one of the biggest global investment opportunities of the next decade, an avenue to enhance sustainable development and human quality of life, and

– if tackled correctly – reduce emissions and combat the climate crisis.

Globally, the built environment is responsible for 75% of GHG emissions, with the building sector on its own accounting for 37%. In India, about 22% of the total emissions are from the building sector, which also is one of the largest consumers of natural resources.

Additionally, it is estimated that about 70% of the infrastructure required by our country’s urban areas by 2030 is yet to be built. Therefore, over the next two decades, the construction sector will have enormous capability and scope to inculcate sustainability across the built environment.

Companies and their property portfolios have the potential to play a significant role in achieving their ESG targets. Additionally, the financial impact of having resilient assets which are as risk-free as possible has been the biggest driver for the adoption of ESG Reporting.

The collateral value derived by aligning with the UN’s Sustainable Development Goals and world climate targets as well as the rise in social status has become a bonus outcome for developers and investors.

ESG and IGBC Green Building Ratings

One of the most universally accepted practices for inculcating environmentally friendly, low-impact and green measures in buildings and the built environment sector is to adopt an IGBC Green Building Rating. IGBC Green ratings provide a definitive framework for the inclusion of green measures and assessment of impact. The Green Rating act as tools not only for implementation but also to assess performance and measure the value received due to its adoption.

Economic Impact: From a stakeholder point of view, green buildings are proven to make business sense – they are energy efficient, consume less water, minimize waste, and decrease operational costs. They also tend to have higher rental values and occupancy rates than their conventional counterparts.

The risks posed by climate change to property assets are significant and result in huge expenditures. The finance institutions and insurance agencies also consider the climate risks before insuring properties. It is essential that businesses be resilient and manage the risks posed, which are minimized for IGBC Green Building rated assets.

There is an ever-expanding evolution of green finance and bonds in the market which offer special considerations to companies based on their ESG standings. Financial institutes across the globe like International Finance Corporation, Asian Development Bank, etc., are facilitating climate-linked funds which make investing in sustainable measures accessible.

Several governing bodies in India have also offered incentives on adoption of IGBC green building rating.

Today, IGBC Green Ratings are also synonymous with the implementation of quality green practices in the general populace. They can act as a key marketing and communication tool to convey the ESG measure and sustainability stance of organizations.

Social Impact: IGBC Green Building Ratings also account for the social aspects of ESG Reporting by advising on practices that improve Health, Safety & Well-Being.

All IGBC green rating systems inculcate the principle of occupant well-being and include safer and healthier practices that significantly enhance the quality of life of all involved. The rating criteria adhere to best practices that create improved worker conditions, strict adherence to worker safety, site practices that ensure minimal disturbance to the neighborhood, reducing dust pollution by employing prevention measures, and proper storage and disposal of scrap and wastage. IGBC green rating systems also advocate universal design ensuring buildings cater equally well to differently abled and senior citizens.

The principle of people-centric design is an integral part of green buildings which emphasizes the role the built environment plays in relation to the wellness of the occupant. Research shows that major disease transmission happens indoors as built-up pathogens cause “sick building syndrome”. This is exacerbated by overcrowded layouts, and lack of green space or access to outdoors, highlighting the importance of the built environment to both public health and carbon emissions. IGBC Green Building Ratings address these problems by advocating for healthier spaces that offer thermal, visual, acoustic, and olfactory comfort.

The area of Corporate Social Responsibility (CSR) through which businesses give back to the community, is also an indicator of ESG targets of organizations. The IGBC Green School and IGBC Green Villages ratings are being increasingly adopted by corporations to serve their local communities. The IGBC ratings focus on developing the infrastructure for education & healthcare, providing water and power security, improving hygiene, aiding economic development, developing digital infrastructure, etc. The ratings facilitate a comprehensive approach to sustainability that offer multifold benefits.

Governance Impact: The IGBC Membership & Certifications offered by rating bodies can add value to the governance policies of the organizations as corporations can affect change to a much greater level.

With the sheer size of resources utilized by establishments – be it material, manpower or machinery – sustainability as a tenet can have an enormous impact across their supply chains. IGBC Green Ratings address national priorities such as – water conservation, energy efficiency, reduction in fossil fuel use, conserving natural resources, handling of waste, and overall improvement of quality of life. The IGBC Green Rating frameworks and services help organizations set their long-term environmental strategy, handhold on their approach to net zero, and achieve their climate goals.

Hence, the adoption of IGBC Green Building Ratings is a proven metric of the adoption of sustainable practices, make economic sense and result in overall improved quality of life which can in turn contribute to the ESG Reporting of companies.

The post <strong>How Green Buildings enhance ESG Performance in Indian Real Estate</strong> appeared first on Square Feat India.

By Varun Singh

Commercial real estate sector is leading the green building culture in the country, with more than 90% share.

Heard it right, not many homes are being built green. But offices yes, they are being constructed green. A report by Anarock shows that a mere 5-7% of the overall green building stock is of housing projects. 

Ashutosh Limaye, Director & Head – Consulting, ANAROCK Property Consultants, says, “Despite increasing awareness, most of the demand for sustainable buildings currently comes from consumers of commercial real estate – largely because a vast number of MNCs now insist on the kinds of sustainability features that only Grade A office buildings put on the table.”

If one consider numbers, the Indian Green Building Council (IGBC) started with a modest 20,000 sq. ft. green built-up area in the country in 2003. By 2019-end, IGBC reports that there were more than 5,723 green buildings projects registered under it, coming up across the country, accounting for over 7.09 billion sq. ft. area. 

At least 1,932 of these green building projects are certified and already fully-functional in India. Majority of projects seeking the ‘green building’ tag are commercial spaces.

Below are some of the highlights one what is impacting the survival of green building construction in the country.

Why Buyers and Developers Shy Away

India’s green housing ‘movement’ actually had its roots in the country’s commercial sector that is the IT/ITeS boom years, when premium housing of all stripes was the preferred first home option for many. In those years, green housing projects became a kind of status symbol which proclaimed purchasing power. 

When the global Dotcom bubble burst, India’s IT sector also took a hit. A not-insignificant number of housing loans for premium homes taken by over-confident software professionals – often freshers – turned bad. In this period, the demand for green homes was been closely correlated to the performance of the Indian software industry. 

Today this demand is no longer confined to the IT/ITeS industry. However, in the current environment of highly constrained job growth across sectors – including IT/ITeS – the demand for essentially expensive green homes is quite low. Though affordable housing shows growth, luxury housing has lost its sheen – and green buildings still carry the ‘luxury’ tag. 

Price is always a critical factor for first-time homebuyers and even today, most of them would prefer not to shell out anything more than is absolutely necessary. In short, green housing is still something of an elitist concept and option in India, rather than an imperative.   

The price differences between certified green homes and non-green ones is significant for budget-conscious first-time homebuyers. Green homes are at least 10-15% costlier, depending on various facilities and factors. The fact that in the long run, a green home results in 30-40% savings on energy and water bills does not cut much ice.

The higher costs involved in developing green buildings are definitely a deterrent for many developers, as increased costs must be pushed on to buyers. Because of the price factor, the current demand for green housing comes more from financially settled buyers rather than from first-home buyers for whom such a price difference for what is essentially the same amount of space makes a considerable difference. 

Also, a significant number of green home buyers show interest because they have travelled extensively and seen sustainable housing first-hand in other countries. This, again, implies superior purchasing power.

Though the government has given considerable emphasis and incentivization to sustainability features in contemporary housing, its greatest push is still towards affordable housing. Sustainability and affordability do not live on the same end of the pricing spectrum, and most developers are more focused on creating affordable rather than sustainable housing. 

Prospects for Improvement? 

This will change and already has to some extent. Many developers focus exclusively on integrated townships which are conceived firmly around sustainability concepts. Others have based their very brand positioning on green housing and do get a lot of interest for their offerings. 

However, the hard fact is that the highest demand is currently for affordable housing, and even players who previously focused only on premium offerings have got on the affordable bandwagon.

The challenge before the industry and the government is to make sustainable housing affordable – and so far, this code has not been convincingly cracked. The problem lies not only in the more expensive features of green housing but also in the very perception of such housing being essentially premium, and therefore out of reach. 

Our Environment is Paying the Price

There are options for developing land and buildings in ways which are less harmful to the environment. Sustainable development has a much lower site impact from the very design level onward and throughout the building’s lifecycle after construction. Concepts like scientific waste management, climactic control, waste water treatment and energy-preserving features are baked into a genuine, certified green housing project’s DNA. Sustainable buildings take into consideration their occupants’ health as well as the health of the environment around them. 

However, such concepts must be applied right from the pre-construction phase and to the building’s impact after construction. Currently, sustainable construction practices are very cost-intensive. In an environment where cost of construction – and therefore cost to consumer – is a major concern, many developers will shy away from the added costs and compliances of green building practices. 

It is pertinent to note that since energy and mass cannot be destroyed, no construction process – however sustainable – can be entirely free of environmental impact. It is no accident that the Delhi-NCR construction ban did not make an exclusion for green building constructions as the construction process always involves a certain amount of natural resource consumption, emissions and effluents, and air pollution.

How Can This Change?

The government has given a major push to less environmentally harmful automobiles. Increasingly, entire generations of automobiles are being mandatorily phased out to give way to better, cleaner ones. While one cannot phase out buildings just because they were built in less environmentally aware times, there can be a policy push towards retrofitting older buildings with sustainable features like rainwater harvesting, waste water treatment facilities and solar panel. Simultaneously, the policy approach towards newer constructions can be hardened to make such features mandatory. This features can easily be added in old commercial as well as residential real estate.

Interestingly, while older residential buildings were not built with the environment and today’s urban pressures in mind, they were often also more sustainable than newer constructions. The practice in previous times was to source construction materials locally, and the designs themselves had a lower environmental impact than many newer housing projects. The currently popular practice is to emulate global building designs. This involves the use of a lot of glass and metal – rendering many modern structures heavily dependent on air-conditioning to maintain bearable internal temperatures.    

Another means at the government’s disposal is making the entire chain of green building technology more cost-effective via import and manufacturing exemptions. Developers who have rushed to affordable housing despite their previous market positioning for luxury were significantly motivated by heavy incentives given for creating affordable homes. 

Such a policy approach, if backed by hard targets on the lines of Housing for All by 2022, can attract more developers to sustainable development. Buyers of green homes can be also be significantly incentivised, much along the lines being used for the use of electric cars. Property tax exemptions for green home owners can be raised from the current nominal savings to a substantial and impactful degree. 

India’s famous Paris pledge was to drastically lower reduce the green house emission intensity of its gross domestic product (GHG emissions / unit GDP) by 33-35% per cent over 2005 levels by 2030. If we consider that the country’s GHE accounted for 6.5% of the global total in 2004, this was a massively ambitious target to set. Real estate development and consumption must be factored into meeting this target, or the country will not be able to honour this commitment.

If measures cited above are followed, one could see the shift from commercial towards residential when it comes to green buildings.

Also Read: Green Building List: Maharashtra On Top.

The post Commercial Real Estate Leads in Green Buildings. appeared first on Square Feat India.

By Varun Singh

Believe it or not, but in 2019 the BrihanMumbai Municipal Corporation’s (BMC) Tree Authority, issued 906 notices for removal of 14,518 trees. 

Most of these notices were in regards to redevelopment of old housing societies, new constructions, infrastructure projects and other development projects carried out in the city of Mumbai.

According to Green activist Zoru Bhatena Mumbai’s Tree Authority sought to remove over 14,518 trees during 2019.

When calculated, this will come to an average of 40 trees per day or 1210 trees per month.
“The repercussions of the loss of so many trees, year after year after year, is for all to see & breathe. May our authorities be a little kinder to our city in 2020,” said Bhatena via a Facebook post of his.

Mumbai as a city is surrounded by sea from three sides and is made of several islands connected by carrying out land fillings. The city today hardly has any vacant land remaining to carry out further construction activities. To take care of the growing demand of housing and infrastructure the land occupied by trees in many areas are eyed for development. 

Bhatena says, “The rampant destruction in tree cover and its ill effects are visible everywhere. Every Mumbaikar can see and breathe the ill effects of this mad rush to cut the trees. When will our authorities learn that development does not mean destruction.”

He further adds, “It is never development or preservation. It never should be a choice of one over the other. Both can always go hand in hand. All it needs is the will and a good intent.”

According to Niranjan Shetty former Tree Authority member of BMC, majority of permission sought for removal of trees are by housing societies going for redevelopment, and new building construction, while infrastructure development also holds a major share.

Shetty says, “We cannot deny permission for removal of trees for development or construction work when they follow the policy. However, I have been asking that the policy of transplanting more trees as compensation when one tree is chopped needs to be looked into.”

According to Shetty, the figure is huge for 2019, and he says that there is a need of a policy change. “Many people when they uproot the local trees, plant Ornamental trees, while it could be a tree of another species that has been chopped. We at the BMC should see to it that trees that are axed the same variety of tree has to be planted.”

Recently Mumbai witnessed a massive protest against the tree cutting that was carried out are Aarey. The trees were chopped seeking all the required permissions including the BMC’s tree authority had given a nod. The trees were axed for making way for the Metro Carshed.
The new government in the state of Maharashtra has announced changes in the carshed location from Aarey.

A detailed sms sent to Municipal Commissioner, who is also the chairman of the Tree Authority to seek his responsibility got us no response.

The post Shocking: Mumbai Lost 40 Trees Everyday In 2019. appeared first on Square Feat India.