The conversation within and beyond the boardroom around environmental, social, and governance (ESG) is rapidly maturing. In recognition of the important role ESG plays in driving long-term value creation, more and more boards are focused on and are disclosing how their governance structure is evolving to consider ESG more intentionally. Having a defined plan for overseeing the integration of ESG and the interconnectedness across the pillars of “E”, “S”, and “G” into strategy and disclosure helps demonstrate the significance and prioritization of ESG efforts from the top, to both investors and broader stakeholders.
Amid this shift in board governance, investors continue to increase expectations on climate and ESG matters, as noted by the number and breadth of shareholder proposals on related issues in the 2021 proxy season. As investors update and finalize their proxy voting guidelines for 2022, there is the potential for more votes to be cast against board directors who do not demonstrate an adequate understanding of ESG and sufficient disclosure.
Change is also coming quickly on the regulatory front. The SEC has disclosed its regulatory agenda and has included four important areas that fall under the ESG umbrella: climate change, cyber risk governance, board diversity, and human capital management; proposed rules are expected in early 2022. The SEC also has begun to focus more on ESG-related comment letters. In late September, the commission issued a “Dear CFO” letter that provided a sampling of the types of comments issued about climate change and sustainability disclosures, with a particular emphasis on the consistency of climate-related risk disclosures and the relevance to financial reporting.
In addition, there has been significant movement toward the global convergence of standards. The IFRS Foundation announced at the UN Climate Change conference in Glasgow in early November the formation of the International Sustainability Standards Board (ISSB), which will consolidate the Climate Disclosure Standards Board and the Value Reporting Foundation (which includes the Integrated Reporting Framework and Sustainability Accounting Standards Board (SASB) Standards) by June 2022. The global ISSB standards are intended to elevate sustainability standard setting to be in line with that of financial reporting and accounting, and will promote transparency and consistency in sustainability disclosures to better inform decision-making for users of general-purpose financial reporting.
Other standard-setting entities enhancing their involvement in ESG include FASB, which has released a staff educational paper on the intersection of ESG matters with financial accounting standards; and the Commodity Futures Trading Commission, which has established a climate risk unit. With the pace of the ESG developments expected to accelerate rapidly in 2022, company management and boards should be focused on enhancing governance structures and the control environment around managing, and overseeing, ESG risks and opportunities and delivering high quality disclosure.
Trends in board governance of ESG
The “G” in ESG pertains to the broader corporate governance policies and practices that a company has put in place, and ESG is a significant area of focus for boards to better understand and oversee. As a starting point, the board should define its governance structure, policies, and practices that provide a framework for overseeing ESG accountability and strategic focus. This includes the structuring of board and committee oversight and the associated delegation of responsibilities.
Building on our 2020 initial research in this area, as highlighted in figure 3 (see PDF), there was a marked increase in 2021 in the percentage of S&P 500 companies disclosing in their proxies the primary committee(s) overseeing ESG relative to last year (from 72% to 86%). This trend likely is the result of companies progressing along an ESG maturity model (see figure 1 in PDF) that is more integrated into their core business strategy and risk program and defining how the board oversees such ESG efforts.
Notably, the 35 companies newly added to the S&P 500 this past year (see figure 2 in PDF) were more than twice as likely not to have disclosed the committee overseeing ESG, suggesting that company size and market expectations may have an impact on the formalization of an ESG governance framework.
When compared by industry (see figure 4 in PDF), energy, resources, and industrials (ER&I) companies continued to lead, with 94% of ER&I S&P 500 companies disclosing their governance approach in the proxy. This is not unexpected given the industry’s longstanding focus on employee health and safety and environmental matters, coupled with significant regulatory requirements. In the wake of the pandemic, there has also been strong upward movement in life sciences and health care industry proxy disclosure from 63% to 82%, and a similar trajectory has been seen in the technology, media, and telecommunications industry.
Despite the overall increase in proxy disclosure, there continues to be significant variation in the committee(s) that oversee ESG. The percentage of boards utilizing their nominating and governance committee for primary oversight has grown significantly. Not surprisingly, several companies have changed the nominating and governance committee’s name to be more transparent about the broader committee purview. In the callout boxes, within the PDF, we provide a sampling, from S&P 500 proxies, of some of the tailored committee names within the general nominating and governance category as well as some name variations with the ESG/Sustainability category.
Another trend and shift from last year’s research is an increase in the number of companies disclosing that the full board and a committee or multiple committees have a role in overseeing ESG elements (categorized as “multiple”). As ESG programs evolve and specific elements of the “E” and “S” are defined, a shared governance model whereby certain committees are delegated a specific ESG remit evolves. As an example, for many companies, human capital management initiatives, including diversity and inclusion initiatives, may fall under the “S” category and be allocated to the compensation, management development committee, or its equivalent talent committee, while corporate responsibility initiatives may be overseen by the governance committee. The trend for companies to disclose how the full board or committees are delegated certain ESG oversight responsibilities can effectively enable the board to execute on its fiduciary responsibility.
Only 1% of S&P 500 companies reported that the audit committee was the primary committee overseeing ESG for both years. While this is not surprising, following the shared governance model, the audit committee has certain important roles in ESG efforts, including the following:
Audit committees should understand whether there are appropriate internal and disclosure controls and procedures for the metrics disclosed, whether in an SEC filing or a separate sustainability report. This includes working closely with other committees to understand how ESG risks are identified and prioritized and how materiality is defined.
The audit committee should understand the companies’ ESG program—its interconnectedness across the pillars of “E”, “S”, and “G” and the related goals and metrics—and how management considers ESG strategies and the impact they may have on the financial statements.
As the development of companies’ integration of ESG into strategy and disclosure objectives continues to evolve and marketplace standards become more established and authoritative, the role of internal audit and the value of assurance as a tool to drive trust and confidence in ESG performance will become central. Assurance can provide a strong signal to investors and other stakeholders regarding the quality and reliability of disclosures. Audit committees should take the lead in overseeing the assurance engagement. The committee may consider inquiring with management about engaging with public company auditors on how to evolve and mature its ESG programs to meet the increasing demands of the market and regulators.
Conclusion
ESG’s integration into reporting and disclosure continues to proceed rapidly, and having a defined ESG plan and governance structure is increasingly an expectation rather than an exception, particularly for large public companies. Accordingly, boards will likely need to recalibrate their oversight to accommodate these changes and meet the requirements of regulators, investors, and other stakeholders. Given growing scrutiny and market expectations, companies are realizing value and identifying opportunities more quickly and confidently through a more rigorous ESG governance and data measurement and reporting process. Audit committees should consider adding ESG matters as a standing agenda item in 2022, understand the company’s disclosure process, and regularly assess the company’s progress, risk oversight, financial statement implications, and the integration of ESG considerations into the core business strategy.
2020 was a critical year for cities and communities. The pandemic affected the core of our urban living, and local governments needed to react quickly to protect people’s lives and simultaneously look for the best approaches to handle the long-term effects of COVID-19. View the original article here
At the intersection of both these challenges, one topic stands out: the importance of making cities more human and nurturing a strong sense of connection, shedding light on what cities should care about the most – people.
This is the motto of this study and the underlying idea in the 12 trends we present. Committed to helping cities drive change, we have listened to prominent actors in order to understand what we might expect to happen next. Researchers, practitioners, policymakers and city leaders are just some of the people we interviewed, and their insights helped identify 12 trends that cities, leveraging technology and data, can follow on the road to becoming smarter, more sustainable and resilient.
The 12 trends are not equally applicable or desirable for all cities. They cover most of the domains of a city and touch on the main changes emerging from the pandemic. However, we do not suggest that all these trends form a recipe for every city – after all, there is no one-size-fits-all approach to city development.
These are the 12 trends we have identified:
GREEN PLANNING OF PUBLIC SPACES: Cities are being planned and designed for people, with ‘green’ streets, new corridors and public spaces as centers of social life.
SMART HEALTH COMMUNITIES: Cities develop health care ecosystems that are focused not only on diagnosing and treating sickness, but also on supporting well-being through early intervention and prevention, while leveraging digital technologies.
15-MINUTE CITY: Cities are being designed in a way that amenities and most services are within a 15-minute walking or cycling distance, creating a new neighbourhood approach.
MOBILITY: INTELLIGENT, SUSTAINABLE AND AS-A-SERVICE: Cities work towards offering digital, clean, intelligent, autonomous and intermodal mobility, with more walking and cycling spaces, where transport is commonly provided as a service.
INCLUSIVE SERVICES AND PLANNING: Cities evolve to have inclusive services and approaches, fighting inequalities by providing access to housing and infrastructure, equal rights and participation, as well as jobs and opportunities.
DIGITAL INNOVATION ECOSYSTEM: Cities attract talent, enable creativity and encourage disruptive thinking, developing themselves through an innovation model approach and a combination of physical and digital elements.
CIRCULAR ECONOMY AND PRODUCING LOCALLY: Cities adopt circular models based on a healthy circulation of resources, and on principles of sharing, reusing and restoration, with an emphasis on limiting municipal waste volumes and on producing locally – for instance, by urban farming.
SMART AND SUSTAINABLE BUILDINGS AND INFRASTRUCTURE: Cities aim to have regenerated buildings; they leverage data to optimise energy consumption and the use and management of resources in buildings and utilities: waste, water and energy.
MASS PARTICIPATION: Cities evolve to be human-centered and designed by and for their citizens, promoting mass participation by the ecosystem in a collaborative process and following open government policies.
CITY OPERATIONS THROUGH AI: Cities adopt automated processes and operations (orchestrated by a city platform) and are following data-driven planning approaches.
CYBERSECURITY AND PRIVACY AWARENESS: Cities strive to promote awareness of the importance of data privacy and preparedness for the impact of cyberattacks since data will be an important city commodity.
SURVEILLANCE AND PREDICTIVE POLICING THROUGH AI: Cities are leveraging artificial intelligence (AI) to ensure safety and security for their citizens while safeguarding the privacy and fundamental human rights.
Trend 1: GREEN PLANNING OF PUBLIC SPACES
Cities need to be planned and designed for people, with ‘green’ streets, new corridors and public spaces as centers of social life.
Urban areas are traditionally characterized by high population density and heavy construction to support modern amenities, such as transport and commercial buildings. They now face increasing pressure from expanding populations, limited resources and the growing impact of climate change. One of the indicators for measuring SDG 11 is the area of public and green space in a city, as the lack of natural space creates an unhealthy urban living environment.
Cities should be driving a decarbonization agenda. Becoming low carbon is the first step towards mitigating carbon emissions and achieving ecosystem resilience. At the same time, cities should ensure that urban planning is capable of dealing with the pressures of climate change in the adaptation agenda.
Green public spaces entail:
a large number of trees in cities (Singapore ranks first in the Green View Index from MIT’s Senseable City Lab, which measures the canopy cover in cities);
creation of more and larger public parks and nature-based solutions in the urban environment, fostering a closer connection to nature even in cities with high population density;
more walking and cycling facilities instead of car-centric designs and parking areas, with space for children and adults to enjoy outdoor activities, and fostering a sense of security and safety (according to a study by C40, investing in a shift to mass transit and developing walking and cycling corridors can reduce carbon emissions in cities by 5-15 per cent.).
Cities around the world are recognizing the benefits of a green approach to urban planning, as it has the potential to lower urban temperatures, mitigate air pollution and build natural environmental resilience. World Economic Forum’s Global Agenda Council on the Future of Cities has included increasing green canopy cover in its top ten list of urban planning initiatives.
How to ensure successful implementation
Understand sustainability drivers and societal targets.
Promote equal, fair and integrated urban planning.
Do not underestimate the power of community engagement.
Ensure funding and financing.
Trend 2: SMART HEALTH COMMUNITIES IN THE CITIES
Cities are developing health care ecosystems that are not only focused on diagnosing and treating sickness but also on supporting well-being through early intervention and prevention, leveraging digital technologies.
The health crisis during the pandemic made the case clear: there is a community role in creating a better health environment, and cities need to pay more attention to the well-being of their citizens. Globally, five of the top ten causes of death are related to unhealthy behavior. This brings into the spotlight the need for preventive medicine. The factors that affect a person’s health and behavior are complex; therefore communities (physical and virtual) must play a part.
Cities will develop health care ecosystems that move away from a focus purely on diagnosing and treating sickness and injuries to one that is equally focused on supporting well-being through early intervention and prevention. Instead of being designed and funded to treat individual patients one by one, they will have a greater appreciation of the interconnectedness of communities. The social determinants of health will be better understood, and government and the private sector will collaborate to address some of these challenges.
As care moves outside of the hospital walls new community players and disruptors will become critical in forming the new ecosystem. Scientific advancements and the affordability of personalized health care (genomics, micromics, metabolism and behavioral economics) will ensure that care is tailored for individuals and their families. The citizens’ health journey will be underpinned by interoperable data and analytics guiding them through positive health choices and behaviors.
Cities have a responsibility to create a healthy environment. Smart Health Communities (SHCs) engage patients, companies and public entities to deliver digital health services, in order to develop and shape communities, reducing costs dramatically, improving wellness and longevity, and promoting economic growth. Governments act as enablers of change by promoting this interconnected health care ecosystem. A city, as a geographical SHC, can drive a shift towards preventive and curative therapies, as well as provide solutions that foster collective and cooperative healthy behavior, and generate and analyze interoperable data to predict risks and evaluate impact. While privacy is a concern, investment in smart public health initiatives generates substantial return on investment for cities while improving public health and well-being.
How to ensure successful implementation
Work to generate trust.
Invest in a data privacy and security infrastructure.
Establish partnerships between public and private stakeholders, namely government agencies, technology companies, health care and life sciences players, the media, NPOs/NGOs, social care entities and citizens.
Collaborate with technology companies to launch awareness-creation programs and knowledge-sharing platforms.
Establish community-driven funding hubs to strengthen the reach and support capabilities and operational efficiency of SHCs.
Restructure policies and consider incentivizing SHC development plans.
Trend 3: THE 15-MINUTE CITY
Cities are being designed so that amenities and most services are within a 15-minute walking or cycling distance, creating a new neighborhood approach.
The ‘15-minute’ city concept – primarily developed to reduce carbon emissions by reducing the use of cars and motorized commuting time – is a decentralized urban planning model, in which each local neighborhood contains all the basic social functions for living and working. Many people argue that the concept of creating localized neighborhoods in which residents can get everything they require within 15 minutes by walking, cycling or on public transport will ultimately improve the quality of life. Such spaces entail multipurpose neighborhoods instead of separate zones for working, living and entertainment, which reduces the need for unnecessary travel, strengthens a sense of community and improves sustainability and liveability.
Today most cities have ‘operation-based’ neighborhoods, with separate areas used predominantly for business or entertainment. Fragmented urban planning results in a sprawl, with people having to travel long distances across the city to get to their destination. In contrast, compact cities of the future, or ‘hyperlocalization’, prioritize strategies for urban infrastructure that aim to bring all the elements for living and working into local neighborhood communities.
The ‘15-minute’ city is an iteration of the idea of ‘neighborhood units’ developed by American planner Clarence Perry during the 1920s. The theory of ‘new urbanism’, an urban planning and design concept promoting walkable cities, subsequently gained popularity in the US in the 1980s. Similar versions of ‘urban cells’ or 30- and 20-minute neighbourhoods have also emerged across the globe in the past decade.
The rezoning model will gain further traction in the future, boosted during the COVID-19 disruption, by new ways of working that require less transport. With climate change as a major global concern, C40 in its “C40 Mayors’ Agenda for a Green and Just Recovery”has recommended this model for cities worldwide, arguing that its pedestrianization approach contributes to a reduction in greenhouse gas emissions and supports environmental sustainability.
While this approach may not be entirely applicable to every city – for example, it is probably more suitable for a big metropolis than for smaller cities – remote working and the digitalization of services have increased the impetus to apply the principle of neighborhood planning regardless of city size.
How to ensure successful implementation
Correlate sustainability goals and urban planning initiatives.
Ensure community endorsement.
Decentralize core services.
Launch schemes to promote affordable housing in every neighborhood.
Allow flexible use of urban spaces and properties across neighborhoods.
Trend 4: MOBILITY: INTELLIGENT, SUSTAINABLE AND AS-A-SERVICE
Cities are working towards offering digital, clean, intelligent, autonomous and intermodal mobility, with more walking and cycling spaces, where transport is commonly provided as a service.
This is one area where cities should expect huge disruption. Some major changes in how people move around in cities are already under way, but the trend will accelerate further in the next decade, with electrification, autonomous driving, smart and connected infrastructure, modal diversity, and mobility that is integrated, resilient, shared and sustainable – powered by disruptive business models. In answers to an ESI ThoughtLab survey question, 54 per cent of city leaders admitted they will rethink mobility and transportation in the aftermath of the COVID-19 pandemic.
Less need to travel. It is expected that in general people will travel less than they have in the past. With new urban planning concepts such as the ‘15-minute city’ promoting compact environments, ‘connected corridors’ and changes in the way that people work, movements within urban areas will decrease substantially and bicycles, scooters and even walking will increasingly be the preferred options in community neighborhoods.
Electrification. It is estimated that in 2030, electric vehicles (EVs) will have around 32 per cent of the total market share for new car sales globally,although there will be differences between regions.
Connectivity and automation. Recent Deloitte research in the United States estimates that by 2040, up to 80 per cent of passenger miles travelled in urban areas could be in shared autonomous vehicles. This development will be led by major technology-based corporations or the automotive and transport sector and by technology-based start-ups. Solutions such as passenger drones by EHang and drone delivery by Amazon are making rapid advances. Logistics companies look increasingly to autonomous technology to meet the rising demand for goods.
Sharing. Cities will also benefit from an increase in on-demand multimodal mobility and Mobility-as-a-Service (MaaS) platforms, such as in Helsinki. For instance, residents will be able to plan and book door-to-door trips digitally, use the same fare card for all transport modes, access automated last-mile cargo shipment services, and have end-to-end real-time visibility of freight in transit – and with seamless payment models.
Intelligent mobility. With data playing a central role in some of these shifts, customised travel is something that cities will start to deliver, segmenting their customers (citizens) in a mobility context and implementing strategies for each market segment. The value of ‘intelligent’ mobility is forecast to grow to €850 billion by 2025, representing more than 1 per cent of global GDP.
How to ensure successful implementation • Embrace a holistic approach (and consider the total mobility mix), and start with a minimal viable ecosystem for ‘smart mobility’, adding features over time in an agile way.
• Invest in infrastructure – physical, energy, digital and telecoms – that supports effective transformation.
Be aware that a new generation of vehicles is needed, and there should be a resurgence in the use of some existing types of vehicles, such as motorbikes and bicycles, with a strong focus on micromobility.
Make mobility management a priority, both management of assets (infrastructure and vehicles) and management of clients (people).
Make sure regulation adapts to the new circumstances, covering vehicle security and liability in cases of accidents, data management and privacy, interoperability, connectivity, risk and responsibility, and cybersecurity.
Trend 5: INCLUSIVE SERVICES AND PLANNING
Cities are evolving to have inclusive services and approaches, fighting inequalities by providing access to housing and infrastructure, equal rights and participation, and jobs and opportunities.
Cities are not only centers of economic development; they symbolize equality, healthy communal coexistence and prosperity for all. Social inclusion should be a key pillar of urban growth and development for the cities of the future, bearing in mind the three building blocks identified by World Bank: spatial inclusion (providing affordable housing, water and sanitation), social inclusion (expanding equal rights and participation) and economic inclusion (creating jobs and offering citizens opportunities for economic development).
Cities should be planned and designed to generate social and economic outcomes for everyone, avoiding the costs that occur when people are excluded. Although the poor are usually the most affected, cities will also remove the barriers caused by differences in gender, race, nationality, disability or religion. Inclusive design could mean building gender-inclusive urban centers to provide safe and secure spaces for carers and installing wheelchair-accessible features for those with mobility difficulties. Inclusive design may mean building greener and safer neighborhoods for all citizens and investing to create secure and joyful spaces for children to play and accessible places for the elderly, making cities pleasurable for the silver generation. An inclusive social care system will embrace migrants and offer them tailored services that address their particular needs and circumstances, just as for everyone else.
There are already some signs of cities prioritizing inclusion. A survey of 167 cities worldwide found that 40-47 per cent use metrics to track progress towards inclusion goals, although the majority are in advanced economies.
Digitalization enables governments to facilitate access to a range of services, accelerate business opportunities, analyze societal gaps, educate mass audiences, collect real-time data, boost data-driven decision-making, facilitate predictive and proactive governance, and engage larger audiences in social activity. It also frees up government capacity to re-direct finite administrative and case management resources to those who need it most.
Although a fundamental requirement for social inclusion, technology may also create disparities. City planners should remain aware of the large numbers of ‘digitally invisible’ citizens, to avoid skewing the results of city analysis that would compromise urban planning efforts and even contribute to widening the inequality gap.
How to ensure successful implementation
Implement proactive multisector solutions, both preventive and curative.
Promote an integrated planning approach instead of a fragmented one.
Follow an equity-centered by design approach.
Improve the adoption of technology solutions and digital skills, supported by adjusted regulation.
Pursue data equity.
Establish inclusive living labs.
Use agile methods to respond rapidly and anticipate citizens’ needs.
Trend 6: THE CITY AS A DIGITAL INNOVATION ECOSYSTEM
Cities strive to attract talent, enable creativity and encourage disruptive thinking; developing themselves through an innovation model approach and a combination of physical and digital elements.
While traditionally companies and industrial parks have been concentrated in suburbs of the city, start-ups and digital nomads are bringing innovation and ideas to the city centres. As population numbers increase in urban areas, cities compete for investment, skilled workers (talent) and cultural prominence, and this is turning urban regions into innovation hubs, leveraging data.
In some cities with an innovation or technology department, individuals try to innovate from a silo. This is not what we mean. Cities will adopt a multidimensional approach to innovation, the so-called quintuple innovation helix framework (of interactions between university, industry, government, public and environment), and city governments will act as platforms enabling the right connections, policies, places and infrastructure to make the ecosystem flourish; solving the town’s most prominent challenges and bringing positive change to the city and its industries.
Cities will be Living Labs for digital transformation and centers of experimentation, using data to develop pilots that can be scaled up. By putting talent attraction at the center of its strategy, a city can develop with the goal of being the most attractive host (of people, companies and research centers), in order to facilitate ecosystem development. The City Hall has to develop the right skills, and data collection and usage, and modernize its governance model to foster collaboration and encourage open innovation. Increasing the level of adoption of digital innovation in high-priority economic sectors generates a positive impact on local competitiveness, by opening up new sources of employment and economic growth.It also supports the uptake of disruptive and promising digital technologies. Remote working has lengthened the list of cities that can adopt this strategic approach. In line with the ‘rise of the rest’ theory put forward by Richard Florida in 2019, the shift from enterprise attraction to talent attraction makes it possible for smaller cities to thrive in a post-pandemic world, using data as a source of competitiveness in the digital innovation environment. It is a time for small remote hubs.
How to ensure successful implementation
Create capacity to attract talent, expertise and open talent networks.
Foster agile processes and avoid a risk-aversion culture.
Add the required skill sets and gain an awareness of the opportunities that new technologies offer.
Ensure data mastery and interoperability standards.
Embrace a new way of management and leadership.
Trend 7: CIRCULAR ECONOMY AND LOCAL PRODUCTION IN THE CITY
Cities are adopting circular models based on a healthy circulation of resources; principles of sharing, reusing and restoring; and with emphasis on limiting municipal waste volumes and on producing locally – for instance, urban farming.
Do you know that on average a car is parked more than 90 per cent of the time? Or that the average office is used only 35-50 per cent of the time? That 30 per cent of food is wasted? That half of the waste is produced in cities? Increasingly, cities are developing aspects of a circular economy, which entails decoupling economic activity from the consumption of finite resources and designing waste out of the system.
What does it mean to live in a city with a circular economy? It is a city that:
promotes a better use of resources through procurement policies;
consumes less, and reuses and recycles water, energy, products and materials;
recycles and manages waste according to regulations;
stimulates an economy of repair, borrowing and second-hand commerce;
nurtures a sharing mindset (e.g., car trips, spaces and materials);
fosters better use of resources in construction (e.g., 10-15 per cent of building materials are wasted during construction);
stimulates an innovative approach to how the city and its citizens consume, store and use resources.
A circular economic model is one of the pillars of the European Union’s European Green Deal strategy,and there are already some examples of its application, as well as policies and mechanisms to fund the transition. Cities will also increasingly encourage a ‘produce local’ approach to food and energy. Urban and small-scale farming is gaining traction in some urban centers as a way to deliver fresh and healthy food, establish direct contact with food producers and reduce carbon emissions, while strengthening the local economy. Innovative approaches make better use of space and light, such as vertical farming, hydroponics, LED indoor farming and rooftop farming. Simultaneously, the energy revolution is contributing to the circular economy through decentralization of energy production, mainly through renewable sources (biogas, wind, solar, wood biomass, waste, etc.), and off-grid and microgenerators, paving the way for self-sufficiency whereby cities generate as much energy as they consume, creating communities of energy and offering further economic opportunities.
How to ensure successful implementation
Secure funding for the transition.
Establish flexible and simple regulatory structures and smart procurement.
Create or rethink metrics to measure circularity.
Leverage national or regional policies and invest in awareness campaigns.
Trend 8: SMART AND SUSTAINABLE BUILDINGS AND INFRASTRUCTURES
Cities aim to have regenerated buildings and to leverage data to optimise energy consumption and the use and management of resources in buildings and utilities: waste, water and energy.
In 2019, the Coalition for Urban Transitions estimated that it should be possible to cut emissions from cities by about 90 per cent by 2050 (15.5 GtCO2e by 2050) using proven technologies and practices, in particular for buildings and infrastructure. Estimated cuts include 36.5 per cent from residential buildings and 21.2 per cent from commercial buildings. Buildings are currently responsible for 30-40 per cent of total city emissions. To achieve the COP21 target by 2050, emissions from buildings must be 80-90 per cent lower than they are today.
Many buildings are energy inefficient and contribute heavily to carbon emissions. In the EU, as of February 2020, roughly 75 per cent of building stock was energy inefficient. So there is some way to go. A 2019 Navigant report stated that only 5 per cent of the smart city projects that it tracked had a focus primarily on building innovation, and just 13 per cent had ‘some level’ of focus on buildings.
World Green Building Council defines a green building as one that, “in its design, construction or operation, reduces or eliminates negative impacts, and can create positive impacts, on our climate and natural environment; preserve precious natural resources and improve our quality of life”.9 Given the pressure on cities to act on climate change, green buildings are going to invade our urban centers. Besides being built with sustainable and ethical materials, they will be energy, water and resources-efficient; environment-friendly by design – powered by renewables (such as solar) and capable of producing their own energy (electricity prosumers); covered by vertical and/or rooftop gardens; and able to provide a better indoor environment for those who live in them or use them.
On top of that, they will leverage data and digital technology to enable components of infrastructure to become more efficient and better adapted to the stakeholders’ usage. Business models provided by flexible office operators will foster an Office-as-a-Service or even Real Estate-as-a-Service approach.
Gartner predicts that by 2028 there will be more than 4 billion connected IoT devices in commercial smart buildings. They will be powered by telecommunications infrastructures, with 5G and High Efficiency Wi-Fi (6 or 6E) at the forefront, and smart utilities such as power, waste and water.
As of May 2020, 28 major cities have signed up for the World Green Building Council’s Net Zero Carbon Buildings Commitment, which calls for cities to reach net-zero carbon operations by 2030 for all assets under their direct control, and to advocate for all buildings to become net-zero carbon in operations by 2050.
How to ensure successful implementation
• Define a vision and technological guidelines, and develop a roadmap.
• Stimulate and prioritise sustainability-targeted renovation, construction and restoration projects.
• Launch incentive plans to promote alternate materials and build a strong engagement ecosystem.
• Beyond investing in buzzwords like 5G or sensory-tech solutions, extract value from data.
• Promote data-sharing standards and policy.
Trend 9: MASS PARTICIPATION IN CITY BUILDING AND DEVELOPMENT
Cities are evolving to be human-centred and designed by and for their citizens, promoting mass participation by the ecosystem in a collaborative process and following open government policies.
What does an ideal experience in our city look like? How can our city contribute to a brighter global future? How would we like our children to grow up in the city? What would we like our city to be known for around the world?
These are some of the questions you will be asked in cities where there is open government and mass participation. These are places where citizens, social innovators, civil society organisations, businesses and academia are part of the process of building their cities (in a quintuple helix model), closing the gaps between local government and the ecosystem.
Through mass participation, supported by open data and technology, and with local government acting as a platform, cities can use citizens as a ‘sensor’ and benefit from greater innovation, better utilisation of resources and an increased sense of ownership. Co-creation through mass participation is a bi- or multidirectional human-centred approach, rather than just a bottom-up or traditional top-down approach.
Cities are increasingly innovative in the way they promote participation, and technology plays a key role in enabling innovation – for instance, mobile applications and reporting websites overcome the need for groups to meet in person to discuss new ideas and collaborate; and digital currency opens the door to gamification strategies. But to ensure the three principles of open government are met (participation, collaboration and transparency), it is necessary to have open data platforms and other initiatives. Participatory budgets are a good starting point. Some cities go a step further and provide citizens and the ecosystem with real-time access to information, to keep them informed about changes that affect where they live. Ultimately, cities will progress towards having true platforms for collaboration, fostering co-creation and leading to new governance models (co-governance), where responsibility is shared among the participants and is not just a burden on the local government. From this perspective, a new culture is created, and citizen engagement emerges as critical for ensuring the long-term sustainability of policy initiatives.
How to ensure successful implementation
Engage the city population at scale and combine physical and virtual interactions whenever possible.
Follow the digital imperative, but create a smart population for smart cities.
Ensure accessibility and inclusiveness for all citizens.
Establish clear governance processes and transparency to boost trust – an enabler of open governments and collaboration.
Align objectives and expectations, and make clear connections between participation and decisions taken.
Trend 10: CITY OPERATIONS THROUGH AI
Cities are adopting automated processes and operations (orchestrated by a city platform) and following data-driven planning approaches.
Machines run 24/7, and there are operations and tasks that cities perform that will become increasingly smart and powered by artificial intelligence (AI). AI will contribute to the optimisation of operational efficiencies, benefiting city managers, and ultimately citizens, through reshaped service delivery. In an ESI ThoughtLab study, 66 per cent of 167 cities surveyed are investing heavily in AI, and 80 per cent will do so over the next three years.
While chat assistants are currently among the most common solutions powered by AI, cities will evolve to have digital platforms as ‘city brains’, where all urban activity is orchestrated and operated, providing a holistic view of the city, allowing for events correlation, fast and assertive root-cause analysis, predictive analysis (through machine learning) and incident management; and providing operational insights through visualisation. If the behaviour of almost every citizen is registered through anonymised data, and 5G technology enables cities to become huge connected ecosystems, it will be of paramount importance to maximise data value and improve planning and decision-making using AI and data analytics, on the way to a cognitive city. Gartner predicted in 2019 that a city platform will be a mature smart city solution in five to ten years’ time, when it is expected that 1-5 per cent of cities will be using a city platform to manage their operations.
But cities can go even further. We see cities like Dublin and Singapore, among others, creating a Digital Twin – a dynamic digital replica of their physical assets and environments and their interdependencies – for urban planning purposes and using machine learning to predict future events and trends. Digital Twins will become increasingly powerful in enabling data-driven decisions and will have a high adoption rate among city governments, with the promise of making cities more resilient.ABI research has predicted that by 2025 the number of urban Digital Twins will exceed 500.
How to ensure successful implementation
Start with data strategy and governance.
Be aware of privacy issues, and stimulate a culture of trust.
Ensure data standards and interoperability.
Avoid algorithmic bias.
Develop the right skill sets among the city workforce.
Follow a citizen-focused approach to operations.
Trend 11: CYBERSECURITY AND PRIVACY AWARENESS IN THE CITY
Cities strive to promote awareness of the importance of data privacy and to get prepared for the impact of cyberattacks, since data will be an important city commodity.
As services are becoming highly integrated and interconnected, and vulnerabilities created during data exchanges are more common, data security is vitally important. In 2018, the total cost of losses from cyberattacks for cities in a survey averaged €2.8 million.
Cybersecurity is now a key consideration for developers and planners of smart cities, and attention is turning to the risks inherent in such a highly interconnected environment. However, while the cybersecurity industry has developed a mature understanding of how to measure and mitigate the impact of cyberattacks on infrastructure in ‘non-smart’ cities, there is limited knowledge of the potential impact of attacks on smart cities.
An attack on smart city infrastructure may create effects that cascade – or ‘ripple’ – outwards and affect other parts of the city or country, or beyond. Resilience is the essential concept that must be considered when creating these complex and highly interconnected environments. It is essential to use resilience as a cornerstone of city building, and to do so in a way that can be scaled up and remain flexible for future upgrades and enhancements.
As the complexity of technologies, operational interdependencies, and systems management increases, so does the interest of hackers in profiting from this environment. Developing smart city initiatives without considering cybersecurity and privacy can result in a highly vulnerable environment that poses security risks to critical infrastructure and data, and in some cases may even create safety risks for citizens.
Advance planning is essential. By one estimate, 95 per cent of Cities 4.0 (as labelled by ESI ThoughtLab, referring to hyper-connected cities that use technology, data, and citizen engagement in pursuit of the SDGs) ensure that cybersecurity is considered early in the process, compared with only 51 per cent of other cities.
However, many cities are not ready for the challenges. Besides lagging far behind in the digital revolution, with outdated technologies running critical infrastructure, they lack the human resource expertise to be capable of addressing the challenges. Creating ecosystems of innovation – as Tel Aviv has done – could be one approach to improving security. Another approach is to invest in models of public/private cooperation and coordination. Efforts must be backed by city executives and not left to external entities or departments alone.
How to ensure successful implementation
Ensure three major goals:
Govern like a nation.
Treat smart cities as a defensive ecosystem.
Reboot with resilience.
Syncronise the city with cyber strategy, and allow for flexibility.
Have a clear cyber and data governance in place, with accountability.
Leverage the ecosystem and build strategic partnerships to grow cyber capabilities.
Align regulation policies.
Adopt a specific tool to manage the cybersecurity landscape of a smart city.
Invest in awareness campaigns on privacy.
Trend 12: SURVEILLANCE AND PREDICTIVE POLICING THROUGH AI
Cities are leveraging artificial intelligence (AI) to ensure safety and security for their citizens while safeguarding privacy and fundamental human rights.
Surveillance and predictive policing through AI is the most controversial trend in this report, but one that has important implications for the future of cities and societies.
Technology is frequently used as a synonym for evolution, but the ethics of its use may need to be questioned. An underlying question is what society we are aiming to build. There are doubts and uncertainties about the impact of AI on communities and cities: the most fundamental concern is privacy, but there are frequent debates about AI from other perspectives, such as its impact on jobs, the economy and the future of work. Therefore, one cannot disconnect the discussion about surveillance and predictive policing from recent debates about the societal, ethical and even geopolitical dimensions.
The pace of adoption of AI for security purposes has increased in recent years. AI has recently helped create and deliver innovative police services, connect police forces to citizens, build trust and strengthen associations with communities. There is growing use of smart solutions such as biometrics, facial recognition, smart cameras and video surveillance systems. A recent study found that smart technologies such as AI could help cities reduce crime by 30 to 40 per cent and reduce response times for emergency services by 20 to 35 per cent. The same study found that cities have started to invest in real-time crime mapping, crowd management and gunshot detection. Cities are making use of facial recognition and biometrics (84 per cent), in-car and body cameras for police (55 per cent), drones and aerial surveillance (46 per cent), and crowdsourcing crime reporting and emergency apps (39 per cent) to ensure public safety. However, only 8 per cent use data-driven policing. The International Data Corporation (IDC) has predicted that by 2022, 40 per cent of police agencies will use digital tools, such as live video streaming and shared workflows, to support community safety and an alternative response framework.
Surveillance is not new, but cities are exploring the capabilities of predicting crime by analyzing surveillance data, in order to improve security. Cities already capture images for surveillance purposes, but by using AI, images can now be analyzed and acted on much more quickly.Machine learning and big data analysis make it possible to navigate through huge amounts of data on crime and terrorism, to identify patterns, correlations and trends. When the right relationships are in place, technology is the layer that supports law enforcement agencies to better deliver their job and trigger behavior change. The ultimate goal is to create agile security systems that can detect crime, terrorism networks and suspicious activity, and even contribute to the effectiveness of justice systems.
How to achieve these goals while respecting privacy and liberties remains a crucial question.
Experts say it is almost impossible to design broadly adopted ethical AI systems, because of the enormous complexity of the diverse contexts they need to encompass. Any advances in AI for surveillance and predictive policing need to be accompanied by discussions about ethical and regulatory issues. Even though the value proposition of these technologies might seem attractive from a use case perspective, liberties and civil rights need to be protected by proper privacy and human rights regulations.
In summary, cities need to consider if using technology for surveillance and policing implies making concessions to convenience at the expense of freedom.
How to ensure a successful implementation?
Balance security interests with the protection of civil liberties, including privacy and freedom.
Experiment responsibly, and regulate first.
Establish institutional review boards that include experts from multiple disciplines.
Create mechanisms for monitoring and reviewing algorithms.
Privilege the usage of environmental data instead of personal data.
Promote strong collaboration and trust between law enforcement systems and citizens.
Accompany digitalisation with a change in culture.
Social impact and decarbonization strategies will be the pillars of urban development projects in the coming years View the original article here
From revamping disused docklands to rejuvenating rundown neighbourhoods, cities are embarking on urban development projects that put health and sustainability at the heart of placemaking.
These mixed-use schemes increasingly focus on implementing features that support wellbeing, champion strong environmental credentials, build communities and promote equality and inclusion.
The redevelopment of the western edge of Dublin city center aims to bring the concept of the 15-minute city to life while Rotterdam’s M4H project will re-green the site surrounding a manufacturing hub, and add sport facilities, housing, hospitality and cultural space.
Such schemes show how thinking around what makes a successful city is shifting, says Jeremy Kelly, Lead Director, Global Cities Research at JLL.
“City governments are looking beyond traditional metrics like GDP and employment growth and are refocusing on harder-to-measure factors relating to liveability, opportunity and experience,” he explains.
“That has implications for real estate because city governments now expect the industry to deliver developments that have a positive social impact.”
Looking beyond the money
Many of today’s schemes draw from major urban projects of the previous decade – such as Hudson Yards in New York City and London’s King’s Cross.
“These were substantial projects that changed the spatial logic of a city, opening up new areas that were increasingly mixed-use, and cutting-edge when it came to responding to the demands of occupiers and well-off residents,” says Kelly.
One big difference is that urban transformation projects of the 2020s will positively impact surrounding communities, in part by addressing challenges to provide affordable housing.
“That’s where the shift is – thinking about the community impact,” says Kelly. “And for developments to boost or retain their value, they’ll need to be part of neighbourhoods that are also regenerating.”
Health is another key focus for today’s projects, tying into trends such wellness in the workplace and more active lifestyles.
Outdoor access, natural light and green areas – long shown to boost mental health – will be critical features for projects, along with easy access to leisure and healthcare amenities.
“Health and wellbeing concepts are foundational to today’s developments, whatever the size of the project,” says Walid Goudiard, Head of Project and Development Services at JLL. “It’s a matter of placemaking and curating the built environment to provide a healthy, positive experience whether in an office or residential setting.”
The McEwan in Edinburgh, for example, is the first European residential scheme to receive a Fitwel 3-start rating for its focus on health and wellbeing through landscaped gardens and neighbourhood amenities.
And there will be more to come. “The pandemic has accelerated that transition toward creating more human and sustainable places,” says Richa Walia, Director, Work Dynamics Research at JLL. “There’s a genuine desire among companies to act responsibly and their first priority is to create human-centric places.”
Sustainability for social good
Environmental concerns will equally guide urban development, as municipalities develop plans to hit net zero targets and more real estate companies report their environmental impact in line with globally recognized standards.
In Paris, the recently completed regeneration of Clichy-Batignolles is designed as an eco-quarter with low-energy building powered from geothermal and solar sources.
Biodiversity, too, will become a key pillar for transformation projects, with city authorities more likely to greenlight schemes with features such as green roofs, areas given over to rewilding and living walls. Many municipalities now restrict the construction practice of soil sealing to improve carbon capture in buildings and boost biodiversity.
What’s more, plans will need to consider retrofitting and repurposing existing buildings instead of embarking on carbon-intensive new builds. Here, technology and digitisation can offer two vital benefits in optimising resources, says Goudiard.
“Firstly, sensor-enabled smart buildings can automate operations for improved efficiency and reduced emissions,” he explains. “Digitizing spaces also helps with tracking how they’re used and then getting the maximum value from them – especially in dense city centers. The concern is how to embed tech solutions in a way that really benefits users.”
Technology could also boost inclusiveness in urban developments through data analytics that align space design with users’ needs – such as enhancing play areas or accessible walkways – or digital services that offer more equitable access to housing and infrastructure. However, with less defined metrics to track than decarbonisation initiatives, inclusion can be a design challenge in many projects.
“There is a lot of work to be done when it comes to creating inclusive spaces,” says Walia. “The elements that make up diversity and inclusion need to be addressed holistically. Companies are trying to understand how a development can truly create social impact.”
Governance is also moving with the times.Whole of place governance, where authorities collaborate closely with the users of a space, will be the critical difference in urban transformation projects of the coming years.
City planning in Paris, for example, now calls for developers to run consultations where local communities provide feedback to design teams and investors on major projects, helping to improve inclusiveness.
“It’s a more holistic view that’s not just based on the economic output of that district,” says Kelly. “It’s about value creation and improving quality of life for the whole neighborhood.”
Exterior in the evening of the building. Leaside Innovation Centre
The future of the office post-pandemic has been a subject of many posts in the last few years. I have written that we will be living in a hybrid world, with “one foot in the real world, one foot in the virtual, and everything will be flexible and adaptable.” I have suggested that we will see the return of the satellite office in the 15-minute city, in a new hub-and-spoke world. Oh, and the new office buildings will be made from low-carbon materials and nobody is going to want to work in a building without seriously good ventilation.
That’s why I was so intrigued by a new office building proposed for Leaside, in a former industrial area of Toronto that first transitioned to big box stores but now appears to be evolving again. The Leaside Innovation Centre (LIC) is being developed by Charles Goldsmith, designed by Greg Latimer of Studio CANOO, and engineered by David Moses, who is known for his expertise in mass timber construction.
The LIC is a five-minute walk to a new transit line and is surrounded by very expensive homes in desirable residential areas. Basically, it’s what could be ground zero in a Leaside 15-minute city, and may well attract tenants and buyers from the immediate area.
Leaside Innovation Centre
Like many new office buildings, it is built of mass timber. On their website, they list the benefits:
“Mass timber structure is the contemporary equivalent of the beloved industrial warehouse structures that have populated the downtown core for well over a century and are now being repurposed for housing and office space to meet the needs of the 21st century. The mass timber structure (comprised of Cross-Laminated Timber (CLT) floor plates and glulam beams and columns) is substantially lower in its carbon footprint than steel or concrete. The harvesting of renewable forest products to fabricate CLT captures atmospheric carbon helping to mitigate the impact of climate change by storing the embodied carbon in the finished product. In addition, the CLT structure weighs approximately 25% less than a comparable concrete structure reducing the load on the foundation and allowing for reduced concrete use in the foundations.”
Leaside Innovation Centre
What Is CLT?
It’s an acronym for Cross-Laminated Timber, a form of Mass Timber developed in Austria in the 1990s. It’s made of several layers of solid dimension lumber such as 2X4s laid flat and glued together in layers in alternating directions.
CLT can work as a two-way slab, and when you have beams it can often be less expensive to use Nail-Laminated Timber (NLT)—learn about the different LTs here—but Latimer of Studio CANOO tells Treehugger they wanted longer spans matching those in the parking garage for maximum material efficiency. They are also getting their CLT from Element 5, the new supplier in St. Thomas, Ontario (on Treehugger here). Latimer tells Treehugger the finish on their CLT is far better than you can get from NLT or from other suppliers.
There’s still lots of glass! Leaside Innovation Centre
Many office buildings are clad in floor-to-ceiling glass, including mass timber structures where the developers want to show off the beauty of the wood. Unusually, the Leaside Innovation Centre is clad in prefabricated thin brick panels with only a 40% glass-to-wall ratio. They note this allows for much more insulation, reducing the size of the mechanical systems. Latimer tells Treehugger they are looking at triple-glazing the windows as well, but he also notes that it is much easier to furnish the building when the walls are not all glass, and you get much more efficient office layouts.
Building science expert Monte Paulsen has discussed this many times: all-glass buildings are not sustainable even if they are made of wood. In our coverage of the building that Paulsen is criticizing I mentioned those in passing, but it should be taken far more seriously. It is good to see that Latimer and Studio CANOO are doing exactly that.
In my now-archived review of Joseph Allen’s book “Healthy Buildings,” I noted that after the pandemic, tenants and buyers will have lots of options and will be demanding more fresh air, more filters, more air changes.
“The dramatic drop in the demand side of the office market means that tenants will get to be picky, and they are going to go for the buildings that have the best ventilation; developers will be competing to offer the most and cleanest fresh air, the biggest heat recovery ventilators (so that you get lots of air without lots of heating and cooling costs). Any office building that doesn’t offer this stuff is going to be a see-through (a building with no tenants where you can look in one side and see right through to the other) in short order.”
The LIC is doing exactly that: “Mechanical ventilation air supply will be treated with Ultraviolet Germicidal Irradiation (UVGI) and MERV 13 filters to improve indoor air quality, and minimize the amount of airborne contaminants, germs, bacteria and viruses entering the building.”
Latimer explains that the UVGI “explodes the RNA of the virus” and that the system is the same as being done in the fanciest buildings by engineers like ARUP.
Ground Floor Plan. Leaside Innovation Centre
Latimer also tells Treehugger the building is designed with active transportation in mind: There is currently parking for 30 bicycles and it is not stuck down the ramp in the parking garage, but conveniently sits on the ground floor space smack beside the main entrance, along with two showers. That’s very impressive. When I asked if 30 bikes were enough, Latimer noted they are looking at stacking systems to get in more.
Leaside Innovation Centre
It is a tribute to the success of the mass timber industry that small buildings are getting almost too common to cover anymore. As Monte Paulsen demonstrates, people are also getting a lot more critical. It’s like judging the freestyle skiing and snowboarding at the Olympics; you’ve got to really perform, and you have to have more than one trick.
The Leaside Innovation Centre has lots of moves that make it interesting, not just the relatively locally sourced mass timber but the location, the mechanical systems, the cladding, and yes, the bike room. If people are going to get dragged back to the office, this is where they will want to go—close to home, lots of light and fresh well-filtered air, a little biophilic goodness from all the wood, nice amenities, and a glorious bike locker.
It well may be the model of a speculative office project in the post-pandemic world.
A growing number of firms are adopting bio-based building materials, making it one of 2022’s most prominent emerging design trends.
By: Kate Tattersfield View the original article here
A growing number of developers, architects and interior designers are embracing sustainable alternatives in an effort to curb climate change.
Reducing waste in the workspace design sector is a trending topic right now.
The built environment industry needs to look beyond operational efficiency and focus on decarbonising the materials used in its build and fit out processes.
The built environment is responsible for nearly 40% of global carbon emissions, according to research published by the Green Building Council.
28% of this derive from operational emissions – the carbon omitted by powering, heating and cooling a building – while 11% is a by-product of embodied emissions which are produced through the extraction, transportation, manufacturing, and assembly of the materials used to build, fit out and furnish a building.
Fortunately for our planet and species, there’s an appetite for change, and a growing number of developers, architects and interior designers are embracing sustainable alternatives in an effort to curb climate change.
The built environment garnered lots of attention at the COP26 summit in November 2021, with over 130 events dedicated to it.
During the summit 44 businesses, including leading architecture firms, signed a net zero carbon buildings commitment, pledging to take increased action to decarbonise the built environment across their portfolios and business activities.
The 2022 office design trends we’ve chosen to highlight are all sustainability-focused. Our list covers a range of office design aspects – from the construction materials used to how design elements are recycled. Check them out:
How are you planning to make your office more sustainable this year? Photo credit: RODNAE Productions
1. Bio-based design materials
Buildings – from the homes we live in to the offices we work in – have the potential to become carbon sinks as opposed to carbon generators.
But to limit global warming to 1.5C above pre-industrial levels, the built environment industry needs to look beyond operational efficiency and focus on decarbonising the materials used in its build and fit out processes.
One way to reduce embodied carbon is to manufacture using bio-based materials such as wood, straw and bamboo. Bio-based products typically require less energy and have the potential to capture and store carbon through photosynthesis.
A growing number of firms are adopting bio-based building materials, making it one of 2022’s most prominent emerging design trends.
In July 2021, Grosvenor Group, one of the world’s largest privately-owned international property businesses, launched Holbein Gardens, its first net zero carbon office development.
The firm conducted an early whole life carbon assessment to minimise upfront embodied carbon. Grosvenor Group is trialling new low embodied carbon products including cross-laminated timber in the extension, CEMFREE Concrete, Thermalite aircrete blockwork and reclaimed raised access flooring.
Redesigning an existing office building is often more eco-friendly than constructing one from scratch. However, it’s important to consider the environmental credentials of the procurement, installation and use of materials.
For example, using wood in office design isn’t necessarily sustainable if a large amount of carbon dioxide is produced in the logging, transportation and manufacturing processes, and if it ends up in landfill when the occupier moves out instead of being recycled.
Here’s a list of environmentally friendly building material options to explore and use this year, courtesy of the sustainable and biophilic design company, Barbulianno:
Cob
Recycled steel
Sheep’s wool
Reclaimed, recycled or sustainable wood
Cork
Straw
Bamboo
Recycled plastic
AshCrete
Ferrock
Hempcrete
Plant-Based Polyurethane Rigid Foam
Enviroboard
Mycelium
Clay brick
Timbercrete
Recycled Rubber
Newspaperwood
An indicative view of Holbein Gardens’ eco-friendly communal roof garden. Photo credit: Holbein Gardens
2. 3D printed office accessories
3D printing involves the creation of a 3D object from a CAD or digital 3D model. It’s a very sustainable design method because it produces very little waste compared with objects manufactured using fabrics, metals and other materials.
It also reduces supply chain carbon emissions. A study by Michigan Technological University discovered that 41-64% less energy was used to 3D print an object compared with manufacturing it overseas and shipping it to the US.
3D printing is gaining traction quickly and the office design sector is getting on board. In 2021, the international furniture brand Bene, alongside designers Pearson Lloyd and 3D-print specialist Batch.Works, launched bFriends, a new collection of 3D printed desktop accessories using 100% recycled bioplastic from waste food packaging.
The products can be recycled by Bene at the end of their life to form a “complete closed-loop production model”.
Caption: The 3D printing process in action. Photo credit: BeneBene’s bFriends stands come in different sizes and are designed to hold stationery, notes, mobile phones and more. Photo credit: Bene
3. Biophilic design
It feels like biophilia’s been on the workspace design agenda for so long that it can’t justify being a trend anymore, but here us out.
In previous years, discourse on biophilic design was primarily concerned with plants, but 2022 will see a sharper focus on multisensory biophilic design. This includes the use of natural light, natural soundscapes and pleasant scents from the natural world that many believe have the power to energise or invoke a sense of calm.
Another aspect of biophilic design which is set to gain traction in 2022 is the use of circadian lighting. Like natural light, circadian lighting matches people’s natural biorhythms (or internal ‘clocks’) by creating an artificial ‘sunrise to sunset’ that passes through different illuminance levels and colour spectrums.
Blue-spectrum light is prioritised during daylight hours and warmer tones are introduced when the body is gearing up or winding down, e.g. at the beginning and end of the working day.
Circadian lighting is intended to amplify comfort and productivity, creating a healthier workplace experience. It can also help us feel happier by bolstering our connection to the natural world in an age where we spend the majority (around 90%) of our time indoors in manufactured environments.
According to the professional services firm, ARUP, “…the future of interior and exterior lighting design certainly lies in this balance of quality daylight and electric light working together to support our human circadian adaptation.”
We’ve already included an example of a circular economy in action (Bene), but there are many more examples besides.
A circular economy is one that involves sharing, resuing, repairing, recycling and leasing existing materials and items. It’s the opposite of a linear economy, which follows a ‘take-make-dispose’ framework.
Reducing waste in the workspace design sector is a trending topic right now. In fact, it was a focal point at last year’s Workspace Design Show.
One way to reduce waste is to avoid design change. Waste in the fit out industry is created because of design change, and design change starts at the very early stages of any project, for instance when the client brief changes.
Office designers can also avoid waste by adopting a circular mindset from the outset and partnering up with circular-based suppliers and partners like 2ndhnd, a Scottish-based company that specialises in procuring, refurbishing and reselling office furniture.
The growing awareness of sustainability coupled with the challenges posed by the pandemic has led to an increase in demand for 2ndhnd’s products. In an interview with Insider, co-owner and manager Ross Dutton explained:
“We’re being asked more and more often to strip offices of their existing office furniture, which will eventually be refurbished and resold via our platforms, but also to help in the reconfiguration of existing spaces as more flexible spaces are introduced such as breakout areas, sofas and catch-up pods.”
Architects are working with manufacturers to source new materials that improve health, lower costs, and reduce environmental impact. View the original article here
Building materials—and what’s in them—have been making headlines, and for good reason. As The American Institute of Architects (AIA) raises the bar in response to climate change, architects and design professionals are partnering with clients, contractors, and manufacturers to source materials that meet new environmental goals, part of a larger effort to improve resiliency for the future.
“Historically, architects haven’t asked what goes into building materials,” says Lona Rerick, AIA, an associate principal at ZGF Architects in Portland, Oregon. “We used to just look at aesthetics, performance, and durability. But in the past decade, there’s been a shift to thinking more holistically about sustainable design and better building materials. Now we’re collaborating with clients to improve embodied carbon and health.”
Greener building materials are key to halting climate change. Currently, buildings produce about 40% of the world’s fossil-fuel carbon-dioxide emissions (CO2). In fact, the United States’ building stock produces more than two billion tons of greenhouse gases per year. But that number can be greatly reduced by limiting the embodied carbon of our building materials. Embodied carbon—the CO2 released during material extraction, manufacture, and transport, combined with construction emissions—will be responsible for 74% of all CO2 emissions of new buildings in the next 10 years. And unlike operational carbon, which can be reduced during a building’s lifetime, embodied carbon is locked in as soon as a building is completed and can never be decreased.
The good news? People want change. According to a 2019 survey by the Morgan Stanley Institute for Sustainable Investing, 85% of U.S. investors now express interest in sustainable investing, while half have factored attributes such as the sustainability of a business into their decision to buy. Overall this shows that people want to improve the environmental and social impact of their investments.
To help clients address climate change, architects need to prioritize lowering the embodied carbon of the materials that produce it most. It all starts with a discussion at the outset. “As the design team, we need to have early conversations with clients about the importance of building materials,” says Frances Yang, AIA, the structures and sustainability specialist at Arup in San Francisco. “We need to show them that materials made with little or net zero embodied carbon can be healthier and sometimes cheaper than traditional products. Once clients are on board, contractors and suppliers will support it, and more people will start to realize that they need to come up with greener strategies.”
Architects can minimize embodied carbon by focusing their efforts on the top three worst offenders—concrete, steel, and aluminum, which account for 22% of all embodied CO2.
Prioritize building materials that reduce carbon
The easiest way to reduce embodied carbon is through reuse—not just of existing building materials, but of existing structures, too. For renovation projects, architects can draft efficient designs that make the most of the current footprint. For new projects, architects can bring in salvaged materials sourced from deconstructed buildings. Most of all, when considering new materials, architects can minimize embodied carbon by focusing their efforts on the top three worst offenders—concrete, steel, and aluminum, which account for 22% of all embodied CO2.
Recently, Yang and her colleagues at Arup designed a project for a Bay Area client that required large amounts of concrete. The client was considering purchasing carbon offsets. But the low-carbon-concrete options Yang researched were cheaper than the offsets and could reduce a greater amount of embodied carbon. By choosing concrete made from granulated blast-furnace slag, a byproduct of steel manufacturing, Yang helped the client reduce both the cost of the project and its impact on the environment.
“Teamwork was key,” Yang says. “At the beginning, we worked with the sustainability and engineering teams to share the benefits of slag cement with the client and get them on board, which then persuaded the contractor to also get behind it. The main thing is to start the conversation early and get everyone’s support. In that instance, we were able to help the client cut 12,000 tons of embodied carbon—making everyone really happy with the outcome.”
Manufacturers agree. “Collaboration and communication between architects and concrete suppliers provides many benefits,” says Alana Guzzetta, the laboratory manager at the U.S. Concrete National Research Laboratory in San Jose, California, which has partnered with Yang on projects over the years. “Communication allows architects to be familiar with the cement substitutions and low-carbon-concrete options available in specific markets, which can be helpful in writing specifications. Additionally, when an architectural aesthetic is required for the concrete, the supplier needs to understand those needs to provide the correct mix. Overall, collaboration between designers, contractors, and suppliers is important for implementing the lowest-carbon mixes that meet performance and schedule requirements.”
The 7 steps to adopting better building materials
Creating a plan to build with healthier resources
Establish the goal and scope: Turn values related to health and transparency into clearly written goals and a scope of work, approachable targets, and roles and responsibilities for the project.
Set priorities within budget: Most projects are constrained by cost, and healthier materials are too often abandoned when an all-or-nothing mentality is adopted. Instead, allow projects to achieve incremental improvements. Some improvement is better than none at all.
Develop measurable targets: This step establishes measurable criteria that define success for the project. The target should reinforce the goals and priorities described in the previous steps. Some rating-systems criteria have targets already defined. For example, LEED requires that a minimum of 20 products used on a project meet the disclosure requirements to achieve one point in the Building Product Disclosure and Optimization credit related to healthier materials.
Define methods and metrics: Once targets for healthier materials—which are less toxic for human or environmental health—are established, the next step is to select tools to measure progress. A wide variety of resources are available. Choosing the right one requires matching the information it provides with the goal and scope of the project. For example, if the objective is to avoid certain harmful substances, a list of materials not to be used in the project (and conversely, ones that can be used) should be the primary reference guide.
Outline roles and responsibilities: Determine who will fulfill the essential roles among the primary parties on the project, including the owner, designer or specifier, builder, and operator. Responsibilities include materials research, selection and specification, tracking progress, procurement, and reviewing contractor submissions.
Ongoing review and documentation: During the design phase, tracking gives everyone the ability to see progress toward the project’s targets and also serves as a useful tool to ensure goals will be met.
Develop a materials manual: A manual of building materials is intended to pull together essential information for the facilities operations team. It should address maintenance, warranties, repair, replacement, cleaning, and general care that may be specific to the products installed on the project. Owners who manage their own buildings may wish to use this as the starting point for a continual feedback loop with the building management team. Overall, this can be a great opportunity for architects to develop a closer working relationship with a project manager—a key factor in reducing embodied carbon.
Help clients source better building materials
Another way architects can help reduce embodied carbon is to source materials that have been verified with environmental product declarations (EPDs). Similar to nutrition labels, EPDs are documents that communicate the environmental impact of a product over its entire life cycle, conveying the carbon footprint of materials at a glance. Today, architects can easily check the EPDs of products by using the EC3 Embodied Carbon in Construction Calculator (EC3). Created by the Carbon Leadership Forum, the EC3 is a free, open-access application that helps architects and contrators source sustainable materials in categories like concrete, insulation, gypsum board, and carpet. “Increasingly, we’re writing into our specifications that suppliers must have an EPD if they’re providing a product,” Rerick says. “We need to see that to prove that the builder has lowered the global-warming potential of that product below a certain baseline.”
Recently, Rerick and her colleagues at ZGF Architects were hired by a major tech company to design a new campus in the Pacific Northwest. The tech company is working to become carbon-negative—removing more emissions from the environment than it contributes—and is starting by focusing on construction materials. Using the EC3 tool, ZGF and the other project teams helped the company reduce its carbon footprint while also enriching the EC3 database with additional EPD-approved materials. The size of the project greatly increased the data available to architects everywhere. “The EC3 database is now even more of a game changer, because we have a deeper resource to compare all these different EPDs,” Rerick says. “It enables us to set better targets for lower embodied carbon and then reach them.”
In addition to the EC3 tool, ZGF uses a digital calculator of its own design to further reduce the embodied carbon of projects. Available for free online, the Life Cycle Analysis tool enables architects to enter the ingredients of concrete mixes and quickly see the carbon impact—an innovation that should help improve the industry for years to come. “By creating a database and material-specific baselines to target for products with EPDs, the Carbon Leadership Forum is reducing uncertainty about them,” Rerick says. “This project is helping to accelerate the demand for EPDs among both clients and manufacturers.”
The 5 Key Takeaways of the AIA Materials Pledge
Guidelines for selecting sustainable materials:
Support Human Health by preferring products which support and foster life throughout their life cycles and seek to eliminate the use of substances that are hazardous.
Support Social Health and Equity by preferring products from manufacturers who secure human rights in their own operations and in their supply chains, and which provide positive impacts for their workers and the communities where they operate.
Support Ecosystem Health by preferring products which support and regenerate the natural air, water, and biological cycles of life through thoughtful supply chain management and restorative company practices.
Support Climate Health by preferring products which reduce carbon emissions and ultimately sequester more carbon than emitted.
Support a Circular Economy by reusing and improving buildings and by designing for resiliency, adaptability, disassembly and reuse aspiring to a zero-waste goal for global construction activities.
Advocate for Local Legislation
Going forward, one of the most important ways architects can increase the use of greener building materials is to advocate for local legislation to lower emissions. In 2019, New York City passed the Climate Mobilization Act, which set emissions caps for buildings, with the goal of reducing output levels 40% by 2030. Nearly 70% of New York City’s emissions come from buildings. As part of the legislation, owners of structures 25,000 square feet or larger must reduce emissions or pay a substantial fine, an initiative that’s sparking massive change.
Todd Kimmel, the New York City architectural manager for insulation manufacturer Rockwool and a Certified Passive House Designer, is working with architects to design green projects that include large-scale passive buildings such as the House at Cornell Tech Campus and Sendero Verde, a three-building, 752,000-square-foot complex in East Harlem that will be a model of low-energy construction. In the past, Kimmel focused on passive design and reducing operational carbon, figuring out how projects can utilize Rockwool insulation, a stone wool that retains heat while minimizing negative health impacts. (Unlike rigid or spray-foam insulation, mineral wool has no plastics that can be released into the air during installation or a fire.) But lately, thanks in part to the city’s Climate Mobilization Act, Kimmel has seen an increase in the number of architects working with contractors and manufacturers to source materials made with less embodied carbon—a trend he attributes to spillover from legislation that addresses operational carbon.
“Architects used to consider materials primarily from a performance standpoint,” Kimmel says. “Now we’re seeing clients invest in greener building materials and operations that exceed the code requirements, because they need to build for the future, to ensure they don’t get hit with penalties. As a result, that way of designing, which creates a healthier environment anyway, is becoming the new norm.”
Build Consensus
The key to building with more sustainable materials is to create consensus, from clients to contractors to manufacturers. Change isn’t easy. For manufacturers in particular, research and development can be costly and time-consuming. But innovation is leading to better options, including wooden materials that capture carbon and concrete materials that sequester it. In turn, these materials are becoming more available, giving architects an extraordinary opportunity for change.
“Manufacturing today requires investing in innovation,” says Cassandra Mellon, the director of architectural sales at Rockwool. “We’re a net carbon-negative company, and want to lower the embodied carbon of stone wool even more, because we believe that’s important. Part of what helped inspire us were initiatives like the AIA materials pledge, which showed that this movement was gaining momentum. If architects ask about things, we listen. Ultimately, the materials pledge creates the foundation for a collaborative approach between architects and manufacturers as we all strive for sustainable materials, and I think we’re going to see more of these types of products across the industry in the future.”
The Blueprint for Better campaign is a call to action. AIA is asking architects, design professionals, civic leaders, and the public in every community to join our efforts. Help us transform the day-to-day practice of architecture to achieve a zero-carbon, resilient, healthy, just, and equitable built environment.
As contractors begin to plan future projects, be on the lookout for these seven sustainable building materials in 2021 and beyond View the original article here
With society becoming increasingly environmentally conscious, more and more project owners are looking for sustainable building materials to include in their properties. Not only do eco-friendly buildings substantially increase the resale value of a property in a forward-thinking market, but they can help save on utility and maintenance costs as well.
As contractors begin to plan future projects, be on the lookout for these six sustainable building materials in 2021 and beyond.
1. Composite Roofing Shingles
When people think of sustainability, they often think about materials that produce their own energy or help eliminate the need for energy. However, one aspect that is often overlooked is materials that are long-lasting.
Continually having to repair, manage, and replace building materials is a major drain on resources. As such, common roof tile types like asphalt shingles and wood shakes that frequently raise, crack, and fade can become energy pits not only from the perspective of allowing air and moisture to be transferred into and out of the house, but simply because they require so much attention to maintain.
A better alternative would be composite roofing shingles that stay true to the natural aspect of traditional materials while requiring a fraction of the maintenance resources.
2. Smart Glass Windows
A major trend in sustainability in recent years has been the use of large windows to allow more natural light flow and reduce the need for electric light consumption.
While the merits of this building practice cannot be understated, the benefits can be compounded by using smart glass as the window material of choice. Smart glass is an innovative material that changes its heating properties based on how heat and air conditioning is applied in the house. For example, during the summer months, the glass turns translucent to block any heating wavelengths that may require your air conditioning to work overtime while in the winter, the glass becomes transparent to allow the sunlight to aid in heating efforts.
3. Bamboo Floors
If you are looking for a very bold option for sustainable living, consider using bamboo flooring. While you may not want to take the step of flooring your entire house in bamboo, it makes for a great option for add-ons, antechambers, and mudrooms.
Bamboo has a strikingly similar appearance to traditional wood while having a harvest cycle of a mere three years, compared to roughly 25 years for a normal tree. By choosing bamboo, you can slow the rate of deforestation by giving trees a chance to grow back.
4. Insulated Concrete Framing
Not only does framing help determine what kind of renovations your home can withstand, but it is a fundamental element in controlling heating and cooling costs.
While prefabricated wood panels will come with small cracks and crevices that allow for the transfer of air and moisture into and out of your home, those using an ICF construction (insulated concrete forms) will provide an airtight barrier that prevents unwanted energy transfers while also providing elite thermal mass to help maintain a consistent interior temperature.
5. Solar Panels
The inclusion of solar panels on the roof and in the yard is increasing in prevalence as technology improves and designs become more aesthetically pleasing. Both solar panel tiles and mounted structures are effective ways to reduce a home’s dependence on nonrenewable energy.
6. Eco-Friendly Insulation
Any type of insulation will theoretically be eco-friendly if it sufficiently cuts down on energy used for heating and cooling. However, some of this saving is negated if batts, fillers, and/or sprays used for insulation are not sustainably sourced or use toxic chemicals to help in binding and fire resistance.
As such, an increasingly popular alternative is hemp insulation. This sustainable product of up to 92% natural hemp maintains all of the same insulative properties of more traditional fiberglass or cellulose. In fact, with its ability to be compressed, hemp can even provide superior insulation for homes that are willing to pay a little extra.
Conclusion
The trend of eco-friendly homes is only set to strengthen in 2021 and beyond. Therefore, if you are in the market for a home, or are considering a renovation, take a look at one of the six sustainable listed above for some environmentally-friendly inspiration.
Matt Lee is the owner of the Innovative Building Materials blog and a content writer for the building materials industry. He is focused on helping fellow homeowners, contractors, and architects discover materials and methods of construction that save money, improve energy efficiency, and increase property value.
Written By: Benjamin Laker View the original article here
For decades,the idea that sustainable business practices could lead to profitability has been dismissed. However, with increased pressure from stakeholders and government legislation in recent years, companies are compelled to find ways to reduce their environmental impact while maintaining economic competitiveness.Right now, sustainability is quite rightly top of the agenda, amid the backdrop of the 2021 United Nations Climate Change Conference, more commonly referred to as COP26.
Most people don’t realize that waste is a resource with an economic value and recycling can be a profitable practice say experts.
The environmental impact of organizations and the states they reside in are scrutinized more strongly than ever, ensuring customers and employees do not compromise the ability of future generations to meet their own needs and consequently design a world without waste. At present, nearly 65% of greenhouse gas emissions arise just from handling materials’ production, transportation, and disposal. But a circular economy may significantly reduce 90% of the emissions, thus departing from a linear economy to one that builds circularity into products from the outset is paramount.
ReCyrcle specializes in this area. Designed to support a waste-free world aligned with the “shared blueprint for peace and prosperity” from the UN Sustainable Development Goals, the innovative tech startup offers a revolutionary recycling system that follows a circular economy approach. “We want to prevent and reduce the waste accumulation of recyclable materials in landfills and change society’s mindset towards waste,” Samreen Nurullah, cofounder and director, told me.
ReCyrcle offers a revolutionary recycling system that follows a circular economy approach
She continued, “collection of the materials directly from the consumers through our app allows us to track the entire process and ensure that these materials do not leak into the environment.” Nurullah’s business partner, Sharaf Rahman, added, “We recycle materials and process them into a usable and manufacturable form reducing the demand and need for virgin materials being extracted from the Earth’s crust.” In doing so, the organization is attempting to digitize the reverse supply chain of waste to make the process more efficient, transparent, and accountable.
ReCyrcle makes a critical assertion – they don’t believe that poor recycling rate isn’t a habit problem but is instead a perception problem. “Most people don’t realize that waste is a resource with an economic value and recycling can be a profitable practice,” observes Rahman. “Our app encourages people to recycle by offering rewards and incentives for recycling in the form of digital tokens.”
The mobile app shows the journey of a plastic bottle and post-consumer packaging waste from the point of collection to being processed into new products so a user can track their recycling habits and buy products made from their recycled packaging waste. This could well be a watershed moment for the future of corporate sustainability, particularly because within countries such as the UK, where the government has delayed plans to implement the Deposit Return Scheme for recycling until late 2024. “We understand the climate emergency and have come up with our private digital deposit return scheme, which can be claimed through our app,” concludes Rahman.
ReCyrcle reprocesses 3D printer waste into recycled filaments to be reused in 3D printing again
Companies like to bucket. Purpose belongs to corporate social responsibility, while the customer belongs to the brand. But here’s the problem with those buckets, concludes Nurullah. Your customers are whole people seeking mission and brand engagement. They expect you to deliver what matters most to them. “Embrace your customer’s mindset, the holistic understanding of their heads and hearts, to deliver on brand and purpose,” recommends Nurullah. Because as companies embrace stakeholder capitalism, they risk subjecting themselves to what besets the nonprofit sector—the tendency to think every stakeholder is a customer, which confuses their strategic aim. Therefore, understanding if your organization is substantially differentiated or even relevant is mission-critical – and the key to entrepreneurial performance, which in the case of ReCyrcle, is impressive.
That’s not to say they haven’t had help along the way, of course. For example, Rahman explained at length the impact of support that Brunel University’s Bridging the Gap program has had on the organization. “They’ve aided us throughout our journey, and we have recently started collecting 3D printing waste from their design facilities as the curbside municipal recycling programs do not recycle 3D printing waste,” he said. ReCyrcle reprocesses this waste into recycled filaments to be reused in 3D printing again.
This is a key component when thinking about starting a business, says Dr. Marrisa Joseph, Lecturer in Entrepreneurship at Henley Business School. Startups and increasingly established companies have moved away from thinking about what product or service I could offer. Instead, thinking has evolved to what I could create that my potential customer would want, or even better, what they need and how it will impact the planet.
The triple bottom line concept- people, planet, profit- has become an increasingly sought-after value proposition as businesses thrive when they have a greater purpose. That unique nexus is the source of differentiation and the cornerstone of your differentiation strategy. Embracing it requires that you appreciate them as whole people. What matters the most to your customer is what matters the most to you too. Watch out for the zone of indifference, and don’t build your strategy around it.
Every company has attributes and features near and dear to its hearts. Perhaps it’s the origin story, the internal rally cry, or their hometown. Be forewarned. You cannot compete on differentiation by claiming unimportant attributes to your customer. Your customer’s tell-tale shrug is the evidence that what you hold dear can’t deliver a differentiated advantage. And with the case of ReCyrcle, they certainly have it.
Written By: Ahmet Burak Dağlıoğlu View the original article here
Mobilizing financial resources will play an important role in reaching the sustainable development goals.
Global organizations are cooperating on scaling investment to help achieve sustainability goals.
Investment promotion needs to change to target sustainable investments, particularly to help reach climate goals.
Turkey is implementing this approach by making the SDGs central to its foreign direct investment strategy.
Climate change has been on the international agenda for a long time, but recent developments have upped the urgency of taking immediate action for both humanitarian and developmental reasons. World leaders gathered in Glasgow to discuss climate change at the United Nations Climate Change Conference COP26, following the G20 summit in Rome in late October, which also prioritized sustainability.
Keeping climate change at bay through mitigation and adaptation is imperative to achieving the Sustainable Development Goals (SDGs), which were set by the United Nations in 2015 and made social, economic and environmental sustainability central to economic development.
Achieving the SDGs will, in turn, require an integrated approach and close cooperation among all stakeholders. Mobilizing financial resources will play an especially important role in reaching the SDGs and addressing the adverse effects of climate change. In this regard, foreign direct investment (FDI) has been a significant source of external finance for many countries, especially developing economies, to help achieve sustainable economic development.
Commitment to SDGs can mobilize foreign direct investment
Today, all economies vie for greater FDI inflows as it not only brings capital but also generates employment, transfers technology, and helps move up the value chain. Moreover, FDI can be instrumental in a country’s economic transformation towards a greener economy, as multinational corporations (MNCs) have both the financial wherewithal and technical capacity to help transform local operations to greener global best practices. MNCs have been increasingly incorporating environmental, social and governance (ESG) principles into their investment strategies, not only to achieve ESG investor score targets but also to save costs and mitigate risks, helping achieve both more sustainable and more profitable operations.
The international community is putting more efforts into scaling such investments through establishing effective mechanisms to support cooperation on investment issues, such as the planned World Investment for Development Alliance, which can facilitate collaboration on public-private projects to scale sustainable investment. One important dimension of such scaling is for countries to create a favorable environment to attract “Green FDI” in order to help achieve environmental and climate goals.
Through smart and targeted policies, sustainable investment can make significant contributions to a country’s economic development, including Green FDI to help reduce carbon emissions.—Ahmet Burak Dağlıoğlu
Unless host countries are attractive enough for such investments, MNCs will hesitate to invest there, especially in a time when attracting FDI is becoming increasingly difficult due to unexpected challenges such as the COVID-19 pandemic, policy uncertainty from increasing protectionism, economic shocks, and geopolitical risks. Moreover, the growing inclusion of sustainability clauses into new generation trade and investment agreements by major trading blocs will also affect MNCs’ location choices. Therefore, in order to make the best use of FDI in the aftermath of the pandemic, investment agencies should recalibrate their strategies and position themselves as promoters and facilitators of sustainable investment.
Through smart and targeted policies, sustainable investment can make significant contributions to a country’s economic development, including Green FDI to help reduce carbon emissions. Incorporating the SDGs into a country’s FDI attraction strategy can thus bring benefits across society. Therefore, FDI practitioners and policymakers should develop novel strategies that are more inclusive and SDG-oriented.
How Turkey is contributing to sustainable investments
Cognizant of that we, as the Investment Office of Turkey, have recently revised our FDI strategy and made SDGs one of the main pillars of our investment promotion and attraction policies. We have also incorporated “impact investments” into Turkey’s national development agenda. Through an extensive engagement with national and international stakeholders, “impact investments” have become a priority for private and public sectors in Turkey.
Together with the United Nations Development Program(UNDP), we co-published a series of reports on The Impact Investing Ecosystem in Turkey and SDG Investor Map Turkey, providing a guide for the private sector to perform diligence and make impactful business decisions. After these successful initiatives, Turkey’s Impact Investing Advisory Board was established to mobilize government agencies and private sector stakeholders to develop a state-of-the-art regulatory framework. Establishing such a national impact management framework will standardize the measurement and control across all sectors, which will incentivize impact investing and boost the performance of impact investors.
Success is contingent on going beyond defining certain metrics and standards or appeasing shareholders. Implementation, monitoring, and assessments are essential to creating real impact through sustainable investments. Therefore, national and international efforts to establish strong mechanisms for implementing impact investments and attracting Green FDI must be backed up through collaboration and partnership at every level.
International organizations, such as The United Nations Conference on Trade and Development (UNCTAD), UNDP, and Organisation for Economic Co-operation and Development (OECD), and the World Economic Forum have been playing an important role in creating effective platforms for cooperation. National institutions should continue to engage with these organizations in order to adapt their local investment ecosystems to the changing international investment trends, practices, and opportunities. We are all facing global challenges that require global solutions, and cooperation is a sine qua non requirement to find sustainable solutions for the problems that are threating humanity.
As the push to become carbon neutral accelerates globally, there is increasing pressure on office building owners to implement changes to accommodate those goals, including by making their buildings more energy efficient, using sustainable building materials, reducing waste and improving water systems. Some 105 big companies, including Amazon, Microsoft, Unilever, and BlackRock among others, have pledged to be carbon neutral by 2040, with additional firms promising to reduce carbon emissions by 2030. More than 100 countries, including the U.S., have pledged to become carbon neutral by 2050.
“A future where businesses are taxed on their carbon emissions could be close at hand,” said Drew Shula, founder and CEO of The Verdical Group, a Los Angeles-based green-building consulting firm.
California has already passed legislation requiring new and significantly renovated commercial buildings to be carbon neutral by 2030. Additionally, New York City’s Climate Mobilization Act (CMA) includes Local Law 97, which impacts all buildings over 25,000 sq. ft. and calculates carbon intensity for buildings on a per square foot basis, assigning limits to intensity beginning in 2024. Buildings that exceed that limit will be fined $268 per ton of carbon, notes Meadow Hackett, manager for sustainability and KPI services at consulting firm Deloitte.
She notes that many office REITs are planning carbon neutrality strategies to avoid penalties at their New York City properties, and companies are making capital allocation decisions around energy efficiency based on penalty avoidance.
Green building experts acknowledge that a net zero mandate would present a challenge for office building owners/investors, but note that it may not be as daunting as they might perceive.
“Any existing building’s carbon emissions can be reduced, and the first step is to understand its current level of performance,” says Elizabeth Beardsley, senior policy counsel for the U.S. Green Building Council (USGBC). She adds that this requires metering and reviewing utility bills and any other available building performance data that can help identify areas in need of increased operational efficiency and performance.
Once this assessment is completed, existing building owners and operators should develop a strategic action plan aimed at reducing annual building greenhouse gas emissions, Beardsley says. “The action plan can help owners to develop an ‘optimal path’ forward via the evaluation of alternative scenarios to assess opportunities for system upgrades, efficiency improvements, renewable energy generation and/or procurement, and calculate associated costs for each scenario.”
According to Rielle Green, manager of energy & sustainability with CBRE Property Management, which manages 2.7 billion sq. ft. of commercial real estate globally, there is no one-size-fits-all solution for getting to net zero. “Every property is uniquely built with different operating systems and located in different areas with different climates.”
CBRE property managers work with clients to determine which solutions make sense, which may include installing solar panels to reduce carbon dioxide emissions and energy consumption, smart building technology to monitor energy usage, LED lighting or green roofs.
Beardsley adds that owners could lower a building’s carbon footprint by encouraging tenants to commute by walking, biking, public transport, ride-sharing and carpools. This might involve providing a shared bicycle system or membership in a micro-mobility fleet; contributions for public transportation passes; car-sharing memberships; and on-site electric vehicle (EV) charging stations.
Beardsley also notes that conservation and recycling are other important elements for reducing a building’s carbon footprint. “Reducing a building’s water consumption reduces associated energy loads for water provision and wastewater management, as potable water treatment, distribution and use are highly energy-intensive,” she says.
She offers case studies to illustrate how existing buildings achieved LEED Zero certifications.
The Los Angeles Department of Water & Power, for example, began reducing the footprint of its 17-story, 55-year-old, all-electric John Ferro Building in 2013 with a suite of energy efficiency measures, including lighting retrofits, chiller and fan system upgrades that earned the building’s initial LEED certification in 2015. The following year, the building, which houses LADWP’s 11,000 employees, recertified LEED Gold and in September 2019, it became the first building in California to achieve LEED Net Zero Energy.
Another example is the historic headquarters of Entegrity Partners, a sustainability and energy services company specializing in the implementation of energy conservation and renewable energy projects, which became the first LEED Zero-certified project in the U.S. in 2019 and the second in the world. The building, which achieved LEED Platinum for New Construction, was also awarded Zero Energy certification by the International Living Future Institute.
Entegrity began devising a plan to retrofit its 13,342-sq. ft. Darragh Building to net zero energy in 2016. Initial strategies employed included all-LED lighting, dynamic self-tinting glass, operable windows and doors for natural ventilation in the summertime, and occupancy sensors. The renovation also used locally-sourced materials when possible; preserved daylighting; and installed lighting controls, high-efficiency plumbing fixtures, and native landscaping.
Office buildings with high performing environmental improvements also command a rent premium, according to Beardsley, and trade at higher values than traditional buildings because they offer savings in operational costs. She cites research that indicates tenant were willing to pay $0.75 per sq. ft. for space in a LEED-certified office building compared to a non-LEED certified one.
Additionally, the U.S General Services Administration (GSA) released a 2018 study on the impact of high-performance buildings that quantified their benefits compared to their legacy building counterparts in the GSA’s portfolio. The study found that the upgraded buildings delivered greater cost savings and tenant satisfaction were deemed, therefore, a less risky investment than traditional buildings.
Shula suggests that Blackrock, the world’s largest asset manager, is a great example of this preference for more environmentally sustainable building. The firm committed to net zero for its own operations and is making being carbon neutral the central focus for its more than $8 trillion in assets under management.
Hackett, notes that sustainable swaps and building retrofits are already common in existing buildings to meet carbon neutrality goals. Landlords are deploying more efficient technology, such as occupancy light sensors, LED lighting, and power management software to control HVAC systems.
“Investors are more in tune with how their buildings are performing when it comes to sustainability and ESG today than a decade ago,” adds Green. She notes that sustainability has definitely become a selling point because potential tenants want to know how their buildings are performing in comparison to other buildings in the market.
Meanwhile, “[Institutional] investors are placing ESG, and climate change in particular, central to their investment strategies.”
Hackett notes, for example, that members of Net Zero Asset Owner Alliance, which represent roughly $5 trillion in assets under management, have pledged to transition their investment portfolios to net zero emissions by 2050.
The cost for upgrading existing buildings to achieve net zero depends on many factors, but the building’s age and relative inefficiency are key determinants, Beardsley says. She also notes that the building’s size, shape, and location may limit its capacity to generate on-site renewable energy.
However, “You don’t need to get to zero carbon all at once,” says Shula. “Create a plan to achieve carbon neutrality by 2030, then work backward to today to determine what steps to take first.”
For example, as building equipment reaches end-of-life, it should be replaced with more efficient, all-electric equipment and appliances to enable the reduction of the carbon footprint, he notes.
Getting ground-up buildings to net zero, on the other hand, adds a cost premium of zero to 1 percent when designed and developed as a high-performance building from the start, according to a 2019 USGBC report, The study also noted that operational savings recoup any incremental costs for getting to net zero in a relatively short time, with return on investment for both existing and new office buildings beginning in as little as a year.
Emma Hughes, a LEED project manager with USGBC, notes that with today’s tools, technology and knowledge all new buildings can be designed and constructed to highly efficient standards and achieve net zero energy during the construction process via integration of renewable energy generation and/or procurement.
