The 26th edition of the Conference of the Parties (COP26) concluded with over 200 countries participating over a two-week period of negotiations. The key areas of the COP26 deal include “slashing carbon dioxide emissions by half by 2030; rules that hold countries accountable for progress or failure in achieving these goals and phasing down unabated coal.” The primary goal of the conference is to “halt the increase in the global average temperature to well below 2 °C above pre-industrial levels and preventing global temperatures from rising beyond 1.5 degrees Celsius of pre-industrial temperatures.”
As the largest and only listed property development company on the Lusaka Stock Exchange, the resolutions from COP26 have significant implications for the future sustainability of Real Estate Investments Zambia’s (REIZ) operations and the real estate industry as a whole. It is vitally important to keep in mind that “the built environment is responsible for almost 40% of greenhouse emissions.” Consequently, the sustainability of REIZ’s operations will depend on its ability to adapt and adopt Environmental, Social and Governance (ESG) policies which will be critical in ensuring global temperatures do not rise beyond 1.5 degrees Celsius of pre-industrial levels.
Considering much of the portfolio held by REIZ in both commercial and non-commercial property are already built. Most of the considerations must focus on ensuring energy efficiency of existing buildings by retrofitting and decarbonizing them to ensure that they are ESG compliant. Energy efficiency entails ensuring firstly that “the rate at which current buildings lose energy is minimized.” The second involves “minimizing the rate at which energy is consumed by its occupiers.” There are cost considerations to account for arising from these endeavors. Retrofitting can be as inexpensive as switching to LED lighting throughout the buildings or as expensive as overhauling cooling systems. Caution must be given to ensure compliance to energy efficiency and the cost of upgrading are in balanced to ensure the business continues to be a going concern.
Future construction of buildings should incorporate minimum energy efficient standards as part of the life cycle of newly constructed buildings. These consideration could include automated technology or processes that encourage the efficient use of resources including lighting, air conditioning and ventilator systems. Finally, all these undertakings would mean nothing without the cooperation of the tenants. Therefore, it is essential that REIZ begins to experiment with green leases which could help especially in areas such as waste generation and disposal, energy consumption and water usage. Further consideration should be given to the expected policies, legislation and regulations likely to be introduced by the Ministry of Green Economy and Environment in light of the COP26 resolutions. Actively consulting and engaging the ministry on potential laws that could affect the profitability of new projects at a national should be at the fore of the board’s agenda.