The outcomes from COP23 will have long-term implications for Asian businesses – particularly the real estate sector. In this 2-part blog post series, Ding Li, Senior Sustainability Consultant at Cundall, will discuss risks and opportunities and offer her top tips for businesses to stay one step ahead
Several months on now from the 23rd Conference of the Parties to the United Nations Framework Convention on Climate Change in Bonn (COP23) it is interesting to reflect on the current landscape of environmental regulation and how, in the two decades since the first Conference of the Parties back in 1995, businesses, real estate owners and investors have adapted to a growing number of voluntary actions and regulatory frameworks to mitigate climate change.
Following COP21 in Paris in 2015 we have seen a number of global initiatives for businesses to improve carbon and energy performance, such as Science Based Targets (SBTs), RE100 – the world’s most influential companies committed to 100% renewable power – and the We Mean Business coalition driving policy ambition to accelerate the low-carbon transition.
Environmental Social and Governance performance influencing investment (and di-vestment) decisions
Perhaps even more interesting is how the post-COP21 regulatory environment has started to influence the investment community. Recent decades have seen institutional investors increasingly focusing on Environmental Social Governance (ESG) performance in their investment decision-making. Many key figures in the investment sector – including, most recently, Chief Executive of BlackRock, Laurence D Fink as demonstrated in his letter to CEOs entitled ‘A Sense of Purpose’ – now see social purpose and environmental responsibility as being inextricably linked to a company’s ability to maintain its profits.
The rise in transparent reporting to bodies such as the Global Real Estate Sustainability Benchmark (GRESB) and The Task Force on Climate-Related Financial Disclosure (TCFD) have also proved invaluable to those looking to future-proof their investments against the evolving climate risks and increasingly stringent regulatory instruments such as the carbon tax in Singapore or the National Emission Trading Scheme in China.
We know there is a trend evolving in the marketplace following COP23, and it is a trend that has long-term significant implications for businesses.
The question all companies need to ask themselves is ‘What is the risk to our business and which climate change scenario should we be planning for to protect our investments.’ Waiting for the market to respond may seem a prudent strategy but this means steps are not been taken to future proof assets. We suspect that most companies, when they properly think about the question, will not wait.