They may be late to the party, but the world’s leaders are finally taking climate change seriously. Every sector, including property, will be affected.
We’re 5-1 down against climate change at half time. The doomsday clock is at a minute to midnight, but it’s okay because we have a bomb disposal team on site. That was the less than reassuring message from the Prime Minister during the recent COP26.
Billed as the last opportunity for world leaders to address the climate crisis, the summit’s goal was to ensure the world still has a chance of achieving net zero carbon emissions by 2050. This is the deadline which the UN believes is necessary to limit global warming to 1.5°C – something which would trigger only mild climate catastrophes.
Making those changes will have severe implications for all sectors, including property.
So what has the conference achieved so far?
Well, in a nutshell, not so much. China and Russia skipped it altogether, and India pushed back its commitment to net zero to 2070. There were agreements on deforestation, to ditch coal which includes payments to South Africa to help it break its reliance on coal and plans to force the financial sector to show net zero plans. However, commitments are one thing – following through quite another.
In reality, the only tangible result from the conference has been the emissions from the private jets used by world leaders to get there. But that doesn’t mean it will be meaningless.
The Conference ensures the climate dominated the front pages throughout the conference. With protestors gluing themselves to motorways, it’s unlikely to be something we can ignore any longer. Indeed, whatever the results of ongoing negotiations, the environment is increasingly sitting at the top of developers minds for several reasons.
- Investors want it: Environment, social and governance issues are increasingly important to investors, especially at the top end. According to the Wealth Report 2021, 43% of wealth advisors said their ultra high net worth clients were actively seeking out more environmentally sustainable options.
- Regulators want it: Landlords and property owners are already having to consider the energy efficiency of homes, with the introduction of energy performance certificates. More regulations are likely to come in the future. Getting out ahead of these will be easier than scrambling to keep up.
- Protestors demand it: Love them or loathe them, it’s worth paying attention to protestors such as Insulate Britain, because the things they’re demanding today will become commonplace tomorrow. Their demand that the government makes a meaningful commitment to retrofit all homes to make them more energy efficient is the kind of change we can expect in the not too far distant future. For example, the government currently plans force mortgage companies to disclose the energy efficient ratings of their properties. This could encourage people to spend on insulation and other improvements in order to get a cheaper mortgage. In other words, whether you’re worried about climate change or not, it’s worth doing everything you can to make properties as energy efficient as possible to keep up with evolving trends.
In terms of tangible results, then, COP26 might have been everything its critics said it would be. Even so, the messages coming from this conference should be a warning to everyone. Climate change is coming and everyone – no matter what their sector – is going to have to make major changes.