Investing in a sustainable future
By Michael Long,
head of sustainability,
Asia,
Lendlease
/ EdgeProp Singapore |
Lendlease REIT recently secured its first sustainability-linked loan amounting to $860 million in February this year, the largest for S-REITs to date (Photo: Samuel Isaac Chua/EdgeProp Singapore)
SINGAPORE (EDGEPROP) - If there is a single word to characterise the last decade, “new normal” would be at the top of the list. Technology, climate, public health, and geopolitical events have created seismic shifts in how we will live, work, and play, and unless we learn to adapt and rethink how to invest in the long term, the sustainability of our future is at stake.
The built environment sector consumes almost half of the world’s raw materials, produces at least a third of the world’s waste and is responsible for 40% of the world’s energy consumption and associated greenhouse gas emissions. As such, there has never been a more critical time to consider our role and how the decisions we make today will influence our longer-term economic, environment, climate and community resilience.
Here’s a holistic look at how the built environment sector can work in tandem with the public sector to realise Singapore’s long-term sustainable development goals.
Aligning financial and environmental investment outcomes
Sustainable financing integrates sustainability performance targets into our investment decisions and encourages investors to invest in climate-resilient portfolio assets. Singapore has made significant inroads into establishing an international sustainable finance hub. With the vision of transitioning to an environmentally sustainable economy in mind, the Monetary Authority of Singapore (MAS) has made huge strides in attracting and mobilising green capital.
In January 2021, the MAS launched the Green and Sustainability-Linked Loan Grant Scheme — the first of its kind globally — which aims to support corporates in accessing financing as they invest in green projects and move towards more sustainable business models. Lendlease REIT also recently secured its first sustainability-linked loan amounting to $860 million in February this year, the largest for S-REITs to date (based on publicly available data).
Most recently, the Singapore government announced its plans to issue up to $35 billion green bonds by 2030 to fund public-sector green infrastructure projects.
In line with this year’s Earth Day theme of “Invest In Our Planet”, these initiatives underscore the decisive nature of the government’s approach to direct capital towards sustainable projects, while creating employment across the value chain.
Adapting cities to a future with climate change
Developers and asset managers share the responsibility of ensuring the climate resilience of our built environment. There are three key considerations that could have a positive impact on mitigating climate risks.
First, we should integrate climate change adaptation — such as increasing urban biodiversity and applying biophilic design principles — into all design decision-making behind masterplanning cities and mixed-use developments. These could range from considering changes in rainfall intensity and urban flooding frequency to reducing the impact of the urban heat island effect on our built environment and community.
Second, we could better harness the potential of our existing buildings to become best-in-class, high-performance green buildings that can achieve either Super Low Energy or Zero Energy Building and Construction Authority (BCA) Green Mark certifications. We can partner the relevant authorities to identify precinct-wide and portfolio-wide opportunities that can strategically refurbish and enhance existing building stock, reduce demolition waste and demand for new construction materials, and integrate new technology enabling smarter and more autonomous building operations.
Last but not least, we need to rethink the infrastructure in our cities by seeking out more creative models to develop district-focused utility solutions that go beyond complementing demand to offering more holistic and sustainable services. These include connected renewable energy generation solutions, circular waste networks and district water treatment systems that could create more clean water than they use.
In Singapore, electricity consumption in buildings and households contribute approximately 20% of the country’s overall annual carbon emissions, making it critical to address this at the source of energy usage. To this end, Lendlease aims to transition to 100% renewable electricity usage before 2030, with the end-goal of achieving net zero by 2025 and absolute zero carbon emissions by 2040.
Accounting for supply chain decisions
The latest IPCC (Intergovernmental Panel on Climate Change) Sixth Assessment Report highlights Asia’s vulnerability to climate change, with the increased frequency of extreme weather events and projected sea-level rise threatening civilisation.
With Asia today accounting for 52% of global emissions, the region has the impetus to take immediate action to reduce our short-term emissions, as well as invest in longer-term solutions to build up our resource resilience. These will involve leveraging the diversity of our markets, industry expertise, supply chain innovation and technology.
To achieve the goals set out in the Singapore Green Plan 2030, our ability to account for the life-cycle of the built environment is providing another important lens through which we are now making investment decisions.
One important step is to streamline, digitalise, and connect supply chains and operating models to achieve the best outcomes for safety and sustainability. This will enable developers to glean insight into the sustainability of value-chain components, while also highlighting ways that construction-sector players and building-material manufacturers can use energy more efficiently.
Working closely with industry bodies, including the BCA and Singapore Green Building Council, can offer new opportunities in lowering barriers for suppliers bringing new low-carbon products and materials to market. Underpinning this collaboration is the importance in sharing knowledge and driving transparency through environmental product disclosures, providing a broader view of material costs beyond price. While Singapore does not manufacture most of our building materials, as a significant importer, our decisions can aid the transition that is sorely needed for the region.
We believe that establishing industry targets for reducing embodied carbon, the use of sustainable materials in buildings, and accelerating climate adaptation into our supply chain decisions will help the built environment sector accelerate a low carbon transition.
The Earth Day theme of “Invest In Our Planet” calls for action now, as well as taking a longer-term view as some of the solutions we seek to tackle more complex challenges will come from time and effort across industry and government. After all, investing in economic, climate and resource resilience is ultimately not just for our planet but for our future as well.
Michael Long, head of sustainability, Asia, Lendlease (Photo: Lendlease)
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