The Real Estate sector forms one of the bedrocks of society. In 2016 Fortune Magazine estimated the value of all residential, commercial, forest and agricultural land to be $217 trillion dollars. By way of comparison, the total value of all the gold ever mined from prehistory to present is approximately $6 trillion. This, in my view makes Real Estate the pre-eminent global asset class that has the most power to impact national and international economies.
It’s time to wake up to what’s happening…
The planet is in crisis – that is not hysteria – it’s a simple fact. The World Wildlife Fund reported recently that more than half the world’s vertebrates have disappeared since 1970. We’ve lost 20 percent of the Amazon in the last 50 years, and more than 50 percent of shallow water corals have disappeared in 30 years. More alarmingly for human life, a landmark report from the United Nations’ scientific panel on climate change paints a far more dire picture of the immediate consequences of climate change than previously thought and says that avoiding the damage requires transforming the world economy at a speed and scale that has no documented historic precedent.
The report, issued in October by the Intergovernmental Panel on Climate Change, a group of scientists convened by the United Nations to guide world leaders, describes a world of worsening food shortages and wildfires, and a mass die-off of coral reefs as soon as 2040 — a period well within the lifetime of much of the global population.
It Gets Worse…
The insanity of the current partisan politics in refusing to address the realities of climate change sank to new lows last week with the announcement that The Environmental Protection Agency moved to disband two outside panels of experts charged with advising the agency on limiting harmful emissions of soot and smog-forming pollutants. The agency informed scientists advising the EPA on the health impacts of soot that their “service on the panel has concluded. The decision to dissolve the panels is part of a broader effort by the EPA’s leadership to change the way the agency conducts and assesses science. Those efforts include trying to limit what counts as health benefits when crafting air rules and incorporate into rulemaking only studies that make their underlying data public. There is a time for those of us who care about the future of the planet to dispense with the illusion that “it will all be fine” or “there’s nothing I can do” and to step forward and take action. If not for us, then for our children.
What We Can Do as an Industry…
With the economic muscle of the real estate sector in general and the expertise, professionalism, and power of the commercial real estate sector, the time is now for us an industry to step forward and act. Our industry has a track record for reacting responsibly to environmental regulations and sustainability initiatives and being good corporate citizens. That is now insufficient. We need to lead.
We need to look no further than Germany to see how a concerted resolve to tackle climate change can produce dramatic breakthroughs. The country is in the middle of an initiative called Energiewende (“energy transition”), through which the government is aiming to reduce greenhouse gas emissions by 80 to 95 percent in 2050. On May 8 of 2016, at 11 am, Germany hit an exciting benchmark with 95 percent of the country’s power demands being met by renewable energy sources. A sunny day and strong winds helped contribute to the record-breaking high, and power prices actually went negative for several hours, meaning commercial customers were being paid to consume electricity!
As an industry, not only can we advocate – we can also self-regulate for the implementation of renewable energy sources in the construction of all new buildings, as well as in mandating retrofits in existing buildings. The current global Gross Domestic Product (a measure of economic activity) is currently approximately $80 trillion. In October the scientific panel on climate change estimated the total annual cost limiting warming to 1.5°C (a critical threshold) will about $900 billion a year for the period 2015 to 2050 – about 1.1% of the global GDP.
Martin Luther King said, “Our lives begin to end the day we become silent about things that matter”. What’s needed now is a powerful, respected and forward-thinking voice to lead the way. What could be a more perfect role for our sector at this time?