The building sector has a big responsibility and role to play in combating global warming. In 2007, a United Nations Environment Programme (UNEP) report estimated that this sector, when it adopts suitable measures, can help reduce carbon dioxide (CO2) emissions by 30 per cent to 40 per cent. In absolute terms, this amounts to a reduction of two billion tonnes of CO2 emissions during the Kyoto Protocol period. The UNEP has recently come with a tool kit to implement Responsible Property Investment (RPI), an innovative way to finance sustainable practices. The RPI urges corporate investors and fund and asset managers to factor in positive social and environmental attributes of a project in their decision to buy a property or finance construction. Financial performance alone is not adequate to assess a property. Existing regulatory practices and incentives, such as Certified Emission Reduction, focus on builders and the supply side of sustainable buildings, leaving out the buyers. The RPI initiative fills this crucial gap. Genuine changes in the way the multi-trillion-dollar global property industry invests will have a far-reaching environmental impact.
It also pays to be a responsible investor. Studies show that environmentally responsive buildings deliver ‘lower operating expenses and higher net operating incomes.’ A survey done in 2007 revealed that 80 per cent of corporate real estate professionals in the developed countries were willing to pay at least one per cent more rent for sustainable spaces. Against this background, what is clear is that the Indian property sector can do much more for the environment. Right now, it mostly responds to mandatory codes, which are weak and slow in coming. The delay in implementing the Energy Conservation Building Code is a case in point. A lackadaisical approach in adopting such good practices is not only detrimental to the environment; it also hurts a sector that attracts about Rs.20,000 crore (2008-09) in foreign direct investment. Much like the way consumers turn down products that exploit child labour and other unacceptable practices, the RPI initiative will soon compel investors to turn away from properties that are built to dubious environmental standards. In fact, this initiative goes beyond the environment to address issues such as fair labour practices and legal compliance. The Indian property sector must proactively adopt such progressive initiatives, voluntarily disclose its social and environmental performance, and stay in tune with changing investment norms and practices.