How is the real estate industry adapting to the sustainability trends that have emerged in the past few years?
The real estate market is changing quite rapidly, more and more clients asking for sustainable offices and energy efficient solutions for residential spaces. Together with our partner, we developed the concept of "power house" in Norway, which produces more energy than it uses over its lifecycle. This is made possible by installing solar panels on the roof and on the facade, as well as using hydro energy since we are so close to the fjords. 98% of the investment we make in commercial development is green, having LEED or BREEAM certificates.
Our target is to reduce Scope 1 and Scope 2 emissions by 70% until 2030 and reach net zero by 2045. For project development we are aiming at 50% reduction (including Scope 3) by 2030. The Q2 reports showed that we already achieved 51% reduction in Scope 1 and Scope 2, so we are on the right path. Moreover, the concern for sustainability and the green transition is a business opportunity that can be used as a competitive advantage. As our portfolio is split across several geographies, we have observed Central Europe starting to catch up in the green transition race and, as seen with the Inflation Reduction Act, the US following the same path.
What does the appetite for sustainability look like in commercial Vs. residential properties?
We have an investment of more than EUR 3 billion in commercial development, 50% of it being in the US across five cities: Boston, Washington DC, Houston, Los Angeles and Seattle. The rest of it is in Europe, with large operations in Sweden, Finland, Norway, Denmark, Poland, Czech Republic, Romania and Hungary. We do residential work mainly in Northern and Central Europe.
15 years ago, we decided to settle only on high end investment, so today our office spaces are highly attractive to tenants. They are situated in premium locations and have high environmental standards, which makes them ideal from an employer perspective. The residential sector is lagging a bit behind and the drive has been mostly expressed by the commercial side since they are interested in the life cycle of their building.
However, we have already started developing climate neutral residential buildings because with the energy prices increasing, so will the appetite of customers for energy efficient homes.
What would be some examples of promising innovations that you have in your pipeline?
Besides the "power house" concept that I mentioned earlier, we are also employing other innovations such as a special concrete that can absorb the smog in polluted areas, which we are already implementing across Poland. Since asphalt is a widely used fossil-based material, we developed a new way of producing it - which has near zero emissions, uses circular technologies, bio-binders, biofuel and green electricity. In addition to these, we are working with AI in order to operate the machinery on site in the most efficient way possible. Breakthrough technologies are the sum of long-term commitment towards finding solutions and successful collaborations with other peers of the industry.
How do you envision the communities of the future in terms of sustainability?
The communities of the future will probably be more standardized and have a greater focus on performance. The cityscape will be shaped by interesting buildings that can act as charging stations for electric vehicles thanks to the overflow of energy (in Trondheim we are already charging buses in this way). Authorities and customers are showing interest in more resilient buildings that can withstand the effects of climate change: floods, heat waves, etc. In relation to this, we actually developed a round building in Boston, which uses 15% less cladding thanks to its particular shape and 10% less energy for cooling simply because it is not positioned in direct sun. The structure is made of lighter steel frames as there is not as much headwind present because it has no corners. So, for us, innovation is translated into design, digital tools, materials and lifecycle perspective.
Is there a specific path of action that could help speed up the green transition?
The only way to reach the net zero target is through collaboration with other industries across the supply chain. Earlier this year we joined the CEO Alliance which is an action driven group of major European companies where we try to find the best solutions for energy storage, fossil-free steel, green concrete and other initiatives. From the policy side we would need a faster permitting process, as well as a more efficient use of the public procurement, which is a huge sector and could make a difference across the industry.
If we look at the advancements made by the industry up to now, are we on the right path to reach the targets set for 2050?
Today we have a more defined rule book and a lot of new technologies at hand, but we are also faced with challenges that we cannot control (forest fires, extreme drought, wars, etc.). There is a rich pool of opportunities so we need a stable environment where regulators, financial companies, technology startups and corporations can interact inside a common platform in order to drive the transition. It is a good thing that CEOs are starting to transform the way they evaluate performance and risk, as it is a massive shift that can have a huge impact in and of itself.
