Expo 2020 Dubai, under its 'Connecting Minds, Creating the Future' theme, is setting a new standard for sustainability. The event's comprehensive Expo 2020 Sustainability Initiatives aim to make it the most sustainable World Expo ever. Expo 2020 is focusing on three main elements: sustainability, mobility, and opportunity. Aiming to become the most sustainable expo so far, Expo 2020 Dubai has taken diverse measures from installing renewable energy systems to reducing water usage and segregating waste. Expo 2020’s sustainability efforts are supported by its partners that have been undertaking various sustainability initiatives of their own besides helping realize the expo's sustainability vision. Expo 2020 partners and environmental sustainability efforts GHG emissions Expo 2020 partners are taking climate action by setting ambitious GHG emissions reduction goals. For example, Accenture is targeting net-zero carbon emissions by 2025, with specific goals to reduce absolute GHG emissions by 11% and its scope 1&2 emissions by 65% from its 2016 baseline. Cisco has also promised to have net-zero emissions by 2040, with near-term goals of reaching net-zero for global scope 1&2 emissions by 2025 and reducing scope 3 emissions by 30% by 2030 from its 2019 baseline. Water consumption Expo 2020 partners are also working on reducing their water consumption. For example, PepsiCo has reduced its consumption by 21% from 2018 to 2020. The company has also pledged to improve its water use efficiency by 15% in agriculture, and by 25% in operations from its 2015 baseline. It is also hoping to replenish the water consumed in manufacturing by 100%. Renewable energy Expo 2020 partners are conscious of the impact of their operations on the environment and thus have been switching to clean energy sources. For instance, both SAP and Mastercard are fully relying on renewable energy, with 100% of their electricity being generated from renewables in 2020. Waste recycling Waste recycling initiatives are also key for the Expo 2020 partners. Among the partners, Nissan is a leader, with 96% of its wastes either recycled or diverted in 2020. It is followed by Siemens, with 93% of its wastes recycled or diverted in the same year. Some partners have set other waste recycling goals such as Accenture, which pledged to repurpose or recycle 100% of its e-waste by 2025. Partners’ contribution to a more sustainable Expo 2020 Siemens As the Expo 2020 Infrastructure Digitalization Partner, Siemens is helping the expo achieve its sustainability targets by integrating its smart building technology across the expo structures, providing transparency into their energy and water consumption. PepsiCo In preparation for the event, PepsiCo has launched Expo 2020 Dubai co-branded Aquafina cans and glass bottles, as well as limited-edition Pepsi cans, which are all fully recyclable. PepsiCo is also collaborating closely with Dulsco, the official waste management partner for Expo 2020, to ensure waste is collected and recycled, supporting the Expo’s waste diversion targets. Mastercard Mastercard, Expo 2020's official payment technology partner, has created an add-on feature to Expo 2020 tickets, which allows visitors to donate to Mastercard's Priceless Planet Coalition. Expo 2020 highlights the urgent need to embrace sustainability, which can be observed through the efforts made by the organizers and partners to change their practices to create a more sustainable future. Partner companies have come a long way to achieving their goals in terms of reducing greenhouse emissions, curbing their water consumption, using renewable energies, and recycling their waste. Some had more noticeable successes than others, such as SAP, Accenture, and Cisco, while others are still on the way. Expo 2020 partners, including Siemens, Emirates, PepsiCo, MasterCard, and DP World have also contributed to a more sustainable expo, emphasizing the significance of sustainability to all Expo visitors. Khawla Khrifi - Business Research Analyst Sources: Expo 2020 and Environmental Sustainability
The 21st century has witnessed major efforts by industries all around the globe to seize new technological capabilities to improve personal lives, corporate dynamics, and industrial processes. In an era of severe climate change crises, new technologies and industrial philosophies are becoming more and more essential. In this context, green architecture emerged as a solution to conserve nature and initiated the transformation of the real estate industry. “At the turn of the 21st century, a building’s environmental integrity as seen in the way it was designed and how it operated, became an important factor in how it was evaluated.” What is Green Architecture Green architecture is an eco-conscious approach that advocates for the preservation of nature in designing, constructing, and operating buildings. In green architecture, the architect adopts a design philosophy that considers the environmental impact of all aspects of the project. A green building or community is one that takes into account the efficiency and sustainability of energy resources, the preservation of water and air resources, waste reduction, and the adaptability of materials to a changing environment. Green architecture does not only aim to limit or eliminate the negative impact that construction activity has on the environment, but to have a positive effect on the people and nature through environmentally conscious designs, practices, building materials, and the use of the latest technologies. Why Green Architecture? Construction harms the environment in several ways: high energy consumption, generation of waste, high direct CO2 emissions compounded by deforestation, and water and air pollution. From architectural design to operations, a construction project contributes to climate change, disrupts wildlife, and consumes a lot of resources. The United Nations Environment Program reported that the “buildings and construction sector accounted for 36% of final energy use and 39% of energy and process-related carbon dioxide (CO2) emissions in 2018, 11% of which resulted from manufacturing building materials and products such as steel, cement, and glass. And according to research and statistics, in 2018 the worldwide emissions from buildings rose to 9.7 gigatonnes of carbon dioxide (GtCO2).” The Rise of Green Architecture and Technologies The green architecture was founded in 1969 by Ian McHarg who theorized a holistic approach to transform the way buildings and communities are designed, built, and operated. His most important contribution are detailed in his book “Design with Nature” where he outlined the process of living harmonically with nature by applying a “landscape suitability analysis”. His principles of regional ecological planning explain the importance of assessing the health of a region, its ecological constraints, and accordingly where and how construction should take place to live in harmony with nature. In 1994, the U.S Green Building Council formalized McHarg’s principles establishing the Leadership in Energy and Environmental Design standards (LEED). The LEED standards were made to provide measurable guidance and framework for the design and construction of environmentally responsible, highly efficient, and cost-saving green architecture projects and green buildings. The standards mainly focus on sustainable site development, water savings, energy efficiency, material selection, and indoor environmental quality and are updated frequently. The Green Building Council also tackles awareness, education, innovation, and design of sustainable development. Green architecture was founded in 1969 by Ian McHarg who theorized a holistic approach to transform the way buildings and communities are designed, built, and operated. His most important contribution are detailed in his book “Design with Nature” where he outlined the process of living harmonically with nature by applying a “landscape suitability analysis”. His principles of regional ecological planning explain the importance of assessing the health of a region, its ecological constraints, and accordingly where and how construction should take place to live in harmony with nature. Simultaneously, the advancements in environmental technology and different fields of hydrogeology, geology, biochemistry, and nature-cybernetics have encouraged the goals of sustainable city planning and green architecture. Technology in the 21st century creates the opportunity for a different approach to architecture and design that embraces the environment. Green Architecture Technologies Green walls and vertical gardens along with green roofs are all hallmarks of green buildings that help minimize heating and cooling costs, prevent storm-water runoff, filter out pollutants, and accordingly reduce energy use and cost. Solar power, in addition to hydropower and wind power, is very often used as renewable energy resources for heat and electricity so that any residential or commercial building is able not only to fulfill its own needs but to generate and store electricity. Recycling and waste reduction are also features of major importance in green architecture. Recent smart city projects are trying to blend green infrastructure with internal smart home solutions and seize technological tools to improve sustainability. Smart appliances are being used to minimize energy consumption aiming at establishing net-zero energy in residential and commercial buildings. Net-zero energy buildings rely only on the energy produced onsite from renewable resources through a combination of energy efficiency and renewable energy generation. Green water technologies are also being used along with different irrigation technologies to enhance the quality of water for irrigation and the ecosystem overall. Other water technologies and techniques include dual plumbing systems, the re-use of water, and harvesting rainwater to minimize the consumption of traditional freshwater resources. Sustainable design is based on energy-minimizing strategies as designing windows that constantly reflect daylight, the use of low emitting materials, and the use of smart glass to save a lot on heating, ventilation, and air conditioning costs. In addition, the design also considers the materials used internally and externally to ensure the health and safety of people with regard to carcinogenic elements or toxic materials. Green Architecture around the Globe: Several countries have initiated green building investment projects around the world to meet the Paris Agreement and Sustainable Development Goals (SDGs) for 2030. As of 2015, several countries have already incorporated Green buildings in their master plans. Singapore is one of the earliest countries in Asia to incentivize and initiate green architecture projects. In 2009, the Singapore Green Building Council was established to encourage green architecture and to encourage private-public partnerships. “Singapore is the only country that makes it mandatory for any building of 5,000 square meters to achieve minimum standards as per the code for environmental sustainability,” says Mayank Kaushal, an architect, senior sustainability consultant, and researcher with Future Cities Laboratory. The Parkroyal on Pickering hotel in Singapore designed and completed in 2013 is a prime example of this philosophy in action featuring 161,459 square feet of sky gardens, waterfalls, and planter walls. The hotel incorporates different technologies including solar power grids, rain sensors, and water and light saving tools. The project was designed and completed by WOHA, and the project won Interior Design’s 2013 Best of Year Award for Hotel Common Space. Several countries around the globe have been either developing or planning on going green as well including Canada, Germany, Guatemala, U.S.A, Australia, China, Denmark, Italy, India, Japan, Mexico, Netherlands, U.K, U.A.E, Egypt, South Africa. However, each country may pursue green architecture and sustainable development differently according to its resources and climate. Challenges and Conclusions Green building practices are gaining more acceptance in the construction and real estate industries as a viable solution to becoming environmentally sustainable. Yet green architecture was founded more than 50 years ago, and its uptake hasn’t been progressing as one would expect. Adopting sustainable development and green architecture practices remains challenging for several reasons. Compared to conventional methods, the capital and additional costs needed constitute the major challenge to even consider going green especially for developing countries. The materials and equipment used in the construction of green buildings are expensive as are the technologies needed for energy efficiency and generation. But more recent research shows that: “investments can be recouped through operational cost savings and, with the right design features, create a more productive workplace.” However, the cost is not the sole challenge, other major obstacles include the lack of expertise and skilled manpower, the lack of awareness and environmental education, minimal adoption incentives, and the lack of laws and policies. More importantly, the lack of dedicated research and development is a major issue. And while the main purpose of adopting green architecture is nature-driven, the indirect effects this new approach can have on society is revolutionary. Adopting sustainable development in fact stimulates environmental awareness, technical and scientific research, new skills in the workforce, and efficient industrial practices. The future is ours to lose. References Bold Business, Building Green, 2019. https://www.boldbusiness.com/infrastructure/green-construction-environmental-impact/ Inso Architectural Solutions, Green Architecture Vs. Sustainable Architecture in South Africa, 2021. https://www.inso.co.za/blog/green-architecture-vs-sustainable-architecture-in-south-africa/ World Green Building Council, How Green Building is Facilitating Rapid Sustainable Growth in Africa, 2021. https://www.worldgbc.org/news-media/how-green-building-facilitating-rapid-sustainable-growth-africa DNA Barcelona, DNA Unveils a Futuristic Eco-Building for Singapore, 2020. https://www.dna-barcelona.com/dna-unveils-a-futuristic-eco-building-for-singapore/ TessilBrenta Nonwovens Technology, Green Roofs and Terraces, 2021. https://www.tessilbrenta.com/en/ecotess#roofs EliteTraveler, Futuristic Target Tower to be Built in Singapore, 2021. https://www.elitetraveler.com/design-culture/architecture-interiors/futuristic-garden-tower-to-be-built-in-singapore High Speed Training, Pollution from Construction, 2019. https://www.highspeedtraining.co.uk/hub/pollution-from-construction/ IEREK, Green Buildings and its Benefits in Smart Cities, 2017. https://www.ierek.com/news/index.php/2017/08/01/smart-cities/ Conserve Energy Future, Green Construction, 2021. https://www.conserve-energy-future.com/top-sustainable-construction-technologies-used-green-construction.php CNN, Green buildings: 18 examples of sustainable architecture around the world, 2020. https://edition.cnn.com/style/article/green-buildings-world-sustainable-design/index.html Daniels, T. 2019. McHarg’s theory and practice of regional ecological planning: retrospect and prospect https://www.researchgate.net/publication/335080769_McHarg's_theory_and_practice_of_regional_ecological_planning_retrospect_and_prospect Britannica, The Rise of Eco-Awareness, 2021. https://www.britannica.com/art/green-architecture/Principles-of-building-green United Nations Environment Program, 2019 Global Status Report for Buildings and Construction Sector. https://www.unep.org/resources/publication/2019-global-status-report-buildings-and-construction-sector U.S Green Building Council, Vision, 2021. https://www.usgbc.org/articles?Channels=%5B%22Industry%22%5D Britannica, The Rise of Eco-Awareness, 2021. https://www.britannica.com/art/green-architecture/Principles-of-building-green Conserve Energy Future, Green Construction, 2021. https://www.conserve-energy-future.com/top-sustainable-construction-technologies-used-green-construction.php Interior Design, 8 Sustainably Designed and Architecturally Significant Buildings in Singapore, 2019, https://www.interiordesign.net/articles/16140-8-sustainably-designed-and-architecturally-significant-buildings-in-singapore/ World Green Building Council, The Business Case for Green Building: A Review of the Costs and Benefits for Developers, Investors and Occupants, 2021. https://www.worldgbc.org/news-media/business-case-green-building-review-costs-and-benefits-developers-investors-and-occupants
The discussion around 'ESG standards and regulations' has become pivotal in the realm of finance, steering a significant shift in how investments are approached Investors have been increasingly pouring money into ESG funds, and asset managers have taken notice and responded to this trend by embracing ESG factors within their strategies to attract more inflows, balancing ESG requirements with traditional risk and reward considerations. Despite a lack of legal requirements from policy makers, stakeholders, both individual and institutional, have been seeking greater clarity regarding the impact of their contributions. They are keen to understand not only “if” asset managers are committing to ESG, but proactively asking questions about managers’ stewardship approach. What is ESG Standards? [caption id="attachment_5144" align="aligncenter" width="687"] Asset management firms manage funds for individuals and institutions by making investment decisions on their behalf while considering their unique circumstances, risk appetite and preferences[/caption] ESG stands for Environmental Social and Governance and refers to the three key factors when measuring the sustainability and ethical impact of an investment. Environmental factors include climate change, greenhouse gas emission, waste, pollution etc. Social include human rights, labor practices, talent management, product safety and data security. Governance refers to a set of rules or principles defining rights, responsibilities, and expectations between different stakeholders in the governance of corporations like board diversity, executive pay, and business ethics. ESG Fund Flows The year 2019 has been a memorable one for ESG investments as it saw a significant jump in sustainable fund flows. In the US, for instance, investors poured a record $21 billion into socially responsible investment funds, almost quadrupling the rate of inflows in 2018. In Europe, sustainable fund flows reached €120 billion in 2019, nearly triple the previous year’s amount which stood at €44.8 billion. [caption id="attachment_5156" align="aligncenter" width="626"] European sustainable fund inflows (€ billion)[/caption] To illustrate ESG’s rising popularity among investors, Legal & General Investment Management “LGIM”, the UK’s largest asset manager with £ 1.2 trillion under management*, has more than doubled its business in 2019 due to its excellent ESG track record. The company’s assets under managements were boosted by a £37 billion mandate from the Government Pension Investment Fund of Japan, the world’s largest retirement scheme (more than $1.5 trillion in assets*) and a vocal advocate of responsible investing. LGIM’s CEO Nigel Wilson stated: “ESG is really contributing to our success... the brand is travelling very well.” Industry Response While the degree to which asset managers have embraced this responsibility varies widely, we see growing evidence that some are taking this role seriously and using their influence to encourage greater sustainability. For instance, in 2019, BlackRock, the biggest money management firm in the world with more than $7 trillion under management*, announced its intention to start divesting from companies that get more than 25% of their revenue from coal production by mid-2020. (* figures are as at 31st December 2020) [caption id="attachment_5158" align="aligncenter" width="628"] A growing number of asset managers have voluntarily signed and embraced the United Nation’s Principles for Responsible Investment “UN PRI”[/caption] Regulatory Challenges: On much of this, the investment industry has been running ahead of the regulator, meeting market demands for a greater focus on ESG. However, the market has not been able to agree on common definitions, resulting in fragmentation. Ultimately, regulators will need to intervene. Investor Sentiments Investors are sending strong signals that they are unsatisfied with asset managers ESG criteria and disclosures. For instance, big names such as Morgan Stanley and Vanguard have been denounced for their “sin” stocks. Morgan Stanley Global Brands Fund had 6.83% in Philip Morris, its third largest holding, compared to 0.29% in the benchmark. The allocation comes despite the fact that the investment policy explicitly states the fund incorporates ESG considerations into its approach. The Vanguard SRI European Stock Fund did not have any tobacco exposure but was also criticized for its 5.7% allocated to alcohol, gaming and defense stocks. When questioned about their ESG criteria, some asset manager respond that they want to maintain a “seat at the table” with companies that do not score well on ESG metrics, that ESG does not equal ethical investment, or that their specific methodology does not reject a given product. Some investors might question such approaches, but from managers’ point of view, they carry potential for gains, both environmentally and financially. A Vanguard spokesperson said: “There are different flavors to socially responsible investing. Investors should look closely at a fund’s methodology and exclusion policy to ensure it matches their beliefs.” ESG Policies In their current form, ESG policies seem to be lacking two core elements: first, a universal consensus on what constitutes an ESG investment and a way for asset managers to assess ESG compliance in their portfolio; and second, reporting on ESG is still non-coercive and even if it were, without a proper framework, these policies remain inefficient. European Regulatory Landscape To demonstrate the ineffectiveness of current regulations, we turn to the EU, leaders in ESG regulations, to get an idea of current world standing in ESG policies. [caption id="attachment_5161" align="aligncenter" width="700"] Europe has been leading the race in sustainable finance regulation. The progress on the matter started immediately after COP 21.[/caption] In terms of ESG compliance, the EU has been working on creating ESG and climate change standards by deploying a Technical Expert Group on sustainable finance (TEG). However, most guidelines are still voluntary, non-legislative and unbinding for now. The current proposals include: - An EU green bond standard: The TEG proposed that the Commission creates a voluntary, non-legislative EU Green Bond Standard to enhance the effectiveness, transparency, comparability and credibility of the green bond market and to encourage the market participants to issue and invest in EU green bonds. In 2019, the TEG published a report on EU Green Bond Standard. - EU taxonomy: On June 2019, the TEG published a report on EU Taxonomy that sets out the basis for a future EU taxonomy in legislation. However, this report only tackles the climate change area of ESG. - Benchmark: The TEG has been working on recommending minimum technical requirements for the methodologies of the “EU Climate Transition” and “EU Paris-aligned” benchmarks, with the objective to address the risk of greenwashing (greenwashing refers to marketing that portrays an organization’s financial products, activities or policies as producing positive environmental outcomes when it is not the case). As part of its mandate, the TEG also worked on recommending the alignment with the Paris agreement and ESG disclosure requirements, including a standard format to be used to report such elements. Nonregulatory bodies have also been looking for solutions to help companies audit green conformity and provide companies with step by step instructions , such as the UN PRI. Signatories of the UN PRI recognize the potential impact of ESG issues on the performance of investment portfolios, they acknowledge that in order to be effective fiduciaries, they must integrate these factors into their investment analysis, seek appropriate disclosures, and incorporate ESG issues into their ownership and voting practices. As per ESG reporting, it is also still voluntary in most EU countries except for France which has made it mandatory for asset managers and institutional investors to report on how ESG are incorporated in their investment and risk-management processes with specific mention on climate change considerations (Article 173 of French Law on energy transition for green growth), and the Netherlands, where pension plans are required to disclose in their annual report if ESG criteria are incorporated. Reporting guidelines were only published recently in 2019 by the TEG and they provide non-binding advice to help disclose climate change mitigation investments and activities. In order to express their frustration, 631 institutional investors with more than $ 37 trillion in assets organized the largest ever joint call for climate change to governments during the 2019 COP 25 in Madrid. These investors wrote and signed a petition reiterating their full support for the Paris agreement and urging all governments to implement the actions that are needed to achieve the goals of the Agreement, with the utmost urgency. Conclusion It has become clear that regulations that govern ESG are still insufficient. The introduction of such regulations will be beneficial threefold: First for investors as they deserve more transparency, second for asset managers to simplify the current disclosure standards that are both confusing and expensive for them and to renew their trust with their clients, and third and most importantly for the greater good of society and the planet. 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New business surges at Legal & General Investment Management, Financial Times, March 4th 2020 Regulating the growth of ESG Investing, A look at the landscape of ESG regulation around the world, across three main areas, Morningstar, June 3rd, 2019 https://www.morningstar.com/blog/2019/06/03/esg-regulation.html The Evolving Approaches to Regulating ESG Investing, Morningstar, June 3rd 2019 The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018, October 1st 2019, http://www.legislation.gov.uk/uksi/2018/988/regulation/4/made The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018 full PDF, made 10th September 2018 http://www.legislation.gov.uk/uksi/2018/988/made/data.pdf US Forum for sustainable and Responsible Investments, https://www.ussif.org/index.asp