Sustainable actual property as a “actual alternative” for buyers
Investing in sustainable buildings could offer a real solution to reducing emissions in one of the world’s most polluting sectors, said Taronga Ventures, an investment firm focused on sustainable innovation and technology.
According to the UN, buildings currently account for 39% of global greenhouse gas emissions. Almost a third (28%) of the world’s total is due to the operation of buildings – the so-called operational emissions, while 11% is accounted for by building materials and structures.
“It’s a largely unknown fact,” Avi Naidu, co-founder and CEO of Taronga Ventures, told CNBC’s Squawk Box Asia on Friday.
“A lot of people think transportation, methane and food are big drivers, but it’s actually the built environment,” said Naidu, whose company invests in innovation in the real estate and construction sectors.
Clear up misunderstandings
However, that lack of awareness represents a “great opportunity” for investors, Naidu said, noting that the technology and appetite for sustainable building solutions are already in place.
“There is a misunderstanding in markets and especially among landlords [that] it will cost more. Absolutely, since the technology is first introduced, it is higher on the cost curve, [but] If it gets more widespread, we’ll see the cost curve keep going down, “he said.
The exterior of the Parkroyal Hotel in Singapore.
VW Pictures | Universal picture group | Getty Images
“We are also seeing consumers and investors paying a premium for products and assets that are ESG focused and much more sustainable,” he continued.
Investing in environmental, social and governance – or ESG – has become increasingly popular in recent years, especially in the wake of the Covid-19 pandemic.
“So much of the cost is increasingly mitigated by the ability to get higher rents and higher assets, and so landlords should really think about it,” he said.
Decarbonisation of the economy
Decarbonising the economy could be a market opportunity worth up to $ 30 trillion within the next two decades, according to Goldman Sachs.
For its part, Taronga Ventures invests in environmentally friendly construction solutions “along the entire value chain,” said Naidu. This includes planning, construction and operation, but also the conversion and final destruction of buildings.
Read more about clean energy from CNBC Pro
As we build new inventories, “we have the opportunity to think about different materials, different types of concrete and different methods that will make the process safer, smarter and obviously more efficient from a carbon perspective,” he said.
Naidu’s comments come ahead of the parties’ 26th UN Climate Change Conference, known as COP26, in Glasgow in November, when leaders will discuss efforts to tackle the climate crisis.