The View | Climate change: why it pays for Asia’s office buildings to go green

Decarbonisation of the real estate industry is critical to the fight against climate change given that buildings account for about 40 per cent of overall emissions in the world’s urban centres. For a sign of the extent to which it is making headway, look no further than Embassy Reit, India’s first publicly listed real estate investment trust.

Earlier this month, the largest office-focused Reit in Asia by area announced it had received the LEED Platinum certification for all 77 of its operational buildings spread across 12 office parks in several cities in India. This makes Embassy Reit the world’s largest owner of green-certified office assets in a country that is the third-biggest emitter of greenhouse gases behind China and the United States.

The business case for net-zero offices has never been stronger. Energy-efficient buildings help reduce the cost of owning and managing real estate at a time when the fallout from the Covid-19 pandemic, the commodity shock stemming from Russia’s invasion of Ukraine and sharp rises in interest rates are increasing operational costs across property portfolios.

Just as importantly, the pandemic triggered the most far-reaching shift in office work for generations. Even in Asia, where working from home is less prevalent, the purpose and design of offices is changing. High-quality, well-located and amenity-rich properties that invest in smart building technology, prioritise health and well-being and have strong green credentials are better-placed to attract and retain companies competing for talent in a post-pandemic world.

The rise of environmental, social and governance (ESG) investing – one of the hottest trends in finance – has sharpened the focus on how reductions in carbon footprints translate into property values. Put simply, is there a “green premium” for more sustainable buildings?