A large part of the world’s emissions is caused by the built environment. According to RAKLI’s latest review of sustainable real estate business, almost 40 percent of the total energy usage in Finland comes from buildings and they are liable for more than 30 percent of all emissions. The same review states that controlling climate change should be in the heart of professional real estate investments.  In our current world, where the pandemic has highlighted that global collaboration and innovative solutions are crucial for achieving lasting development and healthy societies, it is a good moment to discuss sustainable real estate investments and their importance in the long run.

Citycon aims at operating its shopping centres carbon neutrally by 2030. We have already taken steps towards carbon neutrality by improving our energy efficiency, increasing our own renewable energy production, cooperating with our tenants in matters of energy saving and increasing the share of carbon neutral energy of our procured energy. Citycon’s journey towards carbon neutrality was further strengthened recently when we signed the International Net Zero Carbon Buildings Commitment. The commitment mandates all actors of the built environment to work towards the Paris Agreement’s temperature goals of 1.5/2°C.

Energy efficiency right from the start

At Down Town shopping centre in Norway, we installed the world’s largest solar plant with snow melting technology last year, and several other of our centres utilize solar energy systems, too. At Citycon we are also adopting energy solutions using geothermal heating and cooling to achieve carbon neutrality, even though the trend is still new to the shopping centre business.

Energy efficiency of almost any existing building can be improved by for example optimizing the energy management, creating an energy storage or utilizing intelligent heating and cooling systems. However, real estate developers have a responsibility going deeper than that: ensuring that already the planning and construction phases of any building are done within a sustainable framework that can be communicated to the investors and the surrounding communities.

Because real estate development projects are typically initiatives that take years or even decades before being completed, our business is naturally planned on a longer timeline that involves multiple stakeholders, partners and strategic decisions. Big changes are not made overnight, and even seemingly rapid development usually has a multi-faceted history behind it. This brings us to the theme of life-cycle thinking.

Life-cycle thinking and Green Financing Framework

Sustainable real estate development will eventually be built on the grounds of life-cycle thinking and the company’s sustainability strategy. Life-cycle thinking takes a holistic view of the production and life cycle of a building and assesses its impacts on the environment through the entire cycle. The full development process needs to be systematically evaluated so that every link in the chain can be demonstrated to be environmentally friendly and sustainable.

Many companies, Citycon included, have their own Green Financing Framework that integrates sustainability objectives in their financing activities. This means that when Citycon issues a bond or other financing under the Green Financing Framework, the investors can be sure that their investments are used according to predefined environmental criteria. Sustainability is also visible in Citycon’s development strategy, where we have decided not to develop shopping centres for rural areas to avoid encouraging car travel. Instead, we develop energy efficient shopping centres for urban hubs that are easily reached by public transport, foot, bike or electronical vehicles.

Trends and shifts in investments tell us a lot about the world we live in and the things we believe in. Sustainable investments and green funds are a globally growing megatrend, which directs increasing amounts of assets towards responsible actors. Environmental certificates are already on investors’ checklist, and it will be interesting to see what this means for real estate developers in the future – which is the level in green building certificates that will be considered high enough, will the certificates eventually involve a life-cycle analysis or will the investors require a separate analysis in addition to the certificate?

It won’t be long before green funds driving sustainability and life-cycle thinking will become the new normal and a hygiene factor in the market – and this should push all actors in the real-estate sector to look for innovative solutions that can make their business more climate-friendly and responsible.

Eero Sihvonen will be part of the jury in a WDBE (World Summit on Digitally Built Environment) pre-event on Tuesday, May 19. The competition is organized in collaboration with KIRAhub, WWF and EconomisE.

Listen to Eero talk about “Redefining Sustainability Through Future-Proof Real Estate Investments” in a WDBE podcast here.