Rainforest landscape of the Western Ghats mountains in Munnar, Kerala, India.
India’s Buildings Sector Moonshot: Corporate Climate Commitments Can Forge the Path
In India’s fight against climate change, the buildings sector provides huge opportunities for emissions reductions. Progressive and forward-looking real estate players are increasingly backing the move toward net zero with ambitious sustainability commitments. As companies set voluntary targets for reducing greenhouse gas (GHG) emissions, the use of science-based targets is becoming a mainstream business practice. Numerous real estate companies globally have announced sustainability commitments using frameworks such as the Science-Based Targets initiative (SBTi), World Green Building Council’s Net Zero Commitment, the Better Buildings Partnership (BBP), the Architecture 2030 Challenge, the RIBA 2030 Climate Challenge, and The Climate Pledge.
RMI and RMI India are dedicated to their mission of responsibly and cost-effectively decarbonizing buildings by 2050. We continually collaborate with governments and business leaders on projects to enable a low-carbon future for India. In 2018, RMI engaged with India’s largest private real estate developer, the Lodha Group, on sustainability planning for their flagship Palava city project, which ranked as India’s number-one smart city.
Recently, the Lodha Group also announced its ambitious commitment to be a carbon-neutral company by 2035. Propelled by the Lodha Group’s commitment to leadership in sustainable design and construction, RMI was pleased to collaborate with the Lodha Group in developing its vision and framework toward the ambitious sustainability commitment.
Race to Net Zero: The Significance of Decarbonizing the Buildings Sector
The buildings sector likely provides the single largest opportunity for reductions in energy consumption and GHG emissions. Currently, India’s buildings account for around one-fifth of total CO2 emissions and nearly 33 percent of the nation’s energy use. The buildings sector is also one of the largest consumers of natural resources. In the absence of peremptory energy efficiency improvements and policy measures, the buildings sector is projected to emit seven times more CO2 by 2050, as compared with 2005 levels. Meanwhile, the residential sector’s overall energy use could increase eightfold.
Climate-related risks will eventually manifest as business risks, and sustainable buildings offer significant economic savings potential. As markets evolve, the threats are not just limited to physical risks from natural calamities—equally important transition risks also need to be considered. The rising tide of climate-related regulations and penalties, technological advancements, changing customer behaviors, and stakeholder pressure can translate to legal risks, reputational risks, and market risks. In this context, initiatives such as the Task Force on Climate-Related Financial Disclosures (TCFD) provide comprehensive frameworks for risk assessment.
India’s real carbon savings potential lies in the buildings that are yet to be built. Estimates suggest that about 70 percent of India’s 2030 urban infrastructure is yet to be built, signaling huge opportunities to save embodied carbon emissions—the emissions from the full life cycle of building materials or other products. In India, real estate is the sector responsible for the most job creation and GDP multiplication driving the economic growth in the country.
About 250 ancillary industries, including cement, steel, brick, timber, and building materials, depend on the real estate industry. Therefore, decarbonizing the buildings sector’s portfolio also drives sustainability in the industries upstream and downstream in the value chain. Eliminating these embodied carbon emissions, along with the operational carbon emissions generated by a building’s ongoing use, is the key to addressing climate change and meeting Paris Climate Agreement targets.
Real estate developers can explore various pathways to achieve their targeted sustainable development goals. However, a powerful vision and roadmap are necessary to lay the foundations for future scaling and to achieve significant GHG emissions reductions.
Lodha Visioning Workshop: Methodology and Outcomes
The path toward a net-zero carbon portfolio is a multiyear journey. By defining overarching north star goals for sustainability, organizations can create long-term value and receive support from various stakeholders in this transformative journey. Lodha Group has established a north star goal of carbon neutrality by 2035, adhering to an internationally recognized commitment framework.
The north star goals were developed further into interim goals and actionable targets with a roadmap identifying work streams, pilot projects, and any needs for additional studies. Lodha Group has proposed a broad scope of measures under sustainability, encompassing energy efficiency, energy procurement, embodied carbon, waste, water, and transportation. Successful pilot projects will provide opportunities to scale up feasible solutions and achieve significant emissions reductions for the overall portfolio of buildings.
The internationally recognized GHG Protocol’s accounting standard for scope 1, 2, and 3 emissions will be used to establish a baseline emissions inventory. This standardized approach will help delineate direct and indirect emissions sources and improve transparency. Ultimately, a greater understanding of scope 1, 2, and 3 emissions reporting will positively influence decision-making and guide business interventions to drive emissions reductions. Following international frameworks, Lodha’s commitment will initially prioritize scope 1 and 2 emissions within the group’s direct control. Crucially, Lodha Group will also begin to address scope 3 emissions within its spheres of influence, such as tenant energy, transportation, and embodied carbon.
Benefits of Corporate Commitments to Ambitious Climate Action
Because the buildings sector is growing faster in India than anywhere else in the world, energy- and resource-efficient buildings are imperative, if not critical, for the environment and the health of the sector. Increasingly, markets and financiers are driving companies to develop sustainability targets and roadmaps. Customers are showing their preferences for brands that prioritize efforts to fight global warming. In this context, we are witnessing a growing number of companies voluntarily announcing corporate commitments toward a zero-carbon future. These corporate commitments and science-based targets, when aggregated, have the potential to drive systemic change and significantly reduce India’s carbon emissions.
Companies can drive out competition and gain market share by building sustainable products. By investing in sustainable initiatives, companies can positively impact the planet—and also significantly outperform their competition in the long term. Every sustainable initiative will set a new benchmark in the sector and raise market standards, making it difficult for competitors that employ unsustainable business practices with a higher carbon footprint to compete. This strengthens a company’s position in the market as an environmentally conscious organization, particularly in a sector that uses large amounts of natural resources.
Therefore, publicly announcing sustainability targets can not only enhance public perception but also drive systemic change by raising market standards in the construction and buildings sector. Being transparent and accountable about progress toward those targets also builds trust and credibility among customers, stakeholders, and employees.
In this decisive decade, the business case for sustainability goes beyond a company’s public image. Climate action is no longer optional. Having a sustainability strategy is an imperative for a successful business and a healthy planet.