Building A Sustainable Future: The Need For Greener Supply Chains In The Real Estate Industry

Development and operations of the built environment of real estate and infrastructure results in more than 40% of overall global carbon dioxide (CO2) emissions. These are the biggest demand side contributor to overall global CO2 emissions that are ultimately responsible for global warming and climate change. Reducing these emissions is becoming increasingly critical with each day, however as they come from various sources in the supply chain it requires an assimilation of all stakeholders to drive market-based low carbon solutions.

To understand the range of sources from where the emissions arise, we must take a cradle-to-cradle view of any building:

Each of these emissions’ sources are part of the supply chain, and we need solutions to make each of these activities greener or low carbon. It starts with estimating and reporting the carbon footprint of each of these activities by each of the supply chain partner, and then creating decarbonisation roadmaps for each.

Leading developers can ensure greening of the construction and operation supply chains by orienting their suppliers to the need of this transition and gradually transforming their supply chains with companies that are compliant and aligned to the net zero roadmap of the developer. By doing so, developers can create demand for greener alternatives, thereby fostering innovation in established as well as start-up ecosystems.

One must note that the Sustainability agenda now goes beyond just green, and covers social aspects like human rights, safety of both the individuals and communities, while also ensuring equal opportunity for diverse group of employees and workers. Alignment of supply chain, together on climate and social parameters, results in a sustainable future and better life for all.

Challenges in developing a greener, more sustainable supply chain:

Data scarcity

Unavailability of environmental performance data in the supply chain. Many companies do not measure the impact, as the market has started demanding the environmental data there is an increasing awareness about the same. Additionally, as the data is getting measured the companies are becoming more conscious of the impact of their functions and are actively trying to improve their environmental performance.

Performance challenges

Greener materials have yet not withstood the test of time and there is lack of confidence in the system for mass adoption. This requires leadership and sponsorship of the idea that can be done through pilots and proof of concept deployments.

Cost premiums

Several green alternatives are expensive and impact the margins of the companies, unless companies responsibly evaluate them with respect to internal carbon prices.

Material Availability

Greener materials even when available many times are not sufficiently available for scale deployment. With the increasing demand signals in the market, manufacturing companies can generate finance and enhance their production capacities.

Finance

Scaling up of greener material production required capital inflow at the manufacturer level; however, in the recent past finance availability on production of greener materials has improved significantly also resulting in a positive shift towards a greener low carbon economy.

Policy gaps

Various innovative green materials and systems require approvals or inclusion in relevant building codes and standards which is a time consuming and tedious process. Leading developers can support the policy makers through pilot projects to prove efficacy of the alternatives.

By operating through a greener supply chain an organization not only derisks its business and improves top and bottom lines, but also contributes significantly in nation building.

Net zero targets and regulatory compliance

Greener supply chains support progressive carbon reduction for any organization, thereby helping to achieve the committed net zero targets. Gradually, the regulations and mandatory disclosure/ reporting requirements have started to become more stringent, especially for large companies. Companies with greener supply chains have more accurate data to disclose and achieve improving trends on sustainability matrices.

Brand improvement and sales

Companies operating with greener supply chains consistently deliver greener and more sustainable products in the markets thereby attracting positive sentiments with the brand. With positive shifts in the market sentiment towards greener products, markets reward companies through better sales, that are able to offer greener and more sustainable products.

Fostering innovations and growth of green jobs

The need to move away from business to greener alternatives fosters innovation that ultimately increases the pie for all. With a demand of greener supplies, there is a whole new market and industry that’s growing and is also creating green jobs for millions of people thereby enabling a transition that’s good for all.

Wellness and climate resilience

Sustainable products and sustainable companies result in better safety, health and well-being of the product users and well as the manufacturers work force. This is truly an approach to help build a better life for all. And last but not the least, greener supply chains ultimately create a mass scale positive impact on the environment thereby reducing the risk of climate change and helping the industry and people to become more resilient. 

(Aun Abdullah, is head of ESG, Lodha.)