Benefits abound for early adopters of COP-driven regulations for the construction sector

COP28 has successfully concluded and development and construction organisations no doubt paid close attention as it unfolded. For many, plans for the new year were already long-since underway, but will now require revisiting and fine tuning. This isn’t to discount the efforts they have already made towards decarbonisation. However, the imminent introduction of formal frameworks and regulations will turn these from ‘nice to have’ into necessity, posing a pertinent question - what if the cost of inaction is now much higher than the cost of climate initiatives?

In the aftermath of COP28, we can anticipate more environmental and carbon performance related regulations to be embedded in UAE and Saudi legislation. As recently as the 10th of December, the UAE Cabinet convened to adopt the National Guide for Smart Construction, the Carbon Credits Registration System and the National Biodiversity Strategy which are applicable to the country’s real estate and construction companies.

While all industry players will eventually have to conform to new regulations, here are five ways in which early adopters will be especially well poised to gain an advantage over the competition.

1. Enhanced operational efficiency

Climate action is first and foremost about managing resources. You can use it as a driver to achieve efficiency by optimising your utilisation of materials, energy, water and reducing waste to landfill. Working and preparing your supply chain will give you a competitive advantage and can push the optimisations further. Bringing new, innovative solutions to the market will yield a differentiating edge.

To claim these advantages, you need to create specific policies and set up the processes needed to implement them. At the very minimum, these must cover energy, water, waste, materials sourcing guidance and environmental management. As an upside, you can expect reduction in operational costs ranging from 10-30% for energy, and potentially minimising even eliminating waste-to-landfill costs. For example, by using recycled water for landscaping, high performance facades and sustainable materials like timber, ICD Brookfield achieved a 30% reduction in energy consumption, which translated to cost savings for tenants.

2. Customer appeal

The luxury segment of the market is already integrating sustainability requirements based on customer demands. This is especially evident in hospitality as more than 60% of UAE travellers are willing to pay for responsible, eco-friendly and sustainable trips. High-end commercial units are following suit with ’green premiums’ being observed in the commercial real estate space as tenants seek office space that align with their own net zero objectives.

The middle segment of the market as well is tackling wellness by integrating climate-oriented initiatives and standards to future proof their assets.

3. Managing risk

The regional market is preparing for an evolution towards more stringent building regulations that will be aligned with the UAE’s climate strategy and Net Zero 2050 goals as well as Saudi Arabia’s 2060 Net Zero ambition. Preparing yourself early will allow you to shift easily when regulation comes into force. The focus should be on lowering your carbon footprint from key materials and construction practices, and maximising energy performance which constitute the majority of carbon emissions for buildings.

To drive this agenda, the Emirates Green Building Council this year established the UAE Sustainability Built Environment Blueprint which is a strategic plan focused on reducing emissions and enhancing sustainability in sectors like buildings and transport, aiming for net zero emissions by 2050 through a series of integrated government and private sector initiatives.

4. Access to alternative finance

The writer is Partner and Global Director of Strategy and Advisory, AESG