This article is part of the World Green Building Week 2021 editorial series highlighting the role sustainable buildings play in #BuildingResilience to climate change and for people and economies.
Provided by Ibrahim Al-Zu’bi, Chief Sustainability Officer at Majid Al Futtaim and Chair of the World Green Building Council (WorldGBC) Corporate Advisory Board
The past five years have been the hottest on record since 1850. Human burning of fossil fuels has increased carbon dioxide levels to their highest point in at least two million years and caused global average temperatures to rise. As a result, the frequency and severity of extreme weather events across the globe has increased in recent decades and the threat posed by climate change is now an undeniable reality. The most recent report published by the Intergovernmental Panel on Climate Change (IPCC), a leading body of the United Nations responsible for consolidating leading scientific consensus on climate change impact, made a harrowing warning that climate change is unequivocally human-caused and could lead to peril for us all1.
With these stark warnings from leading scientists and governments, and with deadly climate events becoming regular news items, it is clear that action to address climate change and build resilience into our global economies is of paramount importance. In response to this need, global governments are bringing regulations into place to drive down carbon emissions and increase investment in climate resilience measures. In turn, a growing level of scrutiny is being placed on the private sector to contribute meaningfully to climate action. Businesses more and more are expected to appropriately govern, manage and report on their most material climate-related risks. If they fail to do so, they could face significant risks from failing to meet market demand for low-carbon solutions, or they could be at risk from extensive physical climate-related damages that they are unprepared for. On the other hand, businesses that are leading in sustainable practices may realise the opportunity to benefit from an increased demand for first-class, sustainable assets.
To tackle the uncertainty around investment risks associated with climate change, the Task Force on Climate-related Financial Disclosures (TCFD) published its best practice framework in 2017 for businesses to disclose the potential financial impacts of climate change. Since publication, more than 2,300 organisations with total market capitalisation of over USD 12 trillion have expressed support of TCFD. Global governments are stating intentions to enforce mandatory climate risk disclosures in line with the TCFD recommendations.
The TCFD framework not only enables businesses to report to their stakeholders in a consistent manner with other businesses and demonstrate how they are addressing climate-related risk, but also serves as a ‘template’ for the steps a business should take to understand and manage climate-related risks. One of the core recommendations of TCFD is to undertake scenario analysis, considering potential future pathways based on the level of climate action in coming decades. TCFD recommends analysis of one scenario consistent with less than 2˚C of average global temperature rise by 2100 in line with the aims of the Paris Agreement and a distinct scenario that is characterised by increased physical risks. By conducting scenario analysis, businesses can report a more holistic understanding of risks in uncertain climate futures to their stakeholders. Having conducted scenario analysis, a business is able to respond to TCFD comprehensively, highlighting which risks are most material to the business and then demonstrating the steps that are being taken to manage these risks under four key pillars: Governance, Strategy, Risk Management, and Metrics and Targets.
Responding to TCFD has a host of benefits for reporting businesses and their stakeholders, but also to wider industries. Businesses can use the TCFD framework to better understand climate-related risks posed to their strategy and can take steps to embed resilience within their existing processes. Stakeholders can use the disclosures to understand their own risks and demand more prudent climate risk management. As the scrutiny around climate risk management grows, markets will be expected to shift in favour of the businesses that are taking proactive steps to address climate change, and so can drive change in wider industries. For example, as part of Climate Action 100+, more than 500 investors with over $47 trillion in assets under management are engaging the world’s largest corporate greenhouse gas emitters to strengthen their climate-related disclosures by implementing the TCFD recommendations. This will inevitably lead to carbon reduction measures from these businesses, who will wish to avoid the reputational damage arising from reporting high emitting activities.
At Majid Al Futtaim, we are proud to be an industry leader in sustainability. In 2021, we published our first TCFD response, making us one of the first in the Middle East and North Africa (MENA) region to sign up as a supporter and report to TCFD. We have taken rigorous steps to understand the climate-related risks and opportunities posed to our business. In 2020, we completed a climate risk assessment of our entire property portfolio using two TCFD-aligned scenarios. In 2021, we built on this by carrying out scenario analysis of how climate-related risks and opportunities could impact our overall business strategy. With this understanding, we have defined clear actions that we will take to manage our most material climate-related risks, many of which are underway. We have developed a climate risk tool that enables us to review climate risk control measures across different stages of the property lifecycle. Our Net Positive carbon and water commitments go a long way to mitigate a number of climate-related risks, including increased carbon costs, heat stress and water stress. For our operations and developments, our Sustainable Building Policy and Design Standards include minimum sustainability standards and climate-related requirements. These steps reflect our intention to embed climate resilience across our business and cement our position as a climate champion for the MENA region.
Findings from the IPCC Sixth assessment report confirmed it was indisputable that human influence has warmed the atmosphere, oceans, and land³. With the COP26 summit, described as the most pivotal COP event in history, only a couple of months away, now is the time for governments, industries, and leading businesses to make ambitious climate pledges to avoid catastrophic climate impacts and build their resilience. We hope Majid Al Futtaim’s support of TCFD and the championing of transparent climate risk reporting stimulates climate action from fellow industry leaders; to create a better world for our generation and those in the future.
2. As at September 2021: https://www.fsb-tcfd.org/support-tcfd/
What is World Green Building Week?
World Green Building Week is the world’s largest campaign to accelerate sustainable buildings for everyone, everywhere. Organised by the World Green Building Council (WorldGBC), it is led by our global network of 70 Green Building Councils and their 36,000 members.
Join us from the 20th–24th of September 2021 to find out how our network is accelerating the Sustainable Development Goals towards an inclusive and resilient net zero built environment.