The world’s urban population has grown substantially – from 751 million in 1950 to 4.2 billion in 2018 – with expectations that it will rise further. The United Nations has projected that by 2050, 68 per cent of the world’s population will be living in urban areas. However, this trend toward urbanisation has brought to the
fore the challenge of sustainability, even as nations look to mitigate the threat of climate change.
In such a scenario, building sustainable cities is key to supporting growing demand while offsetting the negative environmental effects associated with traditional construction. Integrated policies for sustainable development are warranted to better the lives of urban and rural dwellers, simultaneously paving the way for environmental and socio-economic good.
In recent times, GCC countries have taken several measures to adopt innovation and green practices in the construction space. The UAE and Saudi Arabia have a total of 242 and 52 LEED-certified projects respectively, the likes of which offer 30-40 per cent savings in water and energy, a report by HSBC in collaboration with Ernst & Young revealed. These buildings can be leased at a rate that is up to 20 per cent higher than the average, the report stated.
The enablers that help foster the green building sector can be broadly classified into three categories, the report found: strategic enablers – covering policies, strategies and regulatory frameworks for green building projects; financial enablers – institutions and products that provide finance to underpin the green building markets; and market enablers – tools/players that facilitate the development of a building entailing design, sourcing and construction.
“All three enablers are equally important to help foster the green building sector in the GCC region. However, strategic enablers are pivotal – without the necessary regulatory and policy frameworks to either incentivise efficient buildings or set minimum standards, the sector would be subject solely to market forces,” Sabrin Rahman, head of Sustainability for HSBC in the Middle East, North Africa and Turkey tells Gulf Business.
“There have been strong steps taken across the GCC to raise the profile and urgency of sustainable buildings, such as through the Emirates Green Building
Council that has mobilised cross-sectoral collaboration. Additionally, energy and water subsidies in the GCC region, though slowly being decreased, act as a
barrier to developing financial incentives for both new green buildings and retrofit projects. Financial enablers in the region are fairly developed with many
local and international banks offering green-labelled financing and seeking to expand their green balance sheets,” Rahman adds.
Green funding is slowly but surely gaining ground regionally. In the UAE, the Dubai Electricity and Water Authority (DEWA) launched the Dhs100bn ($27bn) Dubai Green Fund to facilitate financing in clean energy and green projects.
“Over the last couple of years, we have seen a marked increase in interest in sustainable finance, from issuers, borrowers and investors. What is becoming clear is that a post-Covid environment requires a new blueprint for the economy,” says Rahman.
“Sustainability, specifically environmental and social issues, will be an even bigger factor to consider by governments and the private sector alike. As such, we expect to see sustainable finance scale up in the medium term across the GCC region.”