6 Sustainability Trends to have on your Radar for 2021
2020 is finally coming to an end, but are we ready for 2021, these trends are sure to be a big part of the coming new year
This time of year, even in the tragedy that 2020 was, it is traditional to reflect on the past year and attempt to identify what the new year will hold. As we consider what trends will likely dominate 2021, we cannot underestimate the impact of the first truly global event in history. Sure we have had world wars, but there were still corners of the earth that escaped those events. Covid-19 has impacted every nation, even if your family escaped immediate impact, chances are you know of someone who has been impacted to some degree. Regardless of social class, nearly everyone has been impacted.
Yet, if we fail to take real action on climate issues, the disruption we experienced with Covid-19 will be infinitely greater. During the fifth anniversary of the Paris Agreement, UN Secretary-General Antonio Guterres when referring to the importance of reducing emissions by 50% by 2030 stated, “ “If we fail to meet these goals, the disruption to economies, societies, and people caused by COVID-19 will pale in comparison to what the climate crisis holds in store”.
This brings us to our first trend for 2021, which is an increased focus on the impact of emissions. While the impacts of climate change have been forecast for over a decade, they have been repeatedly been met with skepticism and uncertainty by many. What cannot be ignored however is the increasingly visible and frequency of those impacts. Wildfires have raged from continent to continent, including the Amazon, Australia, Siberia, and California. Soaring temperatures continue to melt polar ice and the number of tropical storms forming and making landfall in the United States in one year hit a record high. This New York Times article does a nice job of documenting the impacts of the past year.
While we have experienced loss associated with nature in the past, the increasing frequency is getting the attention of several influential constituents. In July 2020, The European Central Bank (ECB) pointed out the vulnerability of their economy to the catastrophic shocks that are being experienced as a result of the changing climate. In December, the US Federal Reserve signaled its concern as well, joining a global peer group that is addressing climate’s impact on finance. “As we develop our understanding of how best to assess the impact of climate change on the financial system, we look forward to continuing and deepening our discussions with our … colleagues from around the world,” said Federal Reserve Board Chair Jerome H. Powell in a statement.
Central Banks have a tremendous influence on financial markets and economies, both investors and financial institutions take notice when the Central Bank takes notice. From a risk perspective, this impact takes many forms, from actual asset loss impacts to the regulatory risk associated with greenwashing. Investors and financial institutions often use the insurance industry to offset this risk, another influential constituent who is increasingly taking notice of the impacts of climate change. In addition to direct losses impacted by the consequences of a warming planet, these same investors are also increasingly becoming alarmed about the potential of stranded assets in the fossil fuel industry. As technology pushes renewables ahead of coal and eventually natural gas in terms of cost and availability, the demand for fossil fuels declines, and the investments put at risk. No different then the steam engine industry was impacted by the fossil fuel engine industry, as was the horse and buggy industry, we are at the beginning of the next fuel shift.
This shift is the second major trend of 2021, the shift in fuel for motor energy. More simply put, electrification. From the transportation industry to the building industry, as renewable fuels displace combustion fuels, those motors that rely on combustion for energy will experience increased demand for replacement. Perhaps nowhere is this more visible than in transportation and the emergence of the electric vehicle. Despite the pandemic, Forbes recently forecast that global electric-vehicle sales will grow 50% or more next year, while sales of internal combustion engine vehicles are expected to grow 2% to 5%. Adam Jones of Morgan Stanley was quoted in the article as saying, “the year 2021 is shaping up to be a critical year for EV adoption and (internal combustion engine) de-adoption that will dictate the pace of multiple expansion, contraction, consolidation, and proliferation among the stocks.”
While the impact of resilience may seem obvious with the first 2021 trend, the influence of EV sales might not be quite as obvious to Real Estate, at least initially. This influence plays out in the age-old question of buying versus renting your home. Our economy remains in a volatile position, unemployment, business success, and uncertainty over Covid-19 continue to impact purchasing decisions. While interest rates continue to entice buyers, housing supply shortages and financial liquidity erosion pull people towards renting.
The EV impact comes into focus when we take this into combination with the behavior patterns of EV drivers. Not unlike how we treat our cell phones, EV drivers are typically more aware of their vehicle fuel levels than combustion engine drivers. Much like our cell phones, they also like to top off their batteries at night, while they are sleeping. Waking up to a fully charged battery to start the day. While this may be a bit easier in a single-family residence, it poses a potential challenge for an apartment dweller. The majority of multi-family residences lack meaningful EV charging infrastructure. This lack of infrastructure has the potential to limit the resident’s choices on where they will or will not live. With more and more EVs being purchased, this becomes a more significant differentiator for multi-family property owners. In fact, this is playing out now in Los Angeles and Seattle, where the presence of EV Charging Infrastructure is being taken into consideration when defining Class A and Class B properties according to this study by RCLOO and ChargePoint.
That electrification trend is not restricted to transportation, of course, it also impacts building owners in the form of building code changes and utility industry trends to move away from natural gas for heating and cooking. Two blog posts from this past month: Best of Both Worlds and Electrification, ready or not, here it comes, dive into greater detail as to the impact of electrification on the built environment. Coming in at number three for 20021 trends is the electrification of buildings.
Covid-19 has of course brought into the conversation wellness, from handwashing to overall health, a great deal of consumer attention has understandably been focused on individual wellbeing. Even with the beginning of vaccinations, Covid-19 will continue to impact us well into 2021 and with it concern reducing exposure to the virus. Enter our fourth trend for 2021, an increased focus on health and wellness.
Society has transformed into an app-driven culture for much of the world. We hold in our hand access to more data than at any point in our history. From finding a place to eat, figuring out who sings a particular song, or setting and measuring your progress against calorie and activity goals in our hands is a huge amount of data. Within our multi-family buildings, we are seeing technology advance in areas from leasing to lease management, rent payments, service requests, and even controlling features within the individual apartment such as temperature, lighting, and accessing our apartment.
With the comfort that many have to turn to their phone for information, it is likely that if the information they seek is related to safety, health, or wellness that an app is where they will look for this information as well. A continuation of the National Multifamily Housing Council’s 2018 report Disruption, which identified the increasing trend of residents of all ages to turn their attention to a “360 degree” of wellness, looking for a path for over-all wellbeing.
To provide this information to residents, they need data - they need something to measure against. That data comes in the form of sensors, which previously remained primarily in commercial settings. These devices are making their way quickly into residential environments and often center on the measurement of CO2 as an overall indicator of indoor environmental air quality.
The fifth trend is the emergence of the importance of diversity in our organizations. 2020 saw increased attention to several social justice issues, from racial justice to climate justice, the importance of equality moved from a requirement to a benefit. Organizations embraced that providing true equality in the workplace provided better decision making, new and innovative voices begun to be heard. The realization that regardless of race, gender, or disability that we all have talents and our ability to embrace these talents make our organizations stronger.
The final trend I am seeing for 2021 is the rising importance of full visibility into the supply chain, regardless of the organization. Previously manufacturers and distributors began to look more closely at their respective supply chains, however, increased consumer awareness, the availability of information, and perhaps a more skeptical public will force all industries to consider what products they are buying and the potential risk of associating with those suppliers with questionable environmental impacts, social responsibility, and governance reliability. “Consumers are quickly turning their backs on businesses that prioritize dollars and cents over planet and people.” (Forbes, Redefining ‘Normal’: The Top 5 ESG Trends For 2021)
For procurement managers, maintenance directors, and property management professionals this ultimately means developing processes that dig a little deeper into who you are buying from then simply asking the price. From understanding embodied carbon to aligning yourselves with supply partners who share your corporate values and goals, the purchasing of goods and services has to start looking deeper than merely asking how much.
It will be critical to understanding which of your suppliers are measuring and setting goals around their environmental and social impact. Are they holding themselves accountable by measuring against recognized standards? Equally important is to ask them if they are holding their own suppliers accountable as well. This blog post dives deeper into this trend, The #1 Sustainability Program Blind Spot.
Not surprisingly, every single trend revolves around one element, risk. Investors are asking how vulnerable are their investments to the impacts of climate change while central banks are asking how vulnerable are their economies to the same impacts. The transportation industry is eyeing the risk of a collapse of the fossil fuel industry and failure to transform itself to be prepared for the next technology while cities and utilities are making the same assessment around heating and cooking in buildings. Consumers are looking at risks to their personal wellbeing and trying to stay ahead by surrounding themselves with data about their personal environment. Organizations are recognizing the risk of not making the full realization of the talents of their workforces as well as not understanding the exposure they may have if they associate themselves with businesses that have unethical business practices or who neglect to understand the impacts of their products.
We mitigate that risk by working together, seeking advice from others, and together advancing our industry forward more than any one of us could do on our own. If the development of a vaccine for Covid-19 has taught us anything, it is that we can accomplish unimaginable things, at breakneck speed, and for the common good of all, when we set aside our differences and work together for the common good. As sustainability professionals, we must network and share best practices, not only within our own industry but with other industries as well. We are only as strong as our weakest link, and to reduce the negative impacts of climate change it will take all of us.
You can help reduce the impact of the built environment by sharing this blog with your peers. Together we can impact the 39% of greenhouse gasses attributed to the built environment. It starts with awareness and we succeed with teamwork.
Stay well!
Chris Laughman is the author of the ThirtyNine Blog, a blog dedicated to reducing the impact of the built environment. When not blogging, Chris is helping multifamily properties reduce their energy and water impact as a senior account manager at Bright Power. A full-service energy strategy company, Bright Power is a leading provider of energy efficiency, renewable energy, and energy management solutions for the real estate industry. We use our Find-Fix-Follow approach to Find the best opportunities across a real estate portfolio, deploy the Fixes on specific assets, and Follow to ensure long term value, always optimizing for your financial and sustainability goals. Contact me at claughman@brightpower.com for more information.