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4 questions for: Karl Resel

© Arthur Michalek

Why is sustainable management so exigent for companies today - and how can it be implemented?

 The urgency simply arises from the dynamics of ecological and social trends. We are moving at breath-taking speed into a plus-3-degrees world. For Vienna, current climate models even suggest that if we carry on with “business as usual”, we will even have a plus of seven degrees by the summer of 2050. To believe that this and other trends such as loss of biodiversity will not have a massive impact on companies is illusory. Past experiences will no longer work in this “other world”. If a company wants to continue to be successful in the future, it is important to work up scenarios, assess the risks and be prepared. The investments we are making today must still yield returns even when the conditions change.

If you are constructing an office building today and want to keep it in your portfolio medium term, you should be prepared for the fact that you will no longer find tenants in 2030 if it is heated using fossil fuels and can only be cooled using massive amounts of energy.

But there are plenty of opportunities in every scenario. Every conversion to a sustainable economic system creates a need or demand, and a company can, very successfully, gain from this.

What is the goal of the EU Taxonomy Regulation and what effects does it have on the real estate industry?

We are living in historical times! Only recently, on April 21, 2021, the first criteria for the EU Taxonomy Regulation were officially set. With this regulation, the EU defines, for the first time, what counts as “sustainable economic activity”.

The production of a zero-emission vehicle is sustainable, but building a car with a fossil-powered drive is not. Steel production is only considered sustainable if it doesn’t exceed a certain CO2 level. Very specific criteria have also been defined for real estate. This is also about thresholds for energy efficiency or water-saving measures. With this, the EU has basically created another sustainability standard for buildings. In the future, listed companies with more than 500 employees will have to report how much turnover and how many investments they make with sustainable economic activities. Banks are also obliged to disclose the percentage of their sustainable financing and to integrate environmental and social aspects into their risk evaluation. Conclusion: The financing of sustainable investments will also be comparatively cheaper in the future.

Which criteria must be met for taxonomy-compliant buildings?

For example, for new buildings the following applies: The primary energy requirement must be 10% better than the national requirements for a "Nearly Zero-Energy Building (NZEB)". This must also be independently verified by an Energy Performance Certificate (EPC). After completion, blower door tests must be carried out as well as tests of the thermal integrity. Investors and tenants must be notified if there are any deviations from the plan whatsoever. There are specific limits for the water consumption of taps and sanitary facilities. During construction, 70% of non-hazardous waste has to be recycled. After construction is completed, tests must be carried out to prove that limits for formaldehyde and carcinogenic emissions are not exceeded. There are other criteria for renovating buildings. Installing charging stations for e-cars is considered a sustainable economic activity. But these are only parts of the regulation. As I said, another standard for sustainable building has been created.

What is something that needs to be watched out for in the transitional phase, until 2024?

Well, there are the brand new taxonomy criteria for the two sectors of climate protection and adaptation to the climate crisis. Taxonomy-compliant sales and investments should swiftly be included as core indicators in every sustainability report. In any construction project, the criteria should be taken into account as soon as possible to see if they can be met. Further criteria for the areas of recycling economy, pollution prevention and nature conservation will follow by the end of the year. In addition, only what meets minimum social standards can be considered “sustainable”.

So there is a lot happening, which is a good thing, due to the urgency that has arisen. We still have a narrow window of opportunity to ensure a quality of life for our children in a healthy environment. So we should start implementing changes right away.

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