How green buildings support India’s ESG goals and targets?

Like other countries, India has undergone a paradigm shift when it comes to sustainability, with Environmental, Social, and Governance (ESG) objectives forming the centrepiece of the ecosystem. While ESG was looked at mostly through the lens of regulation, it has now become the crux of overarching strategies not just in the business landscape but also from the perspective of India’s economic and developmental growth.

India’s market regulator, Securities and Exchange Board of India had launched the Business Responsibility Report (BRR) for top 100 listed companies in 2012 and extended it to the top 500 listed companies in 2015.

In 2021, the BRR was replaced by the Business Responsibility and Sustainability Report (BRSR) that mandated ESG disclosures to be communicated by the top 1,000 listed companies based on their market capitalization. After this, more businesses have become aware of their responsibilities whether it is about environmental protection or the health and well-being of employees.

Meanwhile, the ‘E’ in ESG symbolises environment, highlighting the need to reduce environmental impact. This is where green buildings step into picture. These structures are built keeping in mind ecologically friendly practices. Besides, such buildings also help in offsetting carbon emissions and support water and energy conservations.

As India embarks on a journey of sustainable development, it is the need of the hour to incorporate more green buildings not just to nurture the environment, but also to reflect the country’s commitment to ESG significance.

Impact of green buildings

Not many are aware that these buildings can have a lasting impact on people and the planet. According to the Energy Statistics India report, there are a few industries that consume more energy than others — iron and steel account for 15.29% of industrial energy usage, while chemicals and petrochemicals (5.36%), and construction (2.09%).

Constructing green buildings is one of the key steps that can have a multi-fold impact, ensuring environmental protection and economic growth. It can be achieved by ensuring that eco-friendly architectural approaches are adopted as part of various building phases, ranging from initial design to renovation, and reconstruction.

Statistics highlight that construction of buildings account for 40% of the world’s energy consumption. Fortunately, with green buildings, lower energy consumption is one of its prominent markers. As these buildings are designed with energy-efficiency, it not only helps with decreased consumption of energy but also lowers operational expenses.

In a nutshell, green buildings can work well on various counts — apart from offering environmental sustainability, these structures also help with efficient use of water resources.

Green buildings from an economic lens

There is often a misconception that green buildings will not reap profits but that’s far from true. For starters, they bring down the long-term costs considerably even if the construction of the building in its initial phases is capital-intensive. They yield substantial savings over their operational lifespan — this is perfectly aligned with and reinforces India’s commitment towards sustainable economic development.

Green buildings are also considered as a lucrative option for investors and tenants as they offer long-term gains. These are in sync with India’s strategic goal of promoting sustainable investments to support its economic growth trajectory.

Government support and policy landscape

India’s sustained commitment towards construction of ecologically friendly buildings is clearly visible through its policy framework for green building practices. There are a set of guidelines that have been mandated by the government for the construction and development sectors. These are holistic in approach, covering everything from environmental concerns to responsible governance.

One of the most prominent examples is the widespread adoption of the Leadership in Energy and Environmental Design (LEED) certification system that has been designed by the US Green Building Council. This certification has been embraced by developers and business organizations alike, much in line with India’s resolve to foster environmentally conscious construction and development.

Leading by example, some of the most prominent buildings in the country including the T3 at Delhi’s Indira Gandhi International Airport has secured a LEED certification.

Going forward, it is a good idea to weave in green building standards into national policies. A case study here is the National Building Code of India that has been updated to include provisions for green building construction.

When India embarked on the Smart Cities Mission in 2015, striving to establish 100 smart cities across the country, the vision was clear to prioritize sustainable urbanization. Once again, a holistic approach was adopted — where technology, infrastructure, and governance were integrated in equal measure. In fact, all the green building principles apply here, from optimized energy consumption to efficient waste management.

Another much-talked-about initiative, the Pradhan Mantri Awas Yojana (PMAY) that was launched in 2015 to provide affordable housing to all citizens encourages the construction of energy-efficient and sustainable housing. By incorporating green building principles, PMAY contributes not only to curbing energy usage but also promoting sustainable urban living.

Creating impact

The widespread adoption of green building practices and certifications, as well as the seamless integration of sustainable design principles into national policies aligns well with the environmental pillar of ESG. Through some effective measures around sustainable construction, India’s policy framework can rightfully navigate the damaging consequences of urban development.

Embassy REIT, a leading Indian real estate investment trust has incorporated an ESG approach to ensure that its sustainability efforts have a positive outcome. By taking these steps, it has turned around its case. Today, it has a LEED Platinum certification for all 77 operational buildings that covers 33.4 Mn square feet. This is spread across 12 office parks in Bangalore, Mumbai, Pune, and NCR.

Moreover, with sustainability being the centrepiece of its operations, Embassy REIT is on a mission to achieve 100% USGBC certification across its entire portfolio by FY2023.

Additionally, the company has launched a ’75/25 Renewable’ program, targeting at least 75% of electricity consumption from renewable sources by FY2025. In FY2023, 52% of its energy consumption came from renewables; it has also installed electric vehicle charging points while embracing electric vehicles for internal transportation within its properties.

Another example is that of DLF, a player in India’s real estate sector for over 75 years. Most of its developments incorporate green building standards, thereby focusing on energy-efficiency.

In its rental portfolio, approximately 39 Mn square feet is LEED Platinum certified. It has also secured the LEED Zero Water certification across its portfolio including retail malls from the US Green Building Council (USGBC). DLF The Crest is the largest residential project in the world to be awarded with Platinum Certification under LEED v4.1 O+M: Existing Buildings.

Another example is Mindspace REIT. As part of the ‘K Raheja Corp Group’, a pioneer in the Indian real estate’s green transition, Mindspace REIT has prioritized eco-friendly construction. By March 31, 2023, an impressive 97% of its operational area held green certifications (LEED Platinum or Gold). This is visible in 54 operational buildings that have LEED certifications.

These examples have a key takeaway — with the greater adoption of green building practices, India’s goal of an ESG-conscious ecosystem is not too far, if all stakeholders in the construction space make their individual contributions. As they say, every drop counts.

(The author is managing director, Southeast Asia, and Middle East, GBCI, India.)