Funding net zero is a significant challenge, and adapting our built environment to the impact of climate change comes at a cost – both human and financial. How can the public and private sectors work together to manage these costs? Just as critically, how can we make sure that the benefits and burdens of funding net zero are spread equally amongst all communities?
In the second webinar of our Achieving Net Zero Digital Conference Week, we reflected on how we’re going to pay for our net zero ambitions, but also what the cost of inaction is. This is a summary of some of the key themes and practical examples that emerged from our panel discussions and audience Q&A, but you can watch the video to get all the insights.
Funding net zero: the opportunities and the challenges
We kicked off the afternoon with lessons from California, which is already feeling the financial impact of climatic events. Feliz Ventura, Director of Sustainable Economics and Urban Solutions US Regional Director at Hatch, explained the integrated approach taken by the state of California has worked well. This approach addresses climate risks, alongside economic and social risks, and has generated several innovative policies. Whilst there’s lots of best practice from California, challenges remain, such as the structural constraints around taxation that make it difficult to raise money.
Malcolm Hanna, Sustainability Manager Real Assets at Legal and General Investment Management (LGIM), gave a view from the commercial property sector, sharing the pro-active steps LGIM has taken to push forward the net zero agenda. These include issuing net zero briefs and guidance for both new developments and refurbishments, launching pilot projects to test risks and costs, and creating a reporting platform for monitoring and targeting the data they need.
However, financing climate action is about much more than money; it’s also about capacity building, collaboration and creativity. Laetitia Pancrazi, a consultant at Useful Projects outlined six enablers that will help local authorities deliver on their climate pledges and shared a number of quick-wins that councils can do now. For example, making sure there are in-house designers with knowledge of passive design, and co-designing policies and initiatives with the wider community.
Bevan Jones, Senior Manager for Climate Change at Santander, warned that focusing on the cost of achieving net zero risks overlooking the cost of adapting to climate change. Just as in California, the UK’s built environment is already experiencing the impacts of heat waves and flooding – and this will intensify in the coming years. Both the financial and human costs of these climate events need to be factored into the funding strategies put in place to achieve net zero.
Housing association Poplar HARCA is just at the beginning of its net zero journey. Felicity Scott, Poplar HARCA’s Accents Project Producer, described the challenges it’s facing, including funding retrofitting and balancing the sustainability agenda with other priorities, such as building more affordable homes. However, Poplar HARCA is capitalising on funding for tackling other issues, such as air quality, and working on embedding sustainability into the everyday practices of both the community and the organisation.
Making sure that no community is left behind
With a strong resident base, Poplar HARCA is keen to embed their net zero goals within the community – particularly as they embark on resident-led estate regeneration. But the area of Poplar is also home to high levels of deprivation so it’s critical to make sure that the burdens – and benefits – are shared by all.
Involving communities in deciding where funding will have most impact, through participatory grantmaking for example, is one of the ways to address social justice in the debates about funding net zero. On a much broader scale, traditional economic models will also have to change; alternative models, such as community-home insurance, which take into account vulnerability to climate change will need to be considered.
Several panellists also stressed the value of ‘whole systems’ thinking for developing a holistic response to the climate emergency, addressing environmental, economic and social issues and inequalities together. This means finding ways of measuring the additional benefits of environmental policies and interventions, such as the reduction of fuel poverty and the impact on health and well-being. Measuring carbon reduction alone is too simplistic.
Paying for net zero post-Covid
Although the long-term impact of Covid-19 on funding is still unknown for many organisations, it’s clearly going to have an impact on the revenues available for net zero. However, it has also made tackling issues like fuel poverty and access to green space even more of a priority. With more people spending more time at home, for example, the need for more energy efficient homes is more pressing than ever.
Yet there are still reasons to be optimistic. The pandemic is forcing built environment professionals to reflect on our priorities and find more efficient ways of delivering multi-benefit projects that tackle not only climate risks but also social and equity challenges. Not least because of the social and ethnic inequalities that Covid-19 has further exposed.
There’s currently a lot of momentum around disclosing climate risk but much less about the costs and benefits of environmental investments. This is the information that built environment practitioners really need to justify dedicating funding to net zero schemes and initiatives.
Collaborating across sectors
All our panellists agreed that the net zero funding challenge is an opportunity for the public and private sectors to collaborate. A current model that works quite well is when the private sector invests in demonstrator projects, like zero carbon homes, that the public sector can then use to innovate and deliver at economies of scale, over the long term. The West Midlands combined authority, for example, has adopted lessons learned from private-sector schemes to create more standardised delivery models.
Sharing knowledge across the entire supply chain, and making sure there’s equitable sharing of data, is key. Setting principles, targets and frameworks for your organisation’s supply change will encourage innovation and improve quality. This is particularly important because the supply chain within low-carbon solutions is still quite immature.
There were also calls for not only more government funding but also more legislation and higher targets, especially around energy efficiency and design standards for residential homes. More cohesive regulatory standards will give everyone, across all sectors, a much clearer and stronger mandate for delivering the net zero ambition.
Our first Achieving Net Zero Digital Conference webinar Climate Change Needs Behaviour Change also explored the importance of highlighting the co-benefits and engaging with the whole community on these issues. Watch the video here.