How can we judge the environmental impact of property development?
‘Sustainable’, ‘green’, ‘eco-friendly’, ‘ethical’: too frequently seen as - and
used as - zeitgeisty buzzwords to allay any discomfort investors may feel
over looking for the next most profitable venture. But anyone with even
half an eye on the news and weather reports can see that environmental
sustainability can not be merely an optional consideration when planning
developments or deciding where to invest – especially when it comes to
real estate, given that almost 40% of carbon emissions are from the built
environment. But in a world with such interconnected systems and
ecologies, how can we predict impacts that may be surprising and far
reaching?
AidData, a research lab at the College of William and Mary, Virginia, has
been developing the technology and resources to do just that. Their team
includes economists, political scientists, geographers, developers,
program evaluators, policy analysts, and communications professionals,
and they work with 21 different countries in Asia, Latin America and
Africa, using data and hard evidence to improve policy and development
outcomes, helping policymakers to move towards the UN’s 17 Sustainable
Development Goals.
Using satellite, household survey, economic, health, and other spatial
data, along with machine learning analysis and super-accurate data on
geographical boundaries, AidData have created various tools to analyse
the impacts of various development programs, and to predict whether
similar programs would work in other locations. Their Geospatial Impact
Evaluation methods enable fast and rigorous analysis of outcomes for
localised development projects, replicating the standards of a randomised
controlled trial. Development agencies and governments are able to very
quickly discover whether some certain infrastructure project, for example
irrigation systems or village road improvement, had the desired effect on
outcomes like infant mortality, poverty, or deforestation. The highly
localised and granular data can also show whether outcomes are uneven
from region to region, allowing more targeted development in future.
Is there a way we can apply the same rigorous impact-analysis to our
small-scale investments that AidData is enabling international
development agencies and world governments to apply to their
investment in aid, infrastructure, health, and other initiatives?
Environmental, Social, and Corporate Governance are becoming ever
more important criteria when analysing an investment’s risks and
opportunities. In many emerging markets such as Malaysia and Indonesia,
the Islamic finance sector is growing more and more influential too, with
its strong alignment to ESG principles. Propeterra is looking at ways to
adapt the Geospatial Impact Evaluation methods created by AidData and apply them to affordable and social housing projects in emerging and
frontier markets. Propeterra-Impact will be part of our data platform and
allow investors to, for example, compare environmental impacts of two
housing proposals, or filter investment opportunities by their ESG
practises.
Investments that are good for the planet and good for society are
increasingly proving to be good for your pocket too. Rather than being
limitation, companies with environmentally and socially conscious
practices tend to be less risky in other ways – see BPs 2010 oil spill or
VW’s emissions scandal that caused billions in loss. In the real estate
sector for example, developments which meet Building Research
Establishment Environmental Assessment Method (BREEAM) standards on
energy and water use, health and wellbeing, pollution, transport,
materials, waste, ecology, and management processes tend to be safer
investments. Research has shown that building sustainably rarely adds
any capital cost to a project, and any costs incurred are usually recouped
through lower upkeep expenses. Furthermore, the buildings that are
created when applying BREEAM standards are simply more desirable
places to live and work, putting a premium on transaction and rental
prices and making a great return for investors.
Propeterra aims to use GIS to help people choose the best locations and
projects to invest in in terms of both financial returns AND social and
environmental concerns, working towards UN Sustainable Development
Goal 11: Make cities and human settlements inclusive, safe, resilient, and
sustainable. We believe that investing in good is a good investment!