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2019 The Year That Was – 2020 Moving Beyond Tomorrow
23 Jan 19 min Read Read by 1667
The start of a new year is a good time for a roundup of how 2019 has panned out in the global arena; and what it means for Mahindra Lifespaces and India’s real estate industry.
Risks That Impact Us
Each year in January, the World Economic Forum shares the most awaited risk report. Over a ten-year horizon, extreme weather and climate-change policy failures are perceived to be the gravest threats. Environment-related risks account for 3 out of 5 risks by likelihood and 4 out of 5 by the impact. However, our planet doesn’t seem to have risen to the challenges, with an ever-increasing focus on short term measures. It is likely that these risks will intensify in magnitude as well as likelihood as emissions continue abated. What does it mean for the real estate sector? Extreme weather events induced by climate change was ranked as the top risk by the World Economic Forum in the Global Risks Report 2019. As we design cities and urban habitats, it is imperative to bear in mind how design considerations will help us mitigate the risks of flooding and water shortage. We also need to be aware of the challenges and risks to our business; and the financial implications of the same. This year, we have mapped our climate risks and its financial implications (page 28-29 of our latest Sustainability Report). Awaiting the Jan 2020 risk report to understand what lies ahead. Apparently in light of bad COP, since talks ended with big polluters (USA, China, Brazil, and India) blocking stronger action, it is anticipated that climate risks will pose a stronger threat to the global economy and businesses. At MLDL our materiality exercise uses the risks and opportunities to identify issues that impact our business and key stakeholders positively and negatively. Closing on the identification of material issues and linking them to goals and targets has been one of the major highlights of 2018-19. The MLDL materiality exercise was recognised as a best practice in the Mahindra group.
Reinforcing Business SDG Commitments
Sustainable Development Goals were launched in 2015 by the United Nations. Early 2019, the World Business Council on Sustainable Development brought great coherence and ease through a series of tools for integrating SDGs into business considerations. As we march into 2020, with only 10 years to achieve the 2030 Agenda for Sustainable Development, there is a greater sense of urgency for achieving the SDGs. A sustainable built environment involves ethical land acquisition; siting as per climate, water risk and seismic risk evaluation; the incorporation of passive and active strategies in building design; integrated planning of mobility with last-mile connectivity; ethical and conscious procurement; and the mitigation of construction phase impacts via low-carbon, green homes. This year Mahindra Lifespace Developers Ltd. (‘MLDL’) has mapped its value chain against the SDGs. We will track our performance against the global SDG framework.
Rising Regulatory Enforcement
2019 saw a series of fines paid by builders for the violation of environmental regulations. In Delhi, 51 construction sites were fined for dust pollution and poor management of construction and demolition waste in October. The fines levied totaled Rs. 2.7 Crores. A builder in Pune was pulled up by the National Green Tribunal (NGT) for not obtaining Environmental Clearance (EC). In yet another case of violation of environmental norms, a builder in Faridabad was fined a penalty of Rs 10 Cr. Five buildings in Kochi were asked to be razed down for violation of Coastal Regulatory Zone rules. Fines and work stoppage due to regulatory non-compliance are becoming increasingly commonplace, thus impacting timelines.
As India undergoes rapid development, the active citizenry has changed the way environmental reporting is happening. Instances of a work stoppage due to noise and dust are more likely with active citizens directly liasoning with regulators and authorities to log complaints. The closure of ETPs and STPs is commonplace wherever norms are not met. It is imperative for the real estate sector to prepare for this enhanced regulatory enforcement. Strengthening our focus on regulatory updates and awareness is key, and taking measures to go beyond compliance creates value for public health and the occupational health of labourers. We reaffirmed our commitment to Integrated Management System which considers ISO 14001(Environment Management System), ISO 45001(Occupational Health and Safety) and ISO 9001 (Quality Management System). Our EHS teams across locations have been appraised of various regulatory risks.
Integrating A Culture Of Safety
Safety is a key pillar of Sustainability. We have made significant improvements in safety by removing hazards and at-risk behaviour and reinforcing staff accountability. In 2019, the focus was on integrating a safety culture into the fabric of the organisation. The year saw increased awareness of the environment, occupational health, and safety through the SOTERIA newsletter and SMS campaign to keep the workforce aware. As part of our “SMARRT initiative (“Safe Methods and Risk Reduction Techniques”), training was conducted across projects, leveraging the expertise of safety specialists. MLDL leverages appreciation and reward as powerful motivational tools, encouraging associates to be inspired to “catch someone doing something right”. MLDL has introduced spot recognition cards as an initiative to encourage workmen to identify unsafe acts and conditions; report near misses, and prioritise working safely. We are looking at taking this to the next level by creating an integrated Inclusive Safety Culture. 2020 will see more focus on occupational health and safety initiatives in our offices.
Quality Focus
2019 was a very challenging year from the Quality perspective. In 2018, our customer satisfaction score was poor and handover snags were at unsustainable levels. A sustained campaign was introduced to invigorate the Quality culture at project sites. Technical training was increased threefold and focus heightened on training which was specific to the activities to be executed at site. The World Quality Month was celebrated in November across all our projects leading to improve awareness of quality requirements and better understand the stakes involved.
The snagging process was streamlined and made more stringent, resulting in the total number of defects reducing by almost 50% at the time of handover. Actions were initiated to improve post possession Customer Satisfaction Scores. We also introduced Quality audits by independent agency CQRA for the first time – these help us benchmark ourselves within the industry. In line with our credo of Sell genuinely, Build responsibly and Deliver on time, we strive to deliver first time right by reinforcing a quality-focused culture across the organization.
Water Stewardship: Too Much Water Or Too Less
Extreme weather events are an unmistakable signature of climate change! 2019 saw a dichotomy with India challenged by water scarcity in certain parts (Tamil Nadu, Karnataka) and flooding in others. The Indian economy was set back in Maharashtra, Assam, and Kerala due to floods. At the same time, 2019 has already seen record-breaking heat for nine consecutive months. According to the World Meteorological Organization, 22 million people were displaced in 2019 due to extreme weather events. Weather events today displace more people than does global conflict! While the loss of life has decreased substantially due to better warning systems, crores of rupees are required for flood relief and the time it takes to get agriculture and businesses back on track is huge. Extreme weather events directly impact agriculture and logistics, which in turn impact availability and result in rising food prices.
Are businesses impacted? Of course! Man-days lost in terms of productivity; work completion delays; increased time and energy required to salvage damage due to excess rain; business continuity impact due to a lack of water and just heat exhaustion are some of the impacts of extreme weather events on the business. To prepare for this challenge, two water CFT’s were constituted at MLDL to help our sector be better prepared for water management during construction and use phases.
1.5 Degree Challenge
Climate change is the biggest threat facing our world right now: a crisis that can’t be dismissed. The impacts of climate change are already visible. Glaciers are shrinking; sea levels are rising; habitats are shifting; and the frequency of droughts, heatwaves, and catastrophic events is increasing.
According to the IPCC Special Report 2018, the world is already 1.2°C warmer as compared to pre-industrial levels. Without immediate and widespread global action, limiting warming to 1.5°C will be very difficult. However, the transformational change required to make this happen must come from multiple directions, be it government, businesses, citizens, or academia and civil society.
Tackling climate change requires ambitious action from the corporate sector. Our science-based target in line with 1.5C pathway proves our commitment to building a sustainable economy, by doing not what is easy but is necessary. Post-development of a comprehensive greenhouse gas inventory, Science-Based Target Initiative (SBTi) approved our targets at one go in November. We are the only Real Estate Companies (MLDL, MWCDL, MWCJL) in India to get targets approved and are among the first 7 companies in the real estate sector (globally) whose targets are in line with 1.5°C. We are leading the way forward for ambitious corporate climate action. In 2020, we will prepare the action plan for achieving carbon neutrality and SBT targets.
Plastics Galore
According to a Central Pollution Control Board estimate, India generates 26000 tons of plastic waste and is the 15th largest plastic producer in the world. Discarded plastic litter scattered carelessly dot our landscapes. This is accompanied by rampant, unchecked garbage burning. 2019 also marked the end of the year-long celebration on Gandhiji’s 150th birth anniversary. Government resolution on the elimination of single-use plastic items intensified with reiterative messages from central and state governments. Eighteen states have banned single-use plastic. MLDL adopted the resolution of banning single-use plastic across its locations pan-India. A single-use plastic ban policy was put in place and communicated to associates across locations. Our sites have eliminated the use of plastic bottles, sachets, plastic cutlery and we are on our way to declare MLDL single-use plastic free in 2020!
Green Buildings
The green building market in India is slated to double by 2022. Increased environmental awareness amongst developers and customers, increasing regulatory push and incentives for customers and developers will see this segment rise steadily. Green building certifications in India are defined by IGBC and GRIHA. Through the adoption of processes and technologies, green building norms help in providing long-term benefits to occupants in terms of lower costs of ownership due to reduced energy and water costs. Intangible benefits are greater wellbeing due to ventilation, improved air quality due to low VOC paints and flooring materials and extensive provisions for waste management and recycling, proximity to mobility options, enable sustainable lifestyles for our customers. Green buildings help reduce energy demand in the use phase and mitigate pollution in the construction phase, thereby closely linked to enabling the creation of CO-utopia – a world where sustainable lifestyles can thrive. We have a 100% green product portfolio and that qualifies us as a green business.
In 2019
- Mahindra Centralis, Pune was pre-certified as a GRIHA 4-star rated project.
- ORIGINS, Chennai became a ‘Platinum’ rated IGBC Green city (and the first project in Tamil Nadu to be certified as a Platinum rated green City).
- Mahindra Luminare in Gurgaon has been upgraded as a Platinum rated Pre-certified IGBC green home.
Mahindra TERI Centre Of Excellence
The Mahindra TERI Centre of Excellence (CoE) has been accredited by the National Accreditation Board for Testing and Calibration Laboratories (NABL), a Constituent Board of Quality Council of India. The material testing and database, visual comfort studies and water management related research work is progressing as planned. Various national level platforms have been leveraged so far to showcase the research work. To learn more, PLEASE visit the website: http://mahindratericoe.com
The Rise Of ESG Investing
Responsible businesses undertake several activities that are beyond compliance in the dimensions of environmental, social and governance (ESG). In order to understand how these activities impact and create value, it is vital to measure them through various ratings (GRESB), rankings (CDP) and disclosures (globally accepted standards such as GRI standards). ESG indicators are not financial indicators but have financial implications in the form of risks and opportunities and help investors understand the performance of a company. Investors are increasingly using these ratings, KPIs, and disclosures to assess the financial sustainability of the organisations in their portfolio. A quarter of all professionally managed investments are part of socially responsible investing. The Taskforce on Climate-Related Financial Disclosures (TCFD) is driving disclosures. The rise of ESG investing globally has been possible with improved disclosures and the use of information technology to mine and unearth ESG issues that may have an implication on the investment portfolio. ESG investing is here to stay – and the good news for corporates is that ESG reporting and initiatives actually have positive correlations with the financial performance of companies. At Mahindra Lifespaces, we are re-evaluating our ESG risks and opportunities; and assessing our activities of value creation for improved ESG performance. Our GRESB ranking improved from 10th to 5th rank and our CDP results are expected in January 2020. Our sustainability report 2019 can be accessed here.
Deeper Engagement: Sustainability Initiatives
Green Army program, the school activation program was launched with the objective of reaching out to ‘One million caring citizens’. The initiative is in its 5th Year and has achieved a significant milestone of reaching over 300 schools, 60,000 kids and 1,20,000 citizens since inception. In 2019 we have made a shift in the Green Army program by kick-starting the Green School Program in 2 schools. We are looking at increasing employee participation in our sustainability initiatives across locations. Providing opportunities for deeper engagement drives meaning into all social projects.
Making Sustainability Personal this year aimed to move from awareness to participation and correlation to work. MSP is a powerful platform for employees to strive to more sustainable lifestyles and in doing so also impact the way resources are conserved at work, socially responsible and inclusive behaviours. By showcasing positive behaviours as green heroes speak their minds, our endeavour has been not only to make sustainability personal but to unmask the complexity from the topic and make it doable by one and all. Deeper engagement is planned in 2020. Personal carbon footprint, single-use plastic campaign, and Operation Raddiwala are a few initiatives that we have started – we’re gearing up for deeper engagement!
2020 Moving Beyond Tomorrow: The Road Ahead
We have a steep climb ahead as we will set out to prepare the 2025 roadmap and align it with our external and group commitments. We will be reaching out to you as we embark on integrating Sustainability into all functions and all aspects of our Credo.
Future trends in 2020 – that will impact the real estate sector:
- Increased customer awareness of sustainable lifestyles – conscious home buying. More developers will market green features and embrace greener portfolio due to policy incentives.
- Increase in Renewable Energy adoption – an opportunity for long-term savings for cities and residents of housing complexes.
- Severity of water challenge will rise in cities – will create opportunities for conservation and rainwater harvesting.
- Increased adoption of EV, shared mobility and improved public transportation will dictate how people move and parking spaces will open up for other uses.
- Increased telecommuting will define how apartments are designed to factor for home offices.
- Waste segregation will be on tech-enabled platforms with an increased focus on composting at the source.
- Circularity will dictate how we live in the sharing economy – this is the all-encompassing trend that will enable the shift from ownership to service-based models for household appliances.
- Focus on local economies through local sourcing – this will be fortified with higher import tariffs. People would want to grow their own food!
- Climate change and associated extreme weather events will have far-reaching impacts including productive time lost, work completion delays, labour welfare and health due to higher temperatures, rise in food prices, increase inflation.
Moving into the new decade, our efforts in aligning to the above trends will dictate how quickly we are able to adapt to a carbon-constrained world of the future, a degrading environment, and potential ecosystem collapse. Our actions will determine the choice between crafting a future that makes sustainability a way of life and business as usual which is leading to ecosystem collapse. We have some way to go, but with the right focus and alignment with our Credo to Sell genuinely, Build responsibly and Deliver on time, we can make take actions that create value for all our stakeholders: Investors, Customers, and Colleagues!
