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Kalvis Līcis, SIA “Domuss” technical director
/ 18 Feb, 2022
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How to reduce the carbon footprint of the real estate industry?

Opinion piece

Kalvis Līcis
SIA “Domuss” technical director

How to reduce the carbon footprint of the real estate industry?
Sustainability is a topic everyone may have an opinion on, but not everyone will know what the abbreviation ESG means. However, it is an internationally accepted term for a set of criteria by which a company's or organization's strategy assesses social and environmental factors. ESG – Environmental, social, and governance – is the environment, social responsibility, and corporate governance, a set of strategies that helps reduce negative environmental impact and increase support for society.

ESG is not an assessment of an organisation's financial performance but the environment, nature conservation, company employees and partners, compliance of related policies with good governance principles, and responsible action towards the local and global community as a whole.

Global agreement. Since the signing of the Paris Agreement in 2016, a universal intergovernmental agreement to reduce GHG emissions and ensure that global temperatures do not rise by more than 2°C, almost two hundred countries worldwide have signed on the Latvian government has ratified it. Additionally, the European Green Course, which is binding on Latvia – the country and business – acts as a compass for achieving these goals and sets out more concrete measures and responsibilities to help improve people's well-being, health, and environmental recovery.

As a representative of a real estate developer SIA Domuss, I can share my experience implementing these criteria in practice. In our professional activities, we rely on our parent company NCH Capital Inc. guidelines that have been developed globally and adapted to national operations. In addition, in the industry in which we operate – real estate development – we follow up on ESG factors throughout the investment cycle: from the initial acquisition of real estate, through the planning, development, management, and sales stages, ESG criteria are present and applied not only to our organization but also to business partners and subcontractors.

Sustainability initiatives in real estate often involve people sorting waste and assessing energy-efficient buildings. The real estate sector has one of the highest CO2 footprints, also known as the green or carbon footprint. This sector accounts for around 30% of global greenhouse gas emissions and consumes around 40% of total global energy resources. These include electricity and waste and recycling of surplus waste, consumption of petrol, gas, and water during the construction process, transport, and use of everyday resources, e.g., choosing responsible and less environmentally harmful supply chains.

What should we start with? It starts with defining the real needs of the project, goals, and risks of using the building. Then, it is good practice to calculate the approximate CO2 footprint, find the most sustainable alternatives for technical solutions and building materials, and perform calculations on how to implement everything as efficiently and environmentally friendly as possible, such as digital solution modeling or reverse-engineering selection.

During the development of real estate projects, the implementation of sustainability principles can be started before basic construction work begins; for example, by investing in infrastructure and landscaping planning and construction work as much as possible. The surrounding environment of a project, which is open to the neighborhood residents, will quickly gain positive evaluation and support from those who will see the added value in their daily lives. A green, modern and accessible area is a wonderful environment in which to work and live: well-lit streets and pedestrian paths attract lovers of peaceful or active recreation and contribute to the growth of the project's reputation in the population in general.

A bit about energy efficiency: Class A energy efficiency certificates or advanced LED lighting are no longer a great achievement but necessary in new projects. A well-thought-out dynamic shading system for building windows, which reduces the need to use air conditioners in hot weather and provides a comfortable indoor temperature and protection from sunlight, is the main concern for a greener office environment and lower resource consumption. Ventilation with maximum heat recovery, indoor CO2 meters, and requirements for electricity suppliers to use green energy are just some options in constructing energy-efficient buildings. A one-degree temperature reduction can result in a 5-6% savings in heating bills.

The choice of sustainable building materials cannot be understated. There are building façade materials that have reduced maintenance costs and minimized impact on the environment throughout their lifecycle, from production to installation. Builders can be informed about the ESG requirements, incorporated as part of the contract, with an ongoing audit of each construction step and material selection.

In support of Latvia's efforts to reduce CO2 emissions, we decided several years ago to establish public electric car charging stations as part of the Mežaparks Residence project. One is in the underground parking lot of the office building, and another is in the above-ground parking lot next to the building. In addition, we plan to install two more stations to expand the parking lot and individual wall boxes in the underground residential parking lot. We know that it is the only public location for charging electric cars in Mežaparks so far. Still, we hope for wider support to implement initiatives that are an investment with long-term returns in the interests of society as a whole.

Bury or recycle? It would be worthwhile for real estate developers to consider the need to move from a linear to a circular economy or the longest possible preservation of the value of materials and products that can be recycled and add value to these resources. This would promote public education and support a responsible attitude towards unnecessary and recyclable resources.

Waste sorting options are nothing new: separate bins for glass, paper, plastic, metal, batteries, and household waste appear increasingly in Riga and throughout Latvia. We also see clothing recycle containers, usually for charities who donate reusable clothing and footwear useful to others, such as low-income and struggling families, single mothers, orphanages, and seniors’ homes. In general, such initiatives are welcomed by the residents of the neighborhood.

Responsible choice of partners. Investment in the education of customers, building occupants, tenants, and employees themselves is an important step towards achieving common green goals. An ESG improvement plan with specific environmental and sustainability performance targets can be developed for each real estate project. For example, we can replace light bulbs and continue with more ambitious projects.

In the Mežaparks Residence project, specifically Mežaparks Offices, we plan to introduce “Green Lease” premises lease agreements. This is a new development in the local real estate market. Still, we hope that the industry will quickly adapt to extending ESG criteria to all types of cooperation partners. Homebuyers can also provide detailed guides on sustainability initiatives, raising public awareness on implementing and using green thinking daily.

It is important to realize that the road to a highly sustainable office or housing complex is endless as there are always new ideas and initiatives. Still, the goal - green thinking and energy efficiency as the basic rule of action - is at the heart of everything. ESG is the current trend and the future and a shared responsibility to make our environment and interactions greener, more sustainable, and with greater added value.

About SIA Domuss
DOMUSS is part of the US investment fund group NCH that has operated in the Latvian real estate market since 1995. Projects developed by DOMUSS include single-family homes and office buildings (10+ in Old Town and the center of Riga), the exclusive apartment complex Ģipša fabrika, BREEAM certified apartment building Felicity Apartments, single-home development Nordic Villages, shopping malls (incl. Rīga Plaza), warehouses, and logistics centers.
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