Everything we do, or fail to do, will affect the world. The real estate industry is about to make the choice of which part of history they want to belong to. Will the real estate industry remain part of today's degenerate culture and strive for sustainability, or will we transform to a regenerative culture and be leaders in the next Golden Age?
A good ancestor?
Will we be good ancestors? How can I become a good ancestor? Am I capable of sacrifice and transformation to save future generations from the consequences of our current degenerative culture? I asked myself these questions while reading the book 'The Good Ancestor - How to Think Long Term in a Short-Term World', written by Roman Krznaric.
Many countries have already crossed their planetary boundaries, the system that makes life on earth possible (Overshoot Day). On August 9 this year, the UN Intergovernmental Panel on Climate Change (IPCC) published their latest report. This degenerative culture has recently been given code red. Although we are living longer, we are thinking shorter, while the challenges we face call for courageous long-term thinking. How can we make decisions that will benefit us and unborn generations? The Maori say "Kia whakatomuri te hare whakamua" (I walk backwards into the future with my eyes fixed on the past). Do we need to return to the past to create sustainable futures?
Unlimited growth
We live in a degenerate culture; a culture where the mindset of unlimited quantitative growth dominates. A culture that gained momentum during the industrial revolution. This degenerate culture is characterized by valuing only the quantifiable, efficiency is doing things right, informed by mechanism and technology, and fragmented thinking. Moreover, the attitude of profit maximization comes first, everything else (including sustainability) comes second. Overconsumption and production become not the problem, but an integral part of legitimate business models. Degrowth is not a real option. Improvement of the old ways, incremental change and silo thinking dominate in business operations. Running a mythical unicorn is the higher goal of success. A fear-based approach locks companies into a culture that limits true innovation and undermines evolution. And quotes like "Knowledge is power," "Time is money," and "It's a game of numbers" are frequently used.
Real estate companies are part of this degenerate culture based on extracting profits from humanity and nature. Buildings account for some 40% of global energy-related carbon emissions and 50% of all mined materials. The real estate industry's demand for natural resources is accelerating climate change, and inefficient, unhealthy buildings have a negative impact on human health and well-being. Our cities consume huge amounts of resources and are responsible for producing huge amounts of (polluting) waste. Although cities cover about 5% of the world's total land area, they are home to more than half of the world's population. Cities have a huge impact on our climate: they consume more than two-thirds of the world's energy and are responsible for more than 70% of global CO2 emissions.
In addition, the real estate industry also faces social problems such as affordable and available housing, high levels of workplace stress, rapid digitalization, energy transition, fragile supply chains, loss of biodiversity, skills gap, resources scarcity, soil, air, and water pollution, et cetra. Is unlimited growth the way to go?
Losing fitness for purpose
Is the real estate industry applying sustainable development to maintain the current paradigm? Ecologists Fritjof Capra and Pier Luigi Luisi argue that "the great problems of our time - energy, environment, climate change, food security, financial security - cannot be separated. They are systemic problems, meaning that they are all interconnected and interdependent." We know that silo-based monocultures do not benefit life in general. Currently, we "innovate" by solving symptoms and isolated parts with digital technology to hold on to the degenerative real estate culture. Maintaining the current (real estate) economy, consumption, and social system will lead to collapse. Because systems, including planet Earth, are like a human body. It can process and absorb all sorts of things. At some point the body will collapse.
To date, no real estate company has demonstrated an adequate ability to innovate or transform itself. The tendency to protect existing markets and revenues is far greater than the tendency to undermine the existing business model. Meanwhile, market demands are changing, new players - such as Meta, Apple, Google, Tesla, and Amazon - are entering the built environment, and new laws and regulations (such as SFDR and NFRD) are being introduced. The Covid-19 outbreak has accelerated trends and exposed systems that are not future-proof. The impact that the Covid-19 outbreak has had has caused the prevailing societal narrative, including the larger real estate narrative, to become more unstable in many ways. Currently, most real estate companies are losing their fitness for purpose.
Transition period
According to Carlota Perez (British-Venezuelan researcher, lecturer and author), we live in the age of ICT and telecommunications. Each era falls into three parts: the installation period, the inflection or turning point, and the deployment period. The installation period is characterized by creative destruction, new paradigm versus old paradigm, financial capital leads, and bubble creation.
The current installation period of the ICT and telecommunications era is characterized by emerging markets, dot.com & internet mania, and financial failure. The deployment period is characterized by creative destruction, widespread adoption of the new paradigm, and production capital leads. Perez says the coming deployment period will be a sustainable, digital, global knowledge society. A new golden age.
Each Golden Age was facilitated by regulations and policies to expand and ensure social stability. In our current evolution, we are at the turning point from installation to deployment. The transition to a responsible, resilient, regenerative future is not about who has the most profitable business case. It is about creating a thriving future for current and future generations together. Today, we are on the brink: either we can try to perpetuate the old, broken real estate culture, or we can create a new model, one that is suited to the unique challenges of today and (over)tomorrow. Will you invest in a degenerative or regenerative future?
Solution – Code green for a regenerative culture
From sustainability to regeneration is a radical shift in mindset. It is a journey of reconnection. Sustainability strategies (such as SDGs, ESG, Circular Economy) focus primarily on policy, technology, and finance. The change brought about by these strategies is incremental and not transformational. Sustainability is the bridge between degeneration and regeneration and gives time to evolve into transformational innovation. Creating regenerative culture is not a technological, economic, environmental, or social shift. The shift must go hand in hand with an underlying shift in the way we think about ourselves, our relationships with each other, and life as a whole. Regenerative strategies connect policy, technology, finance, health & wellness, compassion & awareness, creativity, play, art, and meaning. The word 'regenerative' means "creating the conditions conducive for life to continually renew itself, to transcend into new forms, and to flourish amidst ever-changing life conditions" (Source: 'Regenerative Leadership - The DNA of life-affirming 21st century organizations').
A regenerative culture is characterized by valuing quality as well as quantity, effectiveness - doing the right thing, informed by a systems view of life, and thinking in patterns and principles. Overconsumption is a serious social problem with serious consequences for humanity. Degrowth is a viable path to a socially just and ecologically healthy society. Climate change is not only a current risk, but also an opportunity to structurally address current critical needs (to slow down is to loot). In a regenerative culture, people's potential is harnessed by seeing change as an inevitable part of life.
In line with regenerative culture, Paul Polman (UN Global Compact board member and former CEO of Unilever) and Andrew Winston have co-authored a book titled "Net positive – How courageous companies thrive by giving more than they take" They define a net positive company as one that "improves the well-being of everyone it affects and at all scales - every product, operation, region and country, and for every stakeholder, including employees, suppliers, communities, customers, and even future generations and the planet itself."
There are several inspired urban and real estate developments making the transition to regeneration, such as Mondragon (Spain), Curitiba (Brazil), El Hierro (Spain), The Eden project (UK), Eastgate Center (Zimbabwe), Green Belt movement (Kenya). Companies that have regeneration in their DNA, transforming and/or serving as examples for parts of a regenerative business are Patagonia (outdoor fashion retailer), Interface (carpet manufacturer in the US), Tony Chocolony (chocolate retailer), Lush (cosmetics retailer), Houdini clothing (fashion retailer), Buurtzorg (healthcare organization), Triodos bank (bank), Ørsted (energy company), North star (housing association). These are just a few examples of a growing movement.
Thriving together for Good
As the 13th-century German theologian Meister Eckhart noted, "The price of doing nothing is much higher than the price of making a mistake." A degenerative future will cost the real estate industry dearly. But the cost can be significantly reduced if a company puts regeneration at its core, rather than a botched CSR initiative. The world's greatest social challenges can be solved by real estate companies. The real estate business can live well by doing good. By unlocking people's potential, we can empower the global business community to take actions that are better for the world, good for business and life-changing for people.
Real estate companies can reinvent themselves to become fit for purpose. It takes courage to reinvent your organization and ask questions such as "How can we create a future-proof environment and value model that is good for all stakeholders, including planet earth?" If we want to become good ancestors, now is the time to restore our imagination and reach out and act. The need for change in the way we interact with our planet, and in how we live, work and play has never been greater in the real estate industry. PropTech for Good was founded to accelerate this ‘for Good’ movement around the world. United by a common goal of unlocking human potential and finding solutions to the world's most pressing challenges, we explore ways to create responsible, resilient, and regenerative environments.
Courage and imagination
The real estate industry is on the brink of a profound transformation. Everything we do, or fail to do, will affect the world we create together. Our greatest opportunity is to look beyond what has always been done and create a world in which we can all prosper. The transition from a degenerative to a regenerative system is the greatest challenge since mankind. This transition will not always be smooth because existing conventions block or even intentionally impede the path that must be taken.
Yet we will be able to make this movement with all current and unborn generations. It is our higher purpose for the future for liveability on planet Earth. Today's real estate companies have a unique opportunity to renew themselves and reshape the built environment. The next Golden Age can be led by a regenerative real estate industry for which the seed is planted today. To thrive today and tomorrow, companies must, at a minimum, contribute to the Global Goals with a regenerative mindset. We can do it. We can be a good ancestor, but it will take courage and imagination.
Author:
Menno Lammers
PropTech for Good alliance
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