The Role of Financial Institutions in Sustainable Building

Tags: built environment (774)

Transforming the built environment into a sector that creates positive impact for people, planet, and the economy does not only require bold and innovative manufacturers, developers, and design professionals. It also needs a broader network of organizations that commit to change. The cooperation of financial institutions, for example, will be vital in enabling the industry to build better. We spoke to Leontien de Waal, senior market analyst, and Jeroen van Muiswinkel, sustainable business developer, of Rabobank to get their insights on the future of circular construction.

Looking at the Wider Context: Building What Is Next
The current discussion on green building in the construction industry largely focuses on improving a building’s energy output, looking at new materials, energy labels, and technical innovation. While the discussion on materials is essential for the construction industry to move to the next level, Leontien and Jeroen stress that it is also important to look at the wider context of a project.

“Before financing any project, we focus on four equally important pillars: the real estate itself, the kind of customer, the social environment, and the actual geographical location of the building. In this way we try to get a feel for the broader picture. What kind of economic activity will we find here 10 years from now? How will this region evolve? When the location isn’t suitable and it will be very costly to upgrade the building, you need to start looking at the circular potential of the building. Is it possible to reuse the majority of the buildings materials, for instance, and create a material passport?”

The reality is that most existing buildings have not been designed for circularity and offer little room for flexibility. Leontien and Jeroen foresee a future where every new building, renovation, or transformation project will be designed with circularity in mind. They believe it will help the future of circular construction domestically, a concept they feel is being held back by the inflexibility of existing buildings and materials in the Netherlands.

Enabling an Environment to Build Better
The current conditions in the construction industry offer little incentive to design, produce, and sell circularity. For instance, there is relatively high taxation on labor, instead of on materials. This holds back innovative design and the use of alternative materials. A solution would be to reform the tax system in such a way that the cost of materials would force built-in durability, reusability, and recyclability.

Another challenge in developing circular business models is the price of virgin versus non-virgin materials. In the concrete industry in the Netherlands, for example, it is still cheaper to purchase sand and gravel from concessions, while theoretically there is a huge amount of secondary building materials that, with some treatment, could be salvaged.

“Unfortunately, the processes to reuse these materials are still quite energy intensive and at this moment costlier than purchasing virgin materials,” they report. “The Dutch Concrete Agreement is a good first step toward more intense cooperation between the concrete value chain and clients demanding concrete solutions. We believe that, for example, minimal requirements for the reused concrete can contribute to a more solid base for innovation and scaling-up.”

Finding Common Ground for Circular Business Models
Leontien and Jeroen believe that Built Positive can play an important role in re-shaping the industry. Its strengths lie in the ability of the initiative to bring people together around a set of shared concepts and mutual language. These assets combined offer a solid base for the development of circular business models.

“Unlike many other initiatives, Built Positive unites all the different actors in the construction and real estate sector. With certification as a starting point, a mutual language for discussing circularity is being developed. In our opinion embracing circularity in the built environment has everything to do with developing sane and profitable business models. Certification and verification lay the foundation for value creation, and value creation is an important building block for sound business cases. It enables a circular discussion based much more on rational grounds than solely on idealistic convictions.”