Construction Value Chain Consultations Workshop 2: Follow the investments: How financing shapes the Construction value chain

Published on December 2, 2021

This workshop was the second of the 3 consultative workshops and comprised of representatives from private companies, civil society, governments, scientific and technical organisations, and the United Nations and other intergovernmental organisations.

Click here to see the workshop report.

Initiatives

A number of best practices and initiatives were shared during the workshop regarding the role of financing in the construction value chain and the influence it has on various stages of the value chain. These included:

Green Growth Knowledge Partnership – Net Zero and Investment Horizons in Real Estate

The Green Growth Knowledge Partnership (GGKP) is a global community of policy, business, and finance professionals and organisations committed to collaboratively generating, managing, and sharing knowledge on the transition to an inclusive green economy. Investors are able to set KPIs and business models to ensure real estate development companies incorprate green building measures into the planning process.

The GGKP's three knowledge platforms - the Green Policy Platform, Green Industry Platform, and Green Finance Platform – offer quick and easy access to the latest research, case studies, guidance, and tools to empower policy makers and advisors, small and medium-sized enterprises (SMEs), and banks, insurance, and investment firms to make evidence-based decisions about how to green their operations and building components. Webinars, courses, and academic programmes are also featured on the platforms to facilitate ongoing learning and capacity building for green growth professionals. Users can browse knowledge and learning by 193 countries, 6 regions, and 49 sectors and themes.

In 2021, the Green Growth Knowledge Partnership (GGKP) launched the Green Forum, an online community space for professionals to share and discuss insights in the pursuit of a sustainable economic transition and green building requirements.
 
Bankers without Boundaries – Role of Financing to Shape Incentives in the Construction Value Chain

Bankers Without Boundaries (‘BwB’) is a not-for-profit organization powered by former investment bankers to assist high impact projects that benefit the environment and social good. BwB works with governments, institutions, cities and foundations to provide advisory and research services to mobilize capital.

BwB applies financial concepts and structuring expertise to projects to align them with the investment needs of capital markets, considering risk reduction, the scaling and generation of financial returns, alongside broader positive co-benefits and impacts. Its focus is to garner public and private institutional support for projects, enabling public funding to sufficiently leverage private capital to generate requisite scalability.

Through environmental tax reforms, including a green tax shift and subsidy reforms, BwB suggests increasing taxes on activities harmful to the environment and using the revenues to reducing taxes on activities not harmful to the environment depending on the national circumstances. The construction chain has the potential to use economic instruments such as primary resource taxes, preferential tax rates for companies’ resource management efforts, and return-benefits for reused and recycled materials.   

Forum Ökologisch-Soziale Marktwirtschaft – How incentives from carbon, energy and primary material taxes can influence the construction value chain

Forum Ökologisch-Soziale Marktwirtschaft (FÖS), internationally known as Green Budget Germany, is a politically independent think tank and environmental organisation, a network of experts and a policy consultant advocating for a continuous ecological financial reform that improves viability towards an ecological future and a strong sustainable economy. The Forum acts as a catalyst for decision-makers and multipliers as well as a consensus-maker, it carries out research projects, develops concrete concepts and introduces them into the debates on modern environmental policy through conferences, background discussions and contributions.
 The Forum is encouraging the implementation of economic instruments that would stimulate innovation and encourage the transition to a sustainable economy. It advocates for the implementation of an environmental tax reform which would tax polluters instead of the general public and future generations.

International Finance Corporation – The Investment Case for Green Buildings

The International Finance Corporation (IFC) is the largest global development institution focused on the private sector in developing countries. The IFC is a member of the World Bank Group, advances economic development and improves the lives of people by encouraging the growth of the private sector in developing countries. It achieves this by creating new markets, mobilizing other investors, and sharing expertise.

IFC’s offer for green buildings follows three components: investment, advice, and market creation. Investment comes from long-term loans, warehousing facilities, risk finance, and green bonds; advice from support in identifying investment pipelines, market intelligence, and a green mortgage toolkit; and market creation from global and local marketing campaigns, stakeholder education, and promotion of incentives without the use of greenwashing.

Overall, green buildings are an estimated $24.7 trillion investment opportunity between 2018 and 2030 in emerging market cities, particularly those in East Asia, Latin America, and the Caribbean. This is a result of the major increase in building construction over the next few decades and the opportunity to ensure that these buildings are green.
 
Tamil Nadu Shelter Fund – Sustainable Housing through Financial Interventions

Tamil Nadu Shelter Fund (TNSF) invests in sustainable and affordable housing and/or in-situ livelihood infrastructure, and by doing so emancipates vulnerable people and economically weaker sections. It aims to create social impact by reducing the environmental footprint of beneficiaries, improving living conditions and livelihood.

TNSF is a unique platform for various types of investors (sovereign wealth funds, banks and financial institutions, impact investors, philanthropic foundations, family offices etc) to help increase the supply of affordable housing while potentially receiving positive tax benefits and risk-adjusted returns.

TNSF’s financing ensures that buildings and construction projects are sustainable through detailed environmental management plans, green certification, rainwater harvesting, renewable energy, and other environmentally friendly aspects to the design plan.

Building and Construction Authority (Singapore) – Singapore Green Building Masterplan

The Building and Construction Authority (BCA) champions the development and transformation of the built environment sector, in order to improve Singapore’s living environment. BCA oversees areas such as safety, quality, inclusiveness, sustainability, and productivity, all of which, together with our stakeholders and partners, help to achieve our mission to transform the Built Environment sector and shape a livable and smart built environment for Singapore.

BCA has developed a Green Finance Action Plan to support a sustainable Singapore and facilitate Asia’s transition to a sustainable future. The Green Finance Industry Taskforce (GFIT) comprising financial institutions, academia, ancillary service providers, and NGOs developed four key industry initiatives to accelerate Green Finance. These initiatives are to develop taxonomy, improve disclosure, enhance environmental risk management, and drive green finance solutions.