The increasing popularity of sustainability and workplace wellness is primarily attributed to the unfolding
Environmental and Social Governance Revolution. Riding on the dictates of COVID-19, health and hygiene
protocols now occupy a permanent place in the workplace. The above developments have redefined
investment decisions across the globe.
Isn’t it terrifying to note that natural disasters kill on average 45,000 people per year, globally?
In 2022 alone, the Emergency Event Database recorded 387 natural disasters worldwide, which
affected 185 million individuals and suffered economic losses amounting to US$223.8 billion. The
statistics draw our attention to the realities of climate change and are a call to action for climate
change mitigation and adaptation.
Considering that almost 40% of global carbon gas emissions come from the built environment, we can
no longer underplay the impact of buildings on the environment. For this reason, putting sustainability
principles into practice within social and economic development requires intensive involvement and
participation of the construction, real estate, and finance industries.
Revolutionary technocrats in the built environment have concluded that the design, construction, and
refurbishment of buildings must be aligned with targets in energy efficiency, resource preservation,
climate change, and human health. To achieve the targets mentioned above, the existing design
Strategies, design tools, and construction techniques also require further development. Also, a lot of
Legislative and non-legislative efforts must be made to increase the demand for sustainable buildings. For
a long time, market acceptance, market penetration, and market transformation of sustainable
buildings have been hampered by various obstacles and prejudices, including a high direct
construction cost. This should now be changing because of proof that sustainable buildings have huge
Again, the negative impact of climate change on humanity has given birth to a new crop of global
investors with high social capital, particularly on environmental responsibility issues. The traditional
vicious circle has fast decimated and demand for sustainable buildings is coming up. This positive
development can be fast-tracked by adopting various built environment instruments, including
standards, laws, incentives, penalties, and awareness campaigns.
To strategically align with the fruits of the ESG revolution in the built environment, the valuation
industry needs to offer innovative services that incorporate the value of sustainability. This can be
supported by an accurate data capture on one’s identified sustainability KPIs. The need to wisely
advise property owners and investors on how sustainability can protect and drive the value of their
properties and competitiveness is paramount.
One may ask if there is scope for sustainable valuations on properties owned by Zimbabwean companies.
- So many further questions are triggered, such as whether valuers are ready to undertake
- Are investors basing their investment decisions on sustainable evaluations?
- Do we have sustainable buildings in Zimbabwe?
- Does the market appreciate the concept and spirit behind sustainable valuations?
- And most importantly, are policymakers ready to embrace sustainable evaluations?
To answer some of the questions raised above, it is interesting to note that the ZSE listing regulations
(SI 134 of 2019) prescribe property valuations as mandatory (sections 323 to 330) and, at the same time,
time, and sustainability reporting as well (Sn 399 to 404).
While the two aspects are dealt with in the regulations separately, if brought together, they give
sustainable valuation a home, making it a compliance issue on either sustainable reporting or
valuation reporting. In this context, you cannot fault the policymakers.
Valuations play a critical role in risk management, improving the financial stability of markets and
industries. The advent of new technologies that expedite processes is triggering the valuer’s role to
evolve from an interpreter of historical data to a forecaster of future trends. As we progress,
Appraisers need to be able to understand increasingly complex data and use a wide variety of sources.
The valuation profession is undergoing rapid change in terms of technology, the services provided,
and the role of the valuation professional. Global events such as the Global Financial Crisis (GFC) and
The COVID-19 pandemic has added impetus to the profession’s complexities. On the other hand,
advances in technology, the increasing significance of data science, and high client expectations
continue to place new demands on the property valuation industry.
As we contend with the above innuendos, we remain aware of the fact that Industry standards guide
professionals, their code of ethics, and their practice. The Valuers are guided by the International Valuation Standards, which are their default reference and guide. The standards outline that Valuers cannot lead the market, but must follow market dictates. Further, they should be aware of sustainability features and their implications on property values in the short, medium, and long term. In this regard, the valuers must wait for the clients’ instructions to undertake the sustainable valuation.
Further, the Royal Institute of Chartered Surveyors requires valuers under the RICS Rules of Conduct to
adhere to several professional and social responsibilities, act in the public interest, and take responsibility
for their actions and prevent harm. It provides guidance notes on specific extracts relevant to
sustainability and ESG.
Valuers are expected to have a working knowledge of how sustainability and ESG can impact value.
These may be physical, relate to policy or legislation, or reflect the views and needs of market
participants. In his or her execution of duty, the valuer should be guided by evidence from current
market trends, and may also consider issues such as long-term obsolescence and the risk of an asset. The
capital expenditure required to maintain the asset’s utility could also be an insightful measurement
for the Valuer.
There may be circumstances where valuers have limited knowledge and skills for a particular
valuation, such as providing detailed cost advice or a specialist environmental risk assessment. In such
In these cases, a valuer must reflect these limitations in the terms of the agreement or, as part of the terms, agree to apply additional specialist expert advice. The above confirms the availability of a framework from Global Valuation Authorities, which the local industry conforms to; making Valuers ready to deliver.
It is important to note that Section 73 of our constitution outlines environmental rights, which create
obligations for entities to ensure their operations protect the environment and disclose the nature
and the impact of their operations on the environment. This can be reflected in sustainable valuations.
We all have a responsibility to protect our environment as mandated by our constitution, which is thus
a compliance issue. Sustainable valuations bring out the value created due to efforts in environmental
preservation. A simple example of clean energy generated by sustainability measures such as
Photovoltaics can generate measurable savings or income that can be factored into the valuation.
Further, improvements undertaken to reduce carbon emissions may result in a more economical
operational performance, which impacts the bottom line and ultimately the value.
In summary, sustainable valuation recognizes the manifestation of environmental risk and its impact
on property value over the immediate or long term. Using Maslow’s hierarchy of needs as a yardstick,
sustainable valuations are a necessary service that property owners require, especially for financial
reports purposes, investment decisions, transaction due diligence, and secured lending as it ultimately
contributes not only to effective sustainability reporting but to ESG as well.
Mike Eric Juru is the CEO of Integrated Properties, a sustainability-focused Real Estate Advisory Firm.
He can be contacted at 0773805000, or by email at email@example.com