Breaking Ground, Breaking Barriers – Beyond Policy, to Action

One of the biggest trends in the Kenyan and East African real estate and construction (REC) industry is seen in the significant strides being made towards embracing sustainable building practices, says ALN Kenya partner Nicole Gichuhi.

“You can see it in a lot of campaigns, discussions and even policies that financiers, the government and other agencies are making,” Gichuhi noted. “You’re seeing financiers requiring ESG due diligence before they agree to finance a project, and investors such as institutional buyers insisting on including ESG disclosures and reporting requirements as prerequisites before investing in real estate products in the market. We’re seeing green building initiatives and incentives to adopt green standards.”

Gichuhi, listed by Chambers Global as helping drive growth in real estate and construction practice at the leading East African firm, explained that the “EDGE” (Excellence in Design for Greater Efficiencies) certification which was introduced by the International Finance Corporation to provide a standardised benchmark for green buildings, has become increasingly relevant among Kenyan developers in recent years. The EDGE certification process involves audits during the design phase and after construction to check buildings meet environmental sustainability criteria.

As EDGE is recognised internationally, EDGE certification can differentiate a developer or development in a competitive market. “If a developer obtains the EDGE certification, they can use that to meet green financing requirements and appeal to international or local investors who are prioritising green and sustainable buildings,” said Gichuhi. “It’s not only about stating that one is environmentally conscious, now it’s an active requirement. There is also potential for mutual commercial benefit as green buildings may result in reduced utility costs over the building’s lifecycle. Developers can offer properties that are cheaper to operate in the long run by focusing on energy and water efficiencies.”

Kenya, like many other countries, has set sustainability and carbon reduction targets. By adopting green building practices, developers contribute to national and global goals.

Gichuhi noted there have also been regulatory reforms encouraging developers to reduce their carbon footprint. For example, the regulations under the Kenyan Energy Act require developers to integrate renewable energy sources such as solar water heating.

“We have an outdated building code that is due to be overhauled,” she explained. “The draft of the new building code was circulated in 2022; if passed by Parliament, the new building code will incorporate more green building initiatives, address modern construction practices and promote sustainability, accessibility, and safety concerns.”

In some countries, governments are offering incentives for green-certified/energy-efficient developments such as expedited approval processes, tax benefits or other financial incentives. ALN Kenya is helping a range of clients navigate this fast-changing landscape.

“We provide strategic advice on various aspects of sustainable development, because we’re well-placed to identify these trends,” Gichuhi said. “We help clients work with a futuristic mindset to ensure by the time they’re having conversations with lenders or investors they can demonstrate they have policies in place, are compliant with all regulations, and have engaged or identified any other relevant experts.”

The firm is pursuing recognition as a leader in this field, working with industry and like-minded organisations and advocating for policy changes they would like to see. With the Africa Climate Summit 2023 having been held in Nairobi in September, Gichuhi hopes there will be a more concerted effort by Government to help the real estate sector adopt sustainable practices and green initiatives at a larger scale.

This article was first published by Africa Legal.