Many gains, both sustainable and financial, can be made by swapping the traditional way of building, which requires many primary raw materials and produces many CO2 emissions, for more sustainable building variants: circular and nature inclusive. Not surprisingly, there is currently a lot of interest in these new forms of construction, as they help make the Netherlands more sustainable and also boost residential living conditions.

Willy Bulsink, fund manager of Triodos Groenfonds, and Rianne Koster, senior relationship manager Sustainable Real Estate at Triodos Bank, talk about sustainable construction with great enthusiasm. “Building more sustainably is a typical case of a win-win, for people and the world.”

To start with a basic question: what is circular and nature-inclusive building?
Rianne Koster: “Circularly constructed buildings can be taken apart, making the building materials largely reusable. This way of building significantly reduces CO2 emissions.”

Willy Bulsink: “Circular construction also involves choosing a lot of natural materials, such as wood, flax, elephant grass and hemp. Wood is used for construction; the other materials serve mainly for insulation or components such as panels.”

Rianne Koster: “Nature-inclusive building provides space for plants and animals in the immediate vicinity of the building. This increases the wellbeing and health of the residents. People who live in a greener environment are generally happier. In addition, trees close to the façade can provide natural cooling indoors by up to 5 degrees compared to the ambient temperature.”

What is the problem with traditional construction?
Willy Bulsink: “The construction industry still uses a lot of primary raw materials, but we cannot continue indefinitely to extract them. In addition, the use of concrete is energy-intensive, leads to significant CO2 emissions and is relatively time-consuming. Timber construction, on the other hand, stores CO2, takes less time and causes much less inconvenience in dust fall and noise. For these reasons, circular construction, and nature-inclusive construction is the future as far as we are concerned.”

How big is the sustainable gain that can be achieved with circular building?
Rianne Koster: “The real estate market is responsible for more than 30% of CO2 emissions. Bringing that number down would of course be very positive. That means opting for the refitting of vacant real estate, for using as few new materials as possible in new projects and reusing materials wherever possible, and/or opting for re-growable materials, such as wood. Thereby, the added advantage of wood is that it also captures and retains CO2.”

Willy Bulsink: “Wood is much lighter than concrete, so foundations do not have to go as deep. Much can already be pre-produced in the factory. Building faster means being able to rent out faster, which is positive for the cost picture.”

Rianne Koster: “Because circular construction uses far fewer new and non-reusable materials, it also makes far less use of our planet’s raw material reserves.”

Willy Bulsink: “In addition, growing bio-based materials can provide a new earning model for agriculture.”

Is the sustainability of a building measurable?
Rianne Koster: “Yes indeed. The environmental performance of a building has a score, the so-called MPG score. This is the sum of the environmental damage caused by the materials used in a building. Material choice is therefore an important component. For a building permit for new residential buildings, the MPG score must not exceed 0.8. At Triodos, we aim for a maximum of 0.45 for houses. We do find it problematic that timber construction contributes too little to a lower MPG score in the current calculation.”

How do the costs of circular construction compare with traditional construction?
Willy Bulsink: “It is estimated that circular is about 10% more expensive, but as more circular construction is carried out, the price difference will of course decrease. By using prefabricated parts, the construction time is much shorter and the error margins are much smaller. The development of sustainable construction would accelerate if the negative environmental impact of harmful raw materials, such as steel and concrete, were also included in the price, and with the positive environmental impact of circular and nature-inclusive construction subtracted. We are only at the beginning of a new way of building. To give it a push, the government could require more timber construction, for example.”

What are the main developments regarding circular construction in the Netherlands?
Willy Bulsink: “The choice for energy-neutrality by self-generating electricity and using smart technology. There is also more focus on insulation and energy-efficient installations. In addition, more and more circular buildings are made of natural materials. Careful use of water is also becoming more important. Think of using rainwater for cooling, garden irrigation and for flushing the toilet.”

How big can circular construction become?
Rianne Koster: “It is scalable and can become big. But even if only part of Dutch building production were circular and nature-inclusive, it would already have a mega impact on CO2 emissions.”

Willy Bulsink: “Currently, only 4-5% of new construction is circular. It always takes several years until a trend takes off. But here, the consumer also has something to say. If demand for this way of building increases, supply will have to match it.”

Circular construction can help solve the current Dutch housing shortage?
Rianne Koster: “With prefabricated timber construction, you can put a lot down quickly, so yes.”

Willy Bulsink: “The construction phase is shorter and the nitrogen emissions much lower, making it easier to start a construction project. That too is a positive.”

What are the selection criteria to finance construction projects with Triodos Groenfonds money?
Rianne Koster: “Energy performance is leading and the MPG score is important. For us, new buildings must be energy-neutral and, in the case of existing buildings, have at least an A label. Those are basic conditions. In addition, a building must offer an extra sustainable plus. That could be the choice of materials, or refitting a vacant building so that new construction is not necessary.”

Willy Bulsink: “The Dutch government’s Regeling Groenprojecten (Green Projects Regulations) contain various criteria a building must meet. These naturally weigh very heavily for us as well. In addition, we also expect an appropriate return on our investment.”

Specifically, what are examples of sustainable building projects that have now been co-financed by Triodos Groenfonds?
Rianne Koster: “The Cartesius area in Utrecht is a good example. There, a nature-inclusive neighbourhood is being built on a former industrial site. Triodos Groenfonds finances a building with 50 flats. Another example in the portfolio is the circular wood building project MaMa One in Amsterdam. This involves housing in the middle segment. The rent must be affordable. The social component also counts for us.”

How big is sustainable construction in Triodos Groenfonds' portfolio?
Willy Bulsink: “Due to changes in the Green Projects Regulation, it is increasing strongly. From financing sustainable energy projects, we are increasingly moving towards financing sustainable real estate. That also suits us. Ultimately, choosing circular and nature-inclusive construction brings together several of our sustainability ambitions. It helps advance the materials and energy transition, but there is also a social side by opting for projects with affordable rents and the positive contribution this form of construction offers to the wellbeing of residents.”

The Netherlands likes to be a sustainable pioneer. Is the Netherlands ahead with circular and nature-inclusive building?
Riannne Koster: “You can't say that. From tradition, they are much further ahead in the Alpine countries and in Scandinavia. Because of the many forests, timber construction is quite normal there.”

Importantly, besides making an impact, the financial result also matters, of course. What can you say about this?
Willy Bulsink: “With any Triodos Groenfonds financing, impact and return go hand in hand. The financing must be repayable from operations and the return must be in line with the risk. In other words, it must be a healthy project with a healthy return.”