Minimum Energy Efficiency Standards (MEES) Regulations: How they will impact flexible workspace from April 2018

Scroll down for our MEES Management 10-Point Strategy


What I’m about to write will come as a great shock to many operators in the serviced and managed office industries: you may not be able to sign up clients for more than 6 months as of April next year. This is less than a year away!


Why is the flexible workspace market at risk?

As of April 1 2018 landlords are no longer able to lease out commercial office space in buildings with an F or G EPC rating unless a time-limited exemption applies, which must be registered on an Exemptions Register.

Many serviced and managed office providers thought that they were exempt from this rule as they are not the primary landlord, however this regulation applies to any tenancy agreement over 6 months and this can include sub-leases and agreements sometimes referred to by serviced operators as licenses (we’d recommend that you speak to your solicitors to determine if your “license” really is a license or a lease/tenancy). This creates something of a challenge for the serviced workspace sector. But they are not the only ones who are not aware of the legislation: in a recent survey by Property Week magazine, 32% of all respondents did not know what MEES was and how it would impact their business.

In a recent PropertyWeek survey, 32% of respondents still didn't know what MEES was and how it would impact their business.Click To Tweet

MEES represents a significant risk to companies looking to sub-let space, because they may be treated as a landlord and as a result must undergo the same process of due diligence as the superior landlord.


What about the rest of the market?

Outside of the serviced office sector, occupiers of all types of non-domestic property may struggle to sublet sub-standard space without undertaking improvement work, the benefit of which may ultimately revert to the superior landlord. And while assignments are not captured until 2023, sub-standard properties may become stigmatised by their poor EPC rating making this type of transaction difficult. Indeed, there are already occupiers, such as Government and large corporates that will not lease sub-standard space. As an example, EVORA was recently engaged to develop an EPC improvement strategy by a fund landlord that needed to obtain a C EPC rating to secure a Government department. This requirement for a C rated property goes far beyond the requirements of MEES, highlighting the growing importance of EPCs as a benchmark for predicted energy efficiency.

Landlords with E (or even in some cases D) rated properties may still be at risk because the EPC calculation is dynamic. The calculation methodology is linked to Part L of Building Regulations which deals with the conservation of fuel and power in new properties. Part L, like most of Building Regulations, is updated on a periodic basis and the minimum energy efficiency targets in Part L have to-date been strengthened with each successive iteration. This has impacted the EPC rating, and in particular the changes adopted in 2010 affected EPC ratings from 1 April 2011 onwards (the date on which EPC software was updated). In plain English, what this means is that an E rated property before 1 April 2011 if reassessed today is likely to be an F or G rated asset if nothing in the building has changed. This means that planned preventative maintenance and improvements will need to factor in these regulations.

Landlords beware: even your D or E rated properties may still be at risk from MEES regulations...Click To Tweet

Failure to comply with the regulations will result in fines of between £5,000 and £150,000. The enforcement authority may also impose a publication penalty. This means that the enforcement authority will publish some details of the landlord’s breach on a publicly accessible part of an Exemptions Register.


What actions can you take?

Here is The EVORA 10-point Strategy for Managing MEES (an image version is available at the bottom of this post):

  1. For landlords with multiple assets, such as funds or workspace providers, review how you store your data. This should be digitalised and in a central and accessible location
  2. Identify where there are gaps in the data (missing EPCs etc.) and identify those assets that are at risk by virtue of their (EPC) rating, capital or rental value and/or a lease or transactional event
  3. Consider the use of software such as EVORA’s highly versatile, market-leading platform, SIERA
  4. Use or involve CIBSE (Chartered Institution of Building Services Engineers) accredited assessors, or assessors that work for a recognised and reputable engineering practice – preferably with additional professional qualifications (such as those recognised by the Engineering Council)
  5. Have your professional EPC assessor review the existing certificate for accuracy and relevance
  6. If it is necessary to prepare a new EPC, ask for an indicative (draft) certificate. The assessor may be able to deliver an improved rating by using better quality data and/or by having better knowledge of building services. However, if the asset remains at risk from MEES, then commission a strategy to improve the building to include capital costs, energy savings and, where appropriate, life cycle costs
  7. Review point 6 in the context of the lease(s) and the fund or asset management strategy
  8. Consider ways to recuperate capital costs through energy savings or asset management driven opportunities
  9. Ensure you retain future access to the energy model used to prepare the EPC and utilise it for energy and asset management purposes, including MEES management. After all, you paid for it!
  10. Finally, to ensure that you’re getting the best result from your EPC-driven improvements, review how operational performance can be monitored to determine if the predicted energy savings align with the operational realities. Again, SIERA can assist with this, thanks to its intuitive and easy-to-use monitoring and targeting capabilities
Here is The EVORA 10-point Strategy for Managing MEES Regulations...Click To Tweet

Final Thoughts

This all sounds very onerous, but in fact MEES should be regarded as an opportunity.

For occupiers

MEES is obviously an opportunity to save money through reduced energy bills and resultant CO2 emissions, and energy efficient buildings are more likely to help deliver a productive working environment.

There are also opportunities for occupiers to use MEES to mitigate rental increases after 1 April 2018 as a result of rent reviews and lease renewals. And it may be the case that occupiers can use MEES to reduce or remove any liability towards dilapidations.

For landlords

MEES is a great opportunity to engage with tenants, but if that were not incentive enough – MEES will become increasingly synonymous with building value and building resilience. Improve your EPC rating and you reduce your risk, and this could influence yields and even, in time, headline rents.

Energy savings could provide an opportunity to look at alternative methods of financing, using the value (£) of the energy saved to redeem finance. This could provide a cost-effective method of improving your estate.

Finally, for those looking to buy or sell sub-standard properties, MEES introduces an opportunity to discuss the price!


As CIBSE accredited assessors, we are perfectly positioned to support you with EPCs and MEES compliance. Please don’t hesitate to get in touch.


EVORA MEES 10-Point Strategy

Air Conditioning Inspections: 5 Years on From Mandatory Lodgement

Neil is an air conditioning expert with over 30 years of experience in the sector.


The Energy Performance of Buildings Directive (EPBD) was first adopted in 2002. The recast Directive, adopted in May 2010, replaced the original Directive from 1 February 2012 and was progressively implemented from January 2013.

The Directive required  ‘measures to establish a regular inspection of air conditioning systems of an effective rated output of more than 12 kW’. In the UK, separate legislation was introduced. In England, Wales, Scotland and Northern Ireland, building owners or managers are required to undertake regular (every five years) inspections of air conditioning systems.

The regulations and requirements relating to air conditioning system inspections for England and Wales have now been in place for over six years, and for a slightly shorter period for Northern Ireland and Scotland. The principle guidance for the inspections is contained in CIBSE TM44.

An air conditioning system is defined as ‘a combination of all components required to provide a form of air treatment in which the temperature is controlled, or can be lowered, and includes systems which combine such air treatment with the control of ventilation, humidity and air cleanliness’.

This includes both fixed self contained systems, such as split systems, and centralised systems. Mechanical ventilation systems that provide no mechanical cooling themselves, but serve spaces that are cooled by other means are included. Any components contained in air conditioning systems that are only intended to provide heating are excluded.

Air conditioning systems that provide refrigeration for process applications, such as server rooms, would also require an inspection if that part of the system allows an inspection to be carried out.

EVORA Air Conditioning Inspections Blog Image

The wonderful world of air conditioning inspections!

If the building owner or manager wants to sell or let a building with an air conditioning system, which should have been inspected, then it is very likely that the legal advisors to the prospective tenant or buyer will require sight of the report during the legal processes prior to exchange of contracts. Failure to have a report, where one is required, may have a negative impact on the transaction process.

In England and Wales mandatory lodgement of air conditioning inspection reports on the national database was introduced on the 6th April 2012. Since then, over 55,000 reports have been lodged, and coupled with inspections carried out before mandatory lodgement was introduced we are now seeing a large number of requests for renewal reports alongside requests for sites that are currently non-compliant.

We can now check the national database to confirm if a property has a valid air conditioning inspection and advise on the renewal date.

The challenge for assessors has been to ensure that they identify real energy saving opportunities for building owners and managers.

At EVORA EDGE, we have introduced an enhanced report that goes beyond the requirements of the legislation. Through providing a supplementary report, we are able to provide photographic evidence of issues identified and greater detail around the financial modelling of improvements.


If you require further information about Air Conditioning Inspections, please don’t hesitate to get in touch.

CRC Scrappage: Winners and Losers

Today marks the end of the monitoring period for the third year of Phase 2 of the Carbon Reduction Commitment (CRC): the seventh year the scheme has operated.

That means in two years, CRC Participants will be starting to collate, report and then pay for their relevant emissions for the final time. Understandably, that can’t come soon enough for some.


The CRC started with good intentions under a progressive cap and trade scheme that rewarded those who reduced emissions through ‘recycling’ CRC allowances from those who did not. Before the Scheme took off, however, it was announced in the Spending Review 2010 that CRC allowances would not be recycled to participants in the scheme but instead would be used to support the public finances. Thereby, the CRC became a tax for all intents and purposes.

The CRC will be scrapped in 2019 and from this, it is important to understand who are the winners and losers and what actions should be taken now to mitigate risks for the ‘losers’ and take opportunities for the ‘winners’.

Who are the winners and losers of the CRC scrappage? What are the risks and opportunities?Click To Tweet

A key decision to scrap the scheme was the cost of administration. Back-of-an-envelope maths tells me that the annual £1,290 subsistence fee paid by all 1,869 Participants in 2015/16 equates to an administrative cost of 0.27% of total revenues (£2.4m subsistence fee over £902m revenue through CRC allowance purchases).

For comparison, administrative costs for the Swedish Tax Administration is 0.1 % of total revenues for their carbon tax model.1 The approach used in Sweden (since 1991) will be implemented in the UK to maintain carbon tax revenues once the CRC is scrapped (more on this later).

So the Swedish model appears to cost half as much as the UK CRC model to administer. The true cost, in reality, is far higher once you add in the internal resource time and/or external consultant costs required to administer and meet CRC requirements such as maintaining an Evidence Pack, undertaking an Internal Audit and fulfilling actions to report, order and then surrender CRC allowances. Compared to the £1,290 annual subsistence fee, the true cost to Participants is likely to be three to 15 times higher, dependent on size and complexity, based on our experience. Suddenly, the Swedish models looks much more appealing: it has also contributed to Sweden’s total greenhouse gas emissions falling by 16 percent between 2000 and 2012, while its overall GDP grew by about 30 percent. 2

The CRC is being replaced by an increase in the Climate Change Levy (CCL): a tax on energy delivered to non-domestic users that is charged per kWh usage. Notably, the CCL is applicable to all energy users (with some exemptions), rather than a select group of CRC Participants. Key to the reduction in administrative cost, is the fact that energy users ‘do nothing’ to calculate their tax liability: a value is calculated and inserted as a line item on energy invoices and collected by the energy supplier. This will be a relief for some, however, the benefits of reporting emissions to improve understanding of impact (and costs) should not be forgotten.

From April 2018 to April 2019, the CCL is going to increase 48% in one year to ensure the CRC revenue of about £1bn is maintained for public finances. This increase will add approximately 3% to the ‘typical3’ energy spend of an air-conditioned office (see Table 1 below for estimated values).

CRC Scrappage: Winners and Losers: Blog Image 1

Table 1

At EVORA, we recommend building owners and tenants take action now to mitigate the onset of the tax hike through identifying and implementing energy efficiency measures that will lead to energy reductions.

Take action now to mitigate the onset of the CCL tax hike... Identify and implement energy efficiency measures.Click To Tweet

However, even with a 48% increase in the CCL, existing CRC Participants will see a net benefit through CRC scrappage, with a tax reduction equivalent to a 5.5% of total annual energy spend (see Table 2 below for estimated values).

CRC Scrappage: Winners and Losers: Blog Image 2

Table 2

The tax saving through scrapping the CRC Scheme (for CRC Participants) is notable at asset level and will be even greater when considered across a portfolio for an existing CRC Participant.

These savings present a great opportunity to budget for energy efficiency improvements that may otherwise have been put on hold. I recommend landlords / energy managers hold early dialogue with tenants / finance directors to discuss the savings and identify the economic case for progressing measures that will deliver attractive returns on investment. A number of measures could be considered, from strategic metering  and Monitoring and Targeting programmes (such as SIERA) to energy efficient retrofits  of LED lighting.

Whether you are a winner or a loser from the CRC scrappage / CCL tax hike, the overall message is the same: if you want to reduce your energy spend, the best action you can take is identify, implement and track the impact of energy efficiency measures.

Planning ahead will give you the best chance of success.

Want to reduce your energy spend? Identify, implement and track the impact of energy efficiency measures.Click To Tweet

Don’t leave any compliance matters to chance.
Speak to one of our experts today.


1 Ministry of Finance, Sweden Senior Advisor Susanne Åkerfeldt, 2011
2 Worldbank.org, 2014
3 Typical energy usage calculated from Better Building Partnership Real Estate Environmental Benchmarks (BBP REEB) 2015 for air conditioned offices. Typical energy costs based on BEIS Prices of fuels purchased by non-domestic consumers in the UK, December 2016

Commercial Real Estate Sustainability in 2017: Seven Likely Highlights

I think most will agree that 2016 has been year of surprises and uncertainties in many arenas. In spite of this, we’ve seen some positive moves in many aspects of the world of commercial real estate sustainability and 2017 could shape up to be an equally encouraging one. I wanted to share EVORA’s thoughts on what we think the highlights of the next 12 months could be.


1. EU and US Political Surprises

The question is will the progress of recent years to a greener and more energy efficient real estate sector be halted or even reversed following Britain’s vote to leave the EU and the US electing Trump? However, the reality is that for the next 5-10 years there could be very little regulatory change, certainly in Europe. Let’s not forget the global context; the UK and other members of the EU are all also members of the International Energy Agency (IEA). As such all are committed to implementing IEA guidelines which is a good example of why the UK as a whole, and more specifically the real estate sector, would still be required to act on climate change whether part of the EU or not.

Aside from Brexit we’ve already been anticipating some ‘rationalisation’ of the UK energy legislative landscape i.e. the review of how its main elements work together; Carbon Reduction Commitment (CRC), Climate Change Levy (CCL), the Energy Savings Opportunity Scheme (ESOS) and mandatory GHG reporting etc.

For the time being, companies will still need to comply with existing legislation and instruments such as ESOS (and MEES – see No. 3, below) should surely, at the very least, only promote the business case for investment in energy efficiency rather than hinder it. Although broader economic performance has not been as bad as predicted since the Brexit vote, the continued uncertainty will be stifling company decision making and the sooner the UK government can provide clarity the better.


2. The Health & Wellbeing Agenda

Recent months have been awash with this topic and I would like to think that, despite staff engagement within many organisations still having some way to go, there need be no more debate that addressing health and wellbeing has a demonstrable business case. There are some great case studies coming out of the retail and commercial office sectors but can we expect 2017 to be the year in which there will be more action? EVORA expects the profile to continue to be increased but perhaps firm action (and to a certain extent, interest) could be limited to major developers and larger investment companies. That said, rapid acceleration of relatively inexpensive monitoring technologies should enable ease of access to valuable data (such as indoor air quality) to organisations of all sizes. This could lead to occupiers taking the initiative on health and wellbeing conversations with their landlords. It will also be interesting to follow the uptake of and insights provided by GRESB’s Health & Wellbeing Assessment; 2016 already saw nearly 25% of the entities that reported to the GRESB Real Estate Assessment voluntarily report to the Health & wellbeing module.


3. EPCs

With the 2018 Minimum Energy Efficiency Standards (MEES) deadline looming, we could see potential high profile litigation relating to historically incorrect EPC assessments. With not much more than a year to go, 2017 should see a lot of activity in this space with a push to understand and address EPC risks. This is something EVORA have recognised the need for expertise in having recently launched EVORA EDGE, our technical engineering division.


4. Science Based Targets

Following the first theme regarding the global context to action on climate change, 2016 saw an increase in the commercial real estate sector’s interest in science based targets (SBTs). One of our Junior Consultants, Kim Diep, wrote two blogs on this providing considerations for the real estate sector. EVORA anticipates that SBTs will continue to gain interest amongst the REITs and Institutional Investors that consider themselves at the forefront of carbon reduction target setting. This will no doubt be a topic on the minds of those following the ongoing response to the COP21 outcomes as a means of aligning the carbon reduction strategies for real estate to the requirements of broader climate policy.


5. Increasing Momentum in Voluntary Reporting

2016 saw a 30% increase in the number of participants in GRESB (Global Real Estate Sustainability Benchmark) in two years, with Europe participants alone comprising $750 bn in total asset value. EVORA was certainly kept busy managing the process of more than 40 submissions for our participating clients. Indeed, the uptake of GRESB in the real estate sector is a fairly good barometer of interest. Investors are asking more and more about ESG and GRESB appears to be an increasingly popular means of engaging in the topic with their fund and asset managers. GRESB has recently released the guidance for the 2017 survey; whilst it’s important that participants engage with GRESB to shape the methodologies to ensure scoring is reflective of market conditions, it will be good news to the ears of those involved with administering submissions that the Real Estate Assessment is being kept stable. EVORA expects increased uptake but also even more focus on score improvement.

Stay tuned to our newsletters for information on the release of our upcoming GRESB eBook and our GRESB Masterclass in March.


6. Focus on Data Accuracy

With more and more data being collected and analysed to inform real estate decision making, accuracy is going to be ever more important. We’ve already highlighted this in respect of EPCs but also GRESB as an example where accuracy of information will be key to implementing improvements and where there is a trend increasingly toward the need for investment grade data. These are merely two examples against a background of emerging ‘big data’ trends which are increasingly pertinent in the real estate sector. Our Technical Architect, Alex Graham, blogged about this very topic in 2016; he highlighted how big data will continue to shape our approach to our software SIERA, for example, to enable our clients to get the insights and information they need to improve their sustainability efforts.


7. Continued Fall in Cost of Low Carbon Tech

Despite the recent backtracking from the Government on the fiscal incentives for low carbon technologies, EVORA would argue that the shortfall in policy could be replaced by market forces which seek similar objectives to ensure a low carbon, energy efficient, economically viable and productive real estate sector. Therefore, despite the seemingly persistent barriers, we expect to see a continued uptake and fall in cost of low carbon technologies. Getting the strategic balance between decarbonisation of energy supplies/generation and energy efficiency will continue to be important.


If you have any questions or if you would like more information on any of the topics covered in this blog post, please don’t hesitate to get in touch with our experts today.

Giving Our Clients The EDGE With Our New Technical Engineering Division

I hope you are having a very happy new year, which will also bring you good health and prosperity. It has been three months since my last update bringing the exciting news of our rebrand to EVORA, recognising our own evolution, as well as that of the real estate industry, being transformed by the impact of sustainability.

A lot can happen in three months, as we experienced in 2016 with some pretty groundbreaking changes around the world. So, not to be outdone, we have some pretty groundbreaking news of our own with the launch of EVORA EDGE, our new technical engineering division.

CRE sustainability consultancy, EVORA, launches EVORA EDGE - its new technical engineering division.Click To Tweet

Technical Engineering Solutions for the Built Environment

EVORA EDGE, being an acronym for Energy, Design, Generation and Engineering, further positions EVORA as a leading full service provider to meet the ever-evolving needs of the commercial real estate sector. EVORA EDGE will complement our current energy and M&E consulting provision with a much more comprehensive breadth and depth of engineering solutions.

I am also delighted to announce that Andrew Cooper, an expert in asset and energy management, and Neil Dady, a senior building services engineer, have merged their respective businesses with EVORA to head up EVORA EDGE. Both Andrew and Neil have joined as Directors and bring a wealth of knowledge and practical experience.

Andrew Cooper & Neil Dady join EVORA as Directors of its new technical engineering division, EVORA EDGE.Click To Tweet

EVORA EDGE will not only significantly strengthen our existing technical offering, which includes the delivery of Part L of Building Regulations, energy audits, EPC work and MEES (Minimum Energy Efficiency Standards) compliance, but will also provide us with a wealth of new services, including:

  • Building services specification and management
  • Compliance with the Heat Network (Metering and Billing) Regulations and with CIBSE CP1(Heat Networks: Code of Practice of the UK)
  • Indoor air quality performance auditing (health and wellbeing)
  • Life cycle assessment including embodied carbon

Please click here to see the full list of services delivered by EVORA EDGE.


Andrew Cooper EVORA EDGE Technical Engineering SolutionsAndrew Cooper

Andrew has over 23 years of property experience. He is regarded as an expert in asset and energy management, and has a background in lease advisory. He is a Chartered Institution of Building Services Engineers (CIBSE) Low Carbon Consultant (in Building Design, Building Simulation and Heat Networks), a CIBSE Low Carbon Energy Assessor (to Level 5, the highest level of accreditation possible) and a MEI Chartered Energy Manager. Andrew comments:

“I have worked as an independent consultant and Deloitte LLP sub-consultant since 2008, and I am delighted to be joining EVORA to help set up its new engineering division. EVORA EDGE will both complement and expand upon the existing technical services offered by company.”


Neil Dady EVORA EDGE Technical Engineering SolutionsNeil Dady

Neil has over 25 years Director-level experience in the building services sector, specialising in air conditioning and mechanical services. He has a wealth of experience in delivering energy audits, identifying inefficiencies and optimising energy performance whilst project managing deliverable solutions. Neil comments:

”Having worked with the EVORA team for many years, I am excited to be joining this dynamic business. EVORA EDGE will bridge the gap between design concepts and engineered projects. Our focus will be on practical solutions with measured and managed outcomes.”


Looking Ahead

This continues to be a very exciting time for EVORA. Our mission from the beginning has been to work with our clients to provide practical solutions whilst providing an outstanding level of service.

Our services now extend to:

  • EVORA – expert commercial real estate sustainability consultancy across Europe
  • SIERA – leading sustainability management software for the commercial real estate investment market
  • EVORA EDGE – industry-leading technical engineering solutions for the built environment

EVORA SIERA EVORA EDGE logos together

EVORA - providing practical sustainability solutions and an outstanding level of service to the commercial real estate sector.Click To Tweet

To learn more about any of the services delivered by EVORA EDGE, or to contact Andrew or Neil, please don’t hesitate to get in touch.

New Guidance on Climate Related Disclosure and Reporting

On December 14th 2016 the Financial Stability Board’s Task Force on Climate Related Disclosure published its long-awaited recommendation report. The report sets out recommendations for helping businesses disclose climate-related financial risks and opportunities.


The report states that the impact that global warming can have on economies is widely recognised.  However, at present, it is difficult for investors to know which companies are vulnerable to climate risks.  It is recognised that without financial disclosure, the financial impacts of climate change may not be effectively priced.  Pricing of risk is an essential function of financial markets.  It it is increasingly important to also understand the governance and risk management context in which financial results are achieved.

At present, it is difficult for investors to know which companies are vulnerable to climate risks.Click To Tweet

The Task Force states that non-financial disclosures should be:

  • Adoptable by all organisations
  • Included in financial filings
  • Designed to solicit decision-useful, forward-looking information on financial impacts
  • Strong focus on risks and opportunities related to transition to lower-carbon economy

The Task Force’s recommendations apply to all financial sector organisations including real estate asset managers and owners. Importantly, it is recognised that large asset owners and asset managers sit at the top of the investment chain and, therefore, have an important role to play in influencing the organisations in which they invest to provide better climate-related financial disclosures.

Recommendations are structured into four categories, as summarised below.

Governance

Organisations should disclose their governance approaches covering climate-related risks and opportunities.

Recommended disclosures:

  • The board’s oversight of climate-related risks and opportunities
  • Management’s role in assessing and managing climate-related risks and opportunities
Organisations should disclose their governance approaches covering climate-related risks and opportunities.Click To Tweet

Strategy

Organisations should disclose actual and potential impacts of climate-related risks and opportunities.

Recommended disclosures:

  • Climate related risks and opportunities the organisation has identified over the short, medium, and long term
  • The impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning
  • The potential impact of different scenarios, including a 2°C scenario, on the organisations businesses, strategy, and financial planning (a clear link to the adoption of science based targets)
Organisations should disclose actual and potential impacts of climate-related risks and opportunities.Click To Tweet

Risk Management

Organisations should disclose how they identify, assesses, and manage climate-related risks.

Recommended disclosures:

  • Processes for identifying and assessing climate-related risks
  • Processes for managing climate-related risks
  • Processes for identifying, assessing, and managing climate- related risks are integrated into the organisation’s overall risk management
Organisations should disclose how they identify, assesses, and manage climate-related risk.Click To Tweet

Metrics and Targets

Organisations should disclose how metrics and targets are used to measure and manage risk.

Recommended disclosures:

  • Metrics used to assess climate risk
  • Scope 1, 2 and if appropriate (3) GHG emissions
  • Targets used to manage climate change risks and opportunities
Organisations should disclose how metrics and targets are used to measure and manage risk.Click To Tweet

To underpin these recommendations, the Task Force also sets out seven principles for effective disclosure.

  1. Disclosures should represent relevant information
  2. Disclosures should be specific and complete
  3. Disclosures should be clear, balanced, and understandable
  4. Disclosures should be consistent over time
  5. Disclosures should be comparable among companies within a sector, industry, or portfolio
  6. Disclosures should be reliable, verifiable, and objective
  7. Disclosures should be provided on a timely basis

The Task Force’s recommendations provide a foundation to improve investors’ and others’ ability to appropriately assess and price climate-related risks and opportunities.   They are wide ranging but also practical in the near term allowing the financial industry to develop and grow capability to report within a structured framework.

For information and if you want to get more involved, a public consultation to solicit views on the Task Force’s recommendations is now open until 12 February 2017 and can be accessed here.


EVORA is uniquely positioned to support commercial real estate organisations in the development and reporting of climate risk strategies through to implementation of management plans and collation and analysis of sustainability data using SIERA – our industry leading sustainability management software.

Please do not hesitate to contact us for more information.

EVORA is uniquely positioned to support commercial real estate organisations in the development and reporting of climate risk strategies.Click To Tweet

The Future of Sustainability In The Commercial Real Estate Sector

The Future of Sustainability In The Commercial Real Estate Sector: A Summary of the 7th Annual 40 Percent Symposium


Read this post if:

  • you had wanted to attend the Symposium but were not able to make it
  • you’d like a quick overview of the key points of discussion throughout the day
  • you heard something about the link between frothy beer and the value of data (?!)
  • you’re interested in the feedback of this year’s attendees
  • you’d like to express your interest in attending the next Symposium in April 2018

Introduction

On Thursday 3rd November, approximately 60 senior commercial real estate and sustainability professionals gathered at the Regent Hotel in Berlin for the 7th Annual 40 Percent Symposium.

Founded in 2011 by John Pike, the aim of the Symposium is to create a one-day, high-quality conference which gives delegates a complete overview of current sustainability issues as they affect commercial property both from an investor’s and occupier’s perspective.

joh-pike“To attend a 40 Percent Symposium is to join a committed and thoughtful audience of like-minded property and investment professionals who understand the need to deliver a sustainable future in property. The 2016 Symposium was our most successful event yet.”

John Pike, Founder and Managing Director, The 40 Percent Symposium

After having been held in London in 2015, this year saw the Symposium make a welcome return to Germany, where the event has always been held in high esteem, not least for the fact that it manages to attract attendees from a broader spread of countries.

This year, we were delighted to welcome attendees from more than 7 countries including the UK, Germany, Sweden, Finland, Portugal, The Netherlands and the USA, all eager to network with their peers and share best practices.


Keynote Address

“Let’s pay more attention to the optimisation of existing buildings’ energy performance…”

The day was kicked off by Martin Brühl, Managing Director of Union Investment and RICS Past President 2015/2016. Mr Brühl delivered a catchy keynote address in which he stressed the importance of optimising the energy performance of existing buildings in addition to the weight that is often placed on the credentials of new builds.

Martin Brühl“Today’s 40 Percent Symposium will mark one essential step towards making sustainability our business as usual… Each of us can contribute to that today, embed what we learn from others in our business routine and tell our clients about it. So our work is cut out and we must succeed. This should be an exciting day.”

Martin Brühl, Managing Director, Union Investment


The Outlook for Political Change in the CRE Sector

The first session of the day saw four experts exploring the following topics:

  • European Union carbon dioxide targets and an outlook on the corresponding regulation changes in Europe and Germany.
  • Thoughts on opportunities and challenges of green policy in the commercial real estate sector.
  • Market perspectives on landlord and tenant relationships and legal implications. Examples beyond pure regulation.
  • How to get tenants on board. Launch of a new sustainability survey to get feedback from real estate users.

The audience showed their engagement early on, with several questions to the panel on the social side of sustainability, including the UK’s Modern Slavery Act, on which one of our sustainability consultants, Louise Russell, has written this informative and well-received blog.

Attendees were also particularly keen to hear more about the work that ECE has done across its shopping centres, which includes collaborating with Philips to develop a new lightbulb.


Economics, Opportunities and Risks, from an Investor Perspective

Next up, these four experts delivered engaging presentations on the following topics:

  • The investors’ long-term risk: without green investment, performance improvement is not possible.
  • How does the enhancement of health and wellbeing in the built environment affect value in real estate?
  • How can the GRESB Assessment support the industry to optimise risk/return profiles of real asset investments?
  • Update on market value of green building certified assets in Europe.

The audience was particularly eager to ask as many questions as possible to Dr. Whitney Austin Gray, Executive Director of Research and Innovation at Delos, following her presentation on health and wellbeing. Health and wellbeing is a topic that is gaining ever more interest each week; is it ‘the next sustainability’?

GRESB was also discussed at length during the panel session and the networking breaks, with many attendees asking us about the support we have provided on multiple GRESB submissions through the combination of our consultancy expertise and our sustainability management software, SIERA.

kay-killman“I thoroughly enjoyed the 40 Percent Symposium, especially the well-balanced mix of investors, developers and other organizations.”

Kay Killman, President, German Green Building Association


Best Practice From Across Europe, Focusing on Innovation

The final session of the day, split into two parts, saw these seven speakers present on the following subject matter:

  • 2050 climate goals for apartment buildings built and realised in 2014.
  • Spondability: Sponda’s signature of responsibility, which takes economic, social and environmental aspects into consideration.
  • Creating green value.
  • How data delivers sustainable value.
  • Turning global challenges into business opportunities.
  • The underestimated energy saving potential: premature pump replacement in existing buildings.
  • Harnessing consumer power.

In many ways, this session is what the 40 Symposium is all about – attendees learning about best practices from their peers.

The audience remained highly engaged right up until the close of the final presentation, keen to learn more about everything from water pump replacements to how seriously Sponda, the Finnish real estate investment company, takes CSR measures.

It was also our chance to shine, with our Managing Director, Chris Bennett, delivering a highly entertaining presentation on the value of data to commercial real estate firms. If you’d like to learn more about the relationship between frothy beer and well-managed sustainability data, you’ll have to get in touch! To whet your appetite, you can watch a short clip of Chris’ presentation in the embedded Tweet below.

frank-rader“For my colleagues and I, this was a fantastic event; well organised and with top content. We had many interesting discussions!”

Frank Räder, Head of Customer Training, Grundfos


The 40 Percent Symposium Will Return in April 2018!

We’re delighted with how well this year’s Symposium was received by all attendees. So much so, in fact, that a placeholder date has already been set for the next one in April 2018!

Based on the excellent feedback of attendees saying that they valued being able to get to Berlin very easily and the opportunity to meet colleagues from all over Europe and beyond, the Symposium will once again be held in Berlin.

Here’s what our partner, Dr. Birgit Memminger-Rieve has to say:

birgitmemminger-rieveTo host the 40 Percent Symposium and bring it back to Germany as an international sustainability conference has been a great experience. Very many thanks to John Pike, who moderated the conference with ease and charm and to the EMA Events team that made sure that our schedule was followed with no delays. I’ve talked to a lot of attendees to get their feedback, which I’d like to summarize here.

The Regent Hotel was a great venue and everyone felt at ease during the day, enjoying and discussing versatile and interesting topics with great speakers from various countries. They say they appreciated having this international symposium in Berlin, giving them insight to the actual political framework, current sustainability studies, and best practice experiences. More practical examples would be good to learn about next time. They also emphasized the excellent networking opportunity during the breaks and at the drinks reception in the evening.

All in all, we’re looking forward to the next Symposium in April 2018.”

Dr. Birgit Memminger-Rieve, Managing Partner, ES EnviroSustain – German consultancy partner to EVORA


To register your interest in attending the next 40 Percent Symposium in Berlin in April 2018, click here now.


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Legal Update: Heat Network Regulations

The Department for Business, Energy & Industrial Strategy (BEIS) has confirmed that no regulatory action will be taken for non-compliance with key requirements set out in the Heat Network (Metering and Billing) Regulations 2014; namely, in relation to ‘heat suppliers’ testing whether it is cost-effective to fit heat meters in multi-occupancy buildings, and where appropriate, fitting them by 31 December 2016.  However, it must also be noted that the remaining requirements in the regulations are unaffected (for example in relation to installation of heat meters at newly constructed buildings).

BEIS does, however, intend to launch a public consultation on a new cost effectiveness tool and accompanying regulatory amendments in early 2017.

About the Heat Network Regulations

A heat supplier obligated under the regulations is defined as a person (or organisation) who supplies and charges for the supply of heating, cooling or hot water to a final customer, through either communal heating or a district heating network.

Whoever is supplying the end user with heat is classed as a heat supplier. This includes the supply of heat as part of a package – i.e. through a service contract. The contract does not need to explicitly mention the supply of heat. Shared / multi-let offices and shopping centres where heating and/or chilled water is provided to more than one tenant in a building are identified as obligated examples within the guidance document.

Requirements

Heat suppliers were required to notify the National Measurement Office of the existence of heat networks by 31st December 2015.

In addition to notification, heat suppliers were required to test whether it is cost-effective to fit heat meters in multi-occupancy buildings, and where appropriate, fit them by 31 December 2016.

Regulatory Update

The cost effectiveness tool is currently being revised by the department for Business, Energy and Industrial Strategy (BEIS). Therefore, pending the revision of the tool it is advised that no further assessments should be undertaken.

“The Financial Conduct Authority (FCA) has confirmed that it would not be appropriate for them (the FCA) to impose fines or other disciplinary measures in respect of a breach of the requirement within the heat network (metering and billing) regulations 2014 (as amended), that certain heat suppliers must test whether it is cost-effective to fit heat meters in multi-occupancy buildings, and where appropriate, fit them by 31 December 2016.”

“Furthermore, it is unlikely that the FCA would take other regulatory action (where a heat supplier was separately regulated by the FCA) if the only non-compliance was in relation to the requirement to test for and fit meters where cost effective. As such, it is not considered necessary for a heat supplier to inform the FCA if it has been unable to meet this requirement.”

What next?

Following a planned public consultation, BEIS intend to launch the new cost effectiveness tool and accompanying regulatory amendments later in 2017.

EVORA will be watching updates on regulatory amendments in 2017 and can assist you in maintaining your compliance.

Discover how EVORA can support you with the Heat Network Regulations.Click To Tweet

Questions? Please don’t hesitate to get in touch.


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World Envoys Reach Agreement To Phase Out HFCs

Almost 200 nations reached an agreement in Kigali, Rwanda, last weekend to amend the Montreal Protocol on Substances that Deplete the Ozone Layer and introduce a global phase-out of hydro-fluorocarbon (HFC) refrigerants.

HFCs were introduced to limit damage to the ozone layer and replace refrigerants that have now been phased out – including R22. However, they have much greater levels of global warming potential (GWP).

EVORA: World Envoys Reach Agreement To Phase Out HFCs

Image Source: DW – http://www.dw.com/en/nearly-200-nations-reach-agreement-to-phase-out-hfc-greenhouse-gases/a-36049841

Developed countries are required to cap and phase down HFCs starting in 2019. This international agreement is legally binding and strengthens existing commitments. The UK, for example, had already committed to phase down HFC use by 79% by 2030, starting in 2015. Timetables for developing countries are different.

What does this mean in the UK?

HFC refrigerant gases are used in air conditioning systems. Widely used HFC refrigerants for commercial air conditioning systems include R-410A, R-407C and R-134a. Phase down will largely impact on supply of new equipment, but it is expected that the phase out will be extended to include the supply of new refrigerant for servicing existing equipment.

Timescales are long term, however, EVORA recommends that real estate firms develop a plan to compile a record of landlord-controlled HFC refrigerants used across their portfolios. Firms are advised to also check with their maintenance providers that they are fully compliant with the current F Gas regulations, which require regular refrigerant leak testing and up-to-date records to be kept.


Questions? Please don’t hesitate to get in touch.


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SIERA Sustainability Software: By Numbers [An Infographic]

Leading Sustainability Software for the Real Estate World

SIERA, our proprietary sustainability management software, has, until recently, been an inadvertently well-kept secret. As a result, “This is great, why haven’t I seen it before?” is one of the most common questions we are asked when demoing the software to our commercial real estate prospects.

Well, no longer will SIERA remain a secret!

We are actively demoing the software to multiple businesses with assets across the globe. What’s more, our clients who are already using it are reaping the rewards of having all their environmental data in one secure database, with powerful validation tools ensuring the accuracy and completeness of their data. SIERA has proved particularly popular with regards to its GRESB reporting automation capabilities. Read more about that here.

We have put together the infographic below to provide a visual overview of some of SIERA’s key figures. The numbers are, of course, changing each month as we add more clients’ assets to the system, but at least this provides a bit of a starting point. We’re very proud of SIERA and what it has achieved for our clients so far.

Would you like a demo of SIERA at your convenience?
Please don’t hesitate to get in touch.


Click the image to view it in full size

(You will also be able to save it as a PDF should you wish to.)

siera-by-numbers-infographic-leading-sustainability-software-for-the-real-estate-world


Further SIERA reading:


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