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Addressing Environmental Risk in Shopping Centres

Environmental impact is not the first thing that comes to mind when we pop down to the local shopping centre. However, going behind the scenes offers a very different viewpoint.

Many impacts need to be considered and managed including energy and water usage, waste management, potential water discharges (think car washes), noise, air conditioning, climate change resilience, flood risk, EPCs and Minimum Energy Efficiency Standard (MEES) obligations. I could go on and I haven’t even mentioned social, economic or health and wellbeing factors also at play. Left unmanaged, these issues can cause harm to the environment, waste money and even impact on asset values. This blog explores the benefits of implementing an Environmental Management System (EMS) to a shopping centre.

To provide a bit of background, I have worked at EVORA for 18 months now.  My role is varied and late last year I successfully completed my first ISO 14001 EMS implementation project. I thought I had better get my ideas down and quickly.


Proactive

Environmental issues are regularly dealt with on an ad hoc basis. Understanding risks and legal requirements is key in mitigating potential incidents and pollution events – otherwise they may only be identified after an incident has occurred. An EMS provides a proactive approach to managing risks as it provides a mechanism and structure to identify, understand and manage the site-specific issues appropriately.

As an example, a site I visited recently benefited from an interceptor, however, it had not been inspected for several years (due to access issues) and maintenance records did not exist. As a result, if there had been a significant spillage, the interceptor may have failed and resulted in a pollution event occurring in the local environment. An EMS, if implemented and used correctly, identifies risk, potential legal requirements and, in this case, would have ensured a regime of maintenance was implemented and sustained.

It could be argued that such an approach can be developed without an EMS – true – but in this case it was not.  Our project used EMS implementation to address this issue.


Legal Compliance

The environmental regulatory landscape can be a minefield for those unfamiliar with the subject. This can result in difficulties in maintaining legal compliance (you cannot comply with legislation if you don’t know what you have to do). Having worked for EVORA for the past 18 months, I have spent a lot of my time building up an understanding of the nuances and intricacies of environmental legislation.  Spoiler alert – it is never as straightforward as it seems! There are many different areas of environmental legislation applicable to shopping centres (and the wider arena of properties in general).

Examples include:

  • Ensuring that waste is stored correctly and disposed of appropriately, if treated on-site, waste exemptions must be considered
  • Maintaining the availability of accurate waste documentation
  • Ensuring EPCs are in place where applicable and compliant with MEES requirements
  • Arranging boiler servicing and F-gas leak testing to be undertaken in line with defined timescales by appropriately competent people
  • Maintaining the integrity of on-site fuel storage and associated systems such as interceptors
  • Bird control (one of the shopping centres we support has a significant seagull issue!)

An EMS can help ensure legislative requirements are understood and implemented.


 A Structured Approach

At first glance it can be difficult to understand the widespread benefits of an EMS. On my first EMS project I asked the question ‘Why are they were pushing ahead with ISO14001?’

On reflection, I think there are multiple reasons:

  • Structured control of environmental risks
  • Identification of improvement opportunities that reduce operating costs (energy savings)
  • Ability to demonstrate environmental credentials to the outside world.

An EMS provides a defined methodology for risk management. It can be implemented on a single site or across an entire business. Furthermore it can integrate with other systems (think health and safety or quality). The setting of objectives helps to manage risks (i.e. energy use) and improve performance often resulting in reduced costs. Progress is monitored in order to determine if objectives are on course to be achieved. This all drives continual improvement, which in turn ensures shopping centres with effective environmental management systems become more resilient to environmental risk and helps in future proofing the asset.


To Certify or Not to Certify

ISO 14001 is the international standard for environmental management. An EMS can be certified against this standard. This is not essential, however, it can be useful for an external party to certify the EMS as it can provide a fresh pair of eyes and helps to confirm that the system is working effectively. A certified ISO:14001 EMS provides external proof and strengthens reputation, provides good publicity for the business, improves GRESB scoring (where relevant) and is often perceived favourably by tenants.

Environmental Management Systems – Worth Far More than the paper they are written on!

If you want to find out more about Environmental Management Systems and wider sustainability strategies in shopping centres contact EVORA today.

Environmental Management Systems: Plan-Do-Check-Act…Deliver?

At the 2016 GRESB Results Global Launch in London, Nils Kok, GRESB CEO and founder, iterated the importance of operating an Environmental Management System (EMS) to implement practical and tailored sustainability solutions.

This is a position that we at EVORA fully support and have seen deliver notable improvements for our clients through protecting and enhancing the performance of their real estate assets and funds.

An EMS is structured according to ISO’s Plan-Do-Check-Act methodology.

A defined approach is required to understand issues, such as risk and opportunity, that are relevant to your business and real estate portfolio (PLAN). Actions will need to be taken to mitigate risks and implement opportunities (DO). A robust and structured methodology is required to measure the impact of these actions and track progress against targets (CHECK). Our proprietary software, SIERA, proved immensely beneficial in supporting the CHECK element of an EMS by reducing errors and improving efficiency in uploading Performance Indicator data through GRESB’s automated data uploader. Finally, adaption and enhancement of your strategy should be considered based on the outcome of your programmes (ACT).

GRESB addresses several key areas of an EMS within their survey such as management responsibilities, communication, training, objectives and, importantly, the results they are delivering. Developing an EMS therefore seems an appropriate approach to score well in GRESB.

We supported 41 GRESB submissions this year and as a result we have pooled a great selection of results from a broad range of clients and funds. This includes several clients, including Schroder Real Estate and Deutsche Asset Management, where we have operated an EMS over a number of years.

Impact of an EMS on GRESB Score

Overall, GRESB scores for our clients with an established EMS* were 14% higher than the GRESB average. This compares to an overall score 5% lower than GRESB average for funds without an EMS. Better than average performance was achieved in each of the seven GRESB aspects for funds with an EMS, whereas funds without an EMS only scored better than average in two aspects.

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The results for our clients are conclusive; if you have an established EMS you are more likely to score better in GRESB than peers who do not have an EMS.

Chasing GRESB points will result in a satisfying Green Star. However, managing risk and enhancing asset value is a fundamental fiduciary duty of a fund manager. Therefore, we looked at quantitative evidence to identify whether the presence of an EMS was delivering results, as recorded through GRESB benchmark reports. The findings were impressive:

  • Average annual like-for-like energy reduction of 10%
  • Annual like-for-like energy reduction of 17,697MWh
  • Estimated annual energy saving of £1.3m
  • Carbon reduction of 9,040 tonnes.

Identifying the value of GRESB on fund performance is a complex task with many different interpretations on ‘value’. However, the results we have seen demonstrate two things:

  1. If you have an established EMS, you will perform better than the GRESB global average
  2. An EMS can and is delivering very notable improvements (to the tune of £1.3m) for our clients.

(* We consider an established EMS to be one that is fully aligned with or certified to ISO14001 and which has been operating for at least two years.)


 

To learn more about implementing an Environmental Management System, SIERA, or how we can support you with GRESB, please get in touch.


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