Science-Based Targets: A Quick Introduction

This is an introductory post. To find out what Science-Based Targets mean for commercial real estate firms, look out for Part 2. You can join our exclusive mailing list here.


What does it all mean?

Interest in Science-Based Targets (SBTs) has grown significantly following last year’s Conference of the Parties (COP21) in Paris (which led to a climate change agreement signed by 195 member states) and more recently at COP22 in Marrakech.

Climate modelling studies point to the influence of human-driven climate change on increasing overall global surface temperatures. SBTs have been established to support achievement of the agreed target which aims to keep global warming below 2°C compared to pre-industrial temperatures (IPCC, 2013). Thus, it is important to situate CO2 emissions within the framework of the past, present and future (IPCC, 2013) and this represents a long-term commitment in tackling climate change.

Science-Based Targets: The Potential?

There is a lot of potential for SBTs, as their use could bolster corporate action on making long-term greenhouse gas emission reductions, as carbon emissions have been proven to enhance the earth’s greenhouse effect, leading to increasing global surface temperatures.

However, SBTs will only be effective because they align to the Paris Agreement’s 2°C target which is a simple, clear goal that not only conveys the urgency of the need for action, but also allows policy-makers to make decisions which have global significance (Rahmstorf, 2014).

How Scientific is a Science-Based Target?

SBTs are scientific in the sense that they align to the 2°C global warming target, but the process that goes into designing a SBT is complex and resource-intensive and may not be transparent to the user. As with climate modelling techniques, tools used to inform SBTs are still undergoing refinements, and to this end, there are still some issues to consider in terms of their practical applications.

To the user, SBTs appear as a ‘black box’ solution. Information on user activities are inputted into the systems and this is used to generate outputs.  However, to the regular user, little known about how the calculations are made. Understanding on how SBTs work will need to develop before we see widespread use.

Even without a SBT, it makes sense to seek energy-saving measures, apply sustainability strategies to prevent loss of financial value and improve organizational reputation. If used correctly, a SBT can support development of improvement goals and plans. However, such targets can vary according to the context of use, importantly, the data used to inform the target-setting process at the outset. Moving forward, it will be important to assess the applicability of each SBT approach and how it works in practice.

Final Thoughts

There are multiple SBT methodologies out there and results will differ dependent on the approach taken. At a user level the analogy of cake baking using different ovens can be used.  All ingredients are prepared in the same way, however, different ovens lead to differing results. One questions whether multiple different approaches will help to achieve the common goal or will the complexity cause confusion and possibly even slow progress.

SBTs are still in their infancy.  Profile is increasing but understanding is still low. The initiative is certainly thought-provoking and something to look out for in the future. At the present time, SBTs do not have the same weight in the commercial real estate sector than it does in other sectors and take-up has been slow.


Look out for Part 2 in this series: Science-Based Targets: Discussions for Commercial Real Estate


To talk to us about Science-Based Targets and what they mean for your organisation, please get in touch.


Interesting Links:

Science-Based Targets Initiative

COP22 Marrakech

IPCC: Climate Change 2013: The Physical Science Basis

How Can GRESB Help to Deliver Fund Performance? Key Highlights from Our Exclusive Event

Read this post for some exclusive updates from GRESB that were announced during the event, and to find out how you can make sure you don’t miss out on attending our future events.


Background

On Tuesday 15th November 2016, EVORA ran an important industry event considering the impact GRESB (the Global Real Estate Sustainability Benchmark) is having on the real estate industry. Over 60 attendees from more than 50 commercial real estate firms attended.

As a business that works solely with the real estate sector in providing practical sustainability solutions, EVORA has seen the meteoric rise of GRESB since its initiation six years ago. In fact, we have been working with GRESB and supporting our clients in the completion of the survey since 2011 – we are also a GRESB Premier Partner – and this year we were involved in the completion of 41 submissions. So it’s fair to say that GRESB is a subject that’s close to our hearts!

There is no doubt that GRESB has had a major impact in mobilizing the real estate industry to embrace the issues of sustainability. From its humble beginnings in 2010, 2016 saw 759 participants complete the survey representing US$2.8 trillion of asset value. However, the benchmark survey is complex and challenging to complete and GRESB pretty much has a monopoly in this area of benchmarking the sustainability performance of real estate portfolios.

[clickToTweet tweet=”There’s no doubt @GRESB has mobilized the CRE sector to embrace the issues of sustainability.” quote=”There is no doubt that GRESB has had a major impact in mobilizing the real estate industry to embrace the issues of sustainability.”]

And it was with this in mind, that we decided to run this exclusive invitation-only event, kindly hosted by TH Real Estate and chaired by Sarah Ratcliffe, Programme Director at the BBP, which considered ‘How Can GRESB Help to Deliver Fund Performance?’.

Great representation from industry leaders

We had five outstanding speakers from the industry, each with their own experiences and opinions of GRESB: Abigail Dean, Head of Sustainability at TH Real Estate; Dan Grandage, Head of Sustainability at Aberdeen Asset Management; Mathieu Elshout, Investment Director at PGGM; Erik Ruane, formerly Head of Development and Head of Sustainability at a leading pan-European, real estate fund management group; and last but by no means least, our own Paul Sutcliffe, co-Founder and Director at EVORA.

The results of our pre-event survey

Paul presented the results from our pre-event survey completed by the participants, which provided some interesting findings.

Firstly, the majority agreed that GRESB is both investor-driven and important to investors, which should be no surprise, since this was the original intention of GRESB.

Of greater note, was the far smaller proportion who thought their GRESB rating fairly reflected their sustainability performance and accurately reflected the key issues, highlighting that many respondents feel that greater alignment is required.

[clickToTweet tweet=”Does your @GRESB rating fairly reflect your overall #sustainability performance?” quote=”Do you think your GRESB rating fairly reflects your overall sustainability performance?”]

Opinions of the Speakers

1. The Benefits

Paul kicked off by re-enforcing that GRESB is a force for good, driving change and focusing on participation. He also highlighted the alignment of the survey to a best practice management system approach (Plan/Do/Check/Act), which from our own experiences, support in driving performance – see our well-received thought leadership piece by Ed Gabbitas on this:

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

Abigail highlighted that GRESB had pushed the industry to improve, whilst enhancing investor insight. Dan and Mathieu also said it supported fund strategy and post-performance evaluation, helping in year-on-year objective and target setting for the funds. Importantly, Erik highlighted that at a more practical level, GRESB had promoted wider utility data collection enabling the funds to better understand performance both at portfolio and asset level.

[clickToTweet tweet=”@GRESB has promoted wider utility #data collection enabling funds to better understand performance.” quote=”GRESB has promoted wider utility data collection enabling funds to better understand performance both at portfolio and asset level.”]

2. The Challenges

What did the speakers see as the challenges? Paul and Abigail highlighted that scoring rewards the wrong behaviour by being more about coverage of data than efficient buildings, and year-on-year improvements rather than absolute performance. Another key issue was the risk of chasing GRESB points, which may not add value to the fund.

A consistent theme from all the presenters was that one size did not fit all, with specific reference to opportunistic and value add funds that can struggle to perform well in the survey, a key area Sander Paul of GRESB picked up on in the Q&A – keep reading!

A Lively Q&A Session

Presentations were followed by a lively Q&A discussion with a panel that included Sander Paul van Tongeren, Head of EMEA and co-founder of GRESB, and Olivia Muir, European Analyst at UBS. Olivia, highlighted from an investor perspective the importance of GRESB to provide a due diligence tool for the capital markets, but accepted that the GRESB performance data had to be re-worked to provide appropriate outputs.

Our attendees heard it first! Exciting updates for 2018, direct from GRESB

Sander Paul agreed that one size fits all is not ideal. He advised 2017 would be a period of stability for the GRESB Real Estate Assessment with minor updates, but that there would be changes going forward. GRESB is exploring property type supplements, where ESG-performance would be aligned to the specific nuances of different property types, and potentially regional supplements as well.

New industry working groups will be set up in early 2017 to support in the development of the 2018 GRESB Real Estate Assessment.

However, he did highlight that GRESB also offers a Developer Assessment, which might be applicable to some of the opportunistic and value add funds that consider development activities to be their core business. It is a stand-alone assessment that contains a selection of questions from the Real Estate Assessment.

Sander Paul also spoke of the importance of optimising property portfolios to reduce their environmental impacts to counter the significant risks of climate change. He expressed the need for disruptive technologies to help achieve this, including innovative software solutions, an area we have majored on with the development of our unique real estate focused sustainability management software, SIERA.

Comments were also made that the GRESB scoring had been opaque. Sander Paul advised that the GRESB validation process and scoring model is now available here, and also on their website.

[clickToTweet tweet=”The @GRESB validation process and scoring model is now available on their website.” quote=”The GRESB validation process and scoring model is now available on their website.”]

A great wrap-up by Sarah Ratcliffe

In summing up, Sarah Ratcliffe provided a fantastic analogy of the evolution of GRESB, comparing it to a child growing up and currently being a teenager; slightly spotty, with a number of imperfections and a bit awkward, but with lots of potential!

I’d agree with this and I certainly do believe in GRESB’s potential. However, as an industry, the onus is upon us to ensure that GRESB not only transforms through mobilising the real estate sector, but also that the content – and hence the scoring – is absolutely aligned to material sustainability issues that can impact on fund performance both now and in the future.


This was an invitation-only event to those on our mailing list.

If you did not receive an invitation but would have liked to attend, please click here to join our mailing list now.


To talk to us about GRESB support in 2017, implementing an EMS, or to request a demo of SIERA, please get in touch.


Further reading:


GRESB also offers an ESG Masterclass which focuses on interpretation of the annual GRESB Real Estate Assessment results and the various reporting and benchmarking tools available to real estate investors, companies and fund managers. The program addresses all material aspects of ESG in real estate investment portfolios as covered by the GRESB Real Estate Assessment.

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.

“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.

“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.

“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.

“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:

To 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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Connect With The Speakers, Sponsors and Organisers of the 7th Annual 40 Percent Symposium

Using Listly, we have created the following list of all the Organisers, Speakers, Sponsors and Partners of the 7th Annual 40 Percent Symposium to connect with, which took place on 3rd November 2016 at the Regent Hotel in Berlin.

This allows you to follow and/or connect with those involved with this year’s Symposium. For example, you can follow some of the speakers on Twitter or, where social media profiles didn’t exist, learn more about the company by visiting its website.

Stay tuned for our full post-event write-ups.


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.

[clickToTweet tweet=”Discover how EVORA can support you with the Heat Network Regulations.” quote=”Discover how EVORA can support you with the Heat Network Regulations.”]

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


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Healthy Buildings In The Information Age

For sustainability as a concept, practice and brand, the digital age has revolutionised the forms and scales of information we are able collect, analyse and compartmentalise about our environments.

Technology has made the invisible visible. With popular discussions surrounding health and wellbeing and the WELL Building Standard, technology is already being applied in exciting ways, such as indoor air quality devices in offices and homes which intelligently monitor and display information for room temperature, humidity, CO2 levels and particulate matter. A smiley face appears if the environment is ideal.

On the one hand, this information has brought a new voice to users of space, such as occupiers within buildings who have the ability to measure and monitor their environments. On the other hand, it is attempting to quantify something that was previously seen as unquantifiable. Nourishment, comfort, and mind are just 3 of the 7 concepts of the WELL Building Standard which seek to analyse occupant health and well-being based on key proxies, such as circadian lighting and access to fruit and vegetables.

The key question is: Would the same conclusions be made without technology?

Highly unlikely.

In a building without intelligent air quality devices, or if a person did not have access to an air quality app in the City of London, it is not possible to identify that CO2 or particulate matter level is above average and therefore intolerable. In this case, people simply coped because they did not know. The fact is, information has made people more in touch with their environments; however at the same time it imposes a structure to what is ideal and not ideal, for example, smiley faces and sad faces.

The message is clear: people are becoming more aware of their environments and technology has triggered new ways of thinking about sustainability.

[clickToTweet tweet=”How technology has triggered new ways of thinking about sustainability.” quote=”People are becoming more aware of their environments and technology has triggered new ways of thinking about sustainability.”]

For example, tenants and landlords need to have better discussions on how office spaces are being used. It is through technology that better landlord-tenant engagements can take place to embed the issues of sustainability and health and wellbeing into lease agreements, fit-outs, on-going building designs and operation.

So the next time you check the temperature in your office space or reach out to grab a muffin at arm’s length from your desk; think of the ways this information is being captured.

Technology is always watching!

Further reading:


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