Healthy Buildings Are Here to Stay

This post is authored by Dr. Paul Toyne, and it originally appeared on the Building4Change website. It has been reposted here with permission.


Good engagement, a strong business case backed up by data and a sense of shared responsibility were all on show at the Healthy Buildings conferences, suggesting health and wellbeing is not just a fad.


Earlier this month I chaired the Healthy Buildings conference which explored ways to improve health and wellbeing in existing commercial properties. Organised by BRE in partnership with EVORA, the day featured a stellar cast of expert speakers who spoke to a packed audience at ARUP’s London HQ.

The programme gave a platform to developers, landlords, architects, building services engineers, fit-out contractors, as well as occupiers, with detailed specifics on biophilic design, indoor air quality, thermal comfort, acoustics, water and thermal comfort. There were lots of fascinating presentations – more than I can do it justice to here. Instead, I will share my three main observations of the day.

Health and wellbeing (H&W) resonates with people on many different levels

I was struck by the high level of audience participation and how most people stayed until the end of the day, rather than leave after the lunch as is often the case at conferences. Why is this? Because in my view the H&W agenda resonates with people, engaging them on many levels, be it technical or emotional; H&W is a global trend that is not likely to go away. And rightly so, because who is not interested in their own wellbeing while working in an office and the impact that an office environment can have? Another subject of interest to the audience environment professionals was being able to understand their role in the value chain that provides these improvements – be it through design, product innovation or behavioural change. This I hope bodes well for wider adoption of H&W solutions.

Business case evidence for H&W is strong and expectations will increase

The day demonstrated the strong evidence that shows clearly the benefits of a healthy building for office occupants and how that translates to commercial benefits for employers and the landlord. It is stating the obvious that no-one wants to design and operate unhealthy buildings, but knowing what elements are essential to H&W and measuring their positive impacts is necessary to convince those who are solely influenced by the bottom line. Various speakers made reference to an array of studies that demonstrate just that. There is no longer the argument that the data is lacking or not market specific enough. Furthermore, I believe that it will be important for commercial office developers and landlords to act and demonstrate how they are improving their stock to their customers to protect their brand and reputation and their market share.

Collaboration and shared responsibility is driving the agenda

Finally, it was clear throughout the day how delegates and speakers felt a shared sense of responsibility for delivering better buildings and a genuine show of collaboration between developers, building managers and the occupiers to achieve this. Landlords and developers were acknowledging their responsibility, arguing that H&W was more than just the building but extended to improving the public realm. What, for example, is the point of improving indoor air quality if the moment you go out of the building for a break or for your commute, you are hit with air pollution. Developers talked about creating the right social infrastructure both within and outside the building, dealing with not just environmental concerns but social concerns such as homelessness. Throughout the day examples were given on how the different stakeholders were working proactively together and with their supply chains to deliver H&W outcomes.

So what does this all mean?

All this suggests that H&W is not a fad or a trend that will go away in a few months. If you consider it as a global trend, covering lifestyles, diet, exercise and technology to monitor performance, then there is no reason to exclude buildings from being part of the mix. Next time you are in your office ask yourself are you in a healthy building? If you don’t know the answer ask your landlord and soon you will open up a discussion that can only lead to better buildings. That is after all the goal we all want.

Watch all the presentations on the BRE Conferences YouTube channel.


Author

Dr Paul Toyne is an independent adviser on the sustainable built environment and professional chair of conferences and events. Find out more about him on www.paultoyne.com or follow Paul on Twitter @Paul_Toyne.


To talk to us about improving health and wellbeing in your commercial properties, please don’t hesitate to get in touch.


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EVORA Appointed by USS to Manage Its Sustainability Data

On behalf of the wider team, I am delighted to welcome Universities Superannuation Scheme (USS) as a new EVORA client.

USS, one of the largest pension schemes in the UK, with total fund assets of approximately £57 billion (as of December 2016), has appointed EVORA to manage its sustainability data and to provide support in meeting its voluntary and mandatory reporting commitments.

Our instruction focuses on monitoring and performance reporting, including the managing of waste, water and energy data for the property portfolio. We are also helping USS with its external reporting requirements ranging from the CRC through to GRESB submissions.

We are very excited to have been appointed by USS and feel our instruction is a reflection of our proven track record in managing large scale data management and reporting mandates. The strategic approach that we take with our consultancy clients is being supported by our proprietary web-based sustainability management software SIERA.

SIERA has been developed specifically for the real estate IM market to provide environmental monitoring and reporting, to help meet specific client reporting requirements, and also regulatory and voluntary reporting standards including CRC, GRESB and INREV/EPRA.

We look forward to working on this instruction and hope it is the start of a much longer-term relationship.

Are You 100% Prepared for GRESB? Take this 2-minute survey to find out

The window for GRESB submissions opened on 1 April and participants have until 1 July to complete the survey.

At EVORA, we support over 50 submissions each year, making this time of year a very busy period for us.  We are GRESB Premier Partners, and operate SIERA, our market-leading software, to ensure effective collation and analysis of data. In short, we are GRESB experts!

To help you with your preparations, we have created the following self-diagnostic questionnaire.

It takes 2 minutes to complete and is comprised of simple Yes or No questions. The questions can be used to analyse progress and preparation, and to flag where further consideration is needed.

With less than 50 working days before the survey deadline, ensuring you’re well prepared is key.



Further GRESB Reading:


For any questions about GRESB, please don’t hesitate to get in touch. We are perfectly positioned to assist you.


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.

[clickToTweet tweet=”In a recent @PropertyWeek survey, 32% of respondents still didn’t know what #MEES was…” quote=”In a recent PropertyWeek survey, 32% of respondents still didn’t know what MEES was and how it would impact their business.”]

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.

[clickToTweet tweet=”Landlords beware: even your D or E rated properties may still be at risk from #MEES…” quote=”Landlords beware: even your D or E rated properties may still be at risk from MEES regulations…”]

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

[clickToTweet tweet=”Here is the @evoraglobal 10-point Strategy for Managing #MEES Regulations…” quote=”Here is The EVORA 10-point Strategy for Managing MEES Regulations…”]


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.


Introducing the GRESB Public Disclosure Score for Listed Real Estate Companies

In January, GRESB released its first public disclosure score (PDS) cards for listed funds. These new ratings are designed to complement the existing assessment and to provide investors with insights that are not fully captured in the standard GRESB reports for listed real estate companies.

The GRESB Public Disclosure Assessment evaluates each participating listed property company’s sustainability information disclosure. The results are communicated by a scorecard. An example is shown below.

The GRESB Disclosure Score is based on an A to E sliding scale (where A is best). Listed participants that score an “A” demonstrate leadership in their approach to environmental, social and governance disclosure, and are characterized by a high degree of transparency on ESG commitments.

The PDS is generated by using responses to a subset of existing GRESB questions that relate to public disclosure of ESG issues.

GRESB states that:

‘ [The PDS] represents a base level of information for about 400 listed property companies globally, and could be utilized for integration into existing data platforms such as Bloomberg and S&P Global Market Intelligence.’

Results published in January 2016 are only available to participants. However, 2017 results will be available to GRESB members who are investors in the relevant funds – in the same way that full GRESB results are available now.

EVORA is a GRESB Real Estate Premier Partner and approved Service and Data Provider. In 2016, we provided GRESB support to 44 participant funds. Click here to download a copy of our free GRESB eBook, Survey, Submission, Success!’

For all GRESB support enquiries, please contact us today.


GRESB Premier PartnerAs a GRESB Real Estate Premier Partner, we are perfectly positioned to provide GRESB support. View our official Premier Partner profile.

We can work with you to complete the submission and understand your scoring, as well as develop a sustainability plan that will improve your future GRESB performance and align with your organisation’s key environmental objectives.

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.

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.

The Non-Financial Reporting Directive: Three Key Questions and How to Approach the New Requirements

This is our 20th blog post of 2017 so far – have you signed up to receive our monthly digest yet?


In December 2016, the EU non-financial reporting directive (Directive 2014/95/EU) was transposed into UK law via The Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016.

In short, this legislation requires large companies to report additional non-financial (i.e. environmental and social) performance-related information within their annual reports.

The original timetable for transposition into national legislation by member states was the 6th December 2016. On the continent, several states are reported to have missed this deadline, which presents uncertainty as to how and when these requirements will be interpreted across jurisdictions.


1. Which companies are affected?

‘Public interest entities’ matching both of the following criteria are required to report against these new requirements:

A. Traded/listed company (anywhere in European Economic Area), banking company, insurance company, or company carrying on insurance market activity

B. ≥ 500 employees (on average during the financial year)

[Notwithstanding these criteria, in our opinion it would be a valuable exercise for any organisation to review their opportunities to develop or improve reporting of non-financial information to relevant stakeholders.]


2. What must be disclosed and when?

The legislation requires disclosure of these aspects of performance:

  • Description of the company’s business model
  • Policies (incl. due diligence procedures)
  • Principal risks and corresponding risk management procedures
  • Management approach
  • Non-financial key performance indicators
  • Outcomes

All the above aspects of performance should be reported in relation to these ‘non-financial’ issues:

  • Environmental matters
  • Social matters
  • Employee matters
  • Respect for human rights
  • Anticorruption and bribery matters
  • Board diversity (i.e. age, gender, geographical diversity, and educational and professional background) [1]

Information must be relevant and material, in order that stakeholders can fully understand an entity’s approach, impact and performance in relation to these environmental, social and governance matters. Where there are gaps in disclosures, an explanation must be provided.

For affected entities, these reporting requirements apply to reporting in relation to financial years starting in 2017. This includes financial years that begin on 1st January 2017.

Interestingly, the European Commission has committed to preparing a report for the European Parliament and Council by 6th December 2018 on the implementation of the Directive, including its scope, effectiveness and the level of accompanying guidance and methods. However, clearly, with the UK now committed to leaving the EU by April 2019, the outcomes of this review will not automatically directly impact UK legislation. More fundamentally, the entire existence of this piece of legislation may be threatened as a result of the UK leaving the EU, as the UK Government will be completing a process of reviewing the applicability of all laws passed pursuant to EU Directives. However, please note that in the meantime and until further notice [by UK legislators] companies will be required to apply this new legislation in its entirety.


3. Where should these disclosures be reported?

According to the legislation, the required information should be included as part of a ‘Non-Financial Information Statement’ within the strategic report of the entity’s annual report. Importantly however, “If information required by subsections (1) to (5) to be included in the statement is published by the company by means of a national, EU-based or international reporting framework, the statement must specify the framework or frameworks used, instead of including that information.”

As such, if for example an entity presently or plans to report through the UN Global Compact (UNGC) or Global Reporting Initiative (GRI), they may already be compliant and can continue to report this information outside of their annual report. In this instance, these separate aspects of reporting would need to correspond to the same financial year.

In our opinion, for companies that present UNGC or GRI-related information outside of their annual report, we hope that they will elect to include more than just a sign-post to this information within their Non-Financial Information Statement. Providing at least a summary of this information will clearly better comply with the intent of this legislation, which is to have relevant and material non-financial information presented alongside financial information in an integrated manner.


Final thoughts on how to approach these new requirements

  1. Consider the relevant criteria to determine whether your organisation is affected.
  2. Unpick the requirements and complete a gap analysis against your organisation’s current activities, performance and data/information collection procedures.
  3. [Optional] Explore synergies with other voluntary/mandatory reporting frameworks that your organisation already reports or would like to report against – e.g. Modern Slavery Statements (Modern Slavery Act 2015); Financial Standards Board (FSB) Climate-related Financial Disclosures (currently draft); GRI; UNGC; and, European Public Real Estate Association (EPRA) Best Practice Recommendations on Sustainability Reporting.
  4. Take a look at what your peers are doing – the Climate Disclosure Standards Board (CDSB) have helpfully compiled some relevant good practice examples that can be accessed here.
  5. Develop a plan to both improve your organisation’s performance in these areas and ability to report accurately and completely.
  6. Implement the plan.
  7. Report!

Nearly finally… we would recommend discussing with your auditor the level of assurance/verification incumbent upon information contained within your non-financial information statement. That said, we would always recommend that such information and data be generated and checked via robust procedures and, where appropriate, supported by third-party advisors and/or software tools. For example, our proprietary software SIERA holds all an organisation’s property-related environmental data in one secure database with powerful validation tools to ensure the accuracy and completeness of data.

And finally, please do get in touch if you would like to explore these requirements further and/or to discuss how your organisation can:

  • achieve compliance

  • derive benefits from better risk management and transparent reporting


We’re ready to help. Contact our experts today.


[1] Please note: Board diversity disclosure requirements are nuanced depending on the exact nature of the business. EVORA can provide more information upon request.