Software as the foundation for investment grade data (IGD)

ESG is here to stay. Momentum is gaining to improve data quality and consistency. Regulations such as Sustainable Finance Disclosure Regulation (SFDR) are clearly helping to drive this. The perceived distinction between financial and non-financial data is not helpful one when ESG data, which might conventionally be seen as non-financial, is used all the time to inform investment decisions.

Clearly those who are managing data for ESG strategy implementation and reporting rightly need to focus on aspects, which London Stock Exchange highlighted, such as:

  • Reporting boundaries: ensuring data aligns to the fiscal timeframes and financial structure
  • Comparability and consistency: employing best practice in terms of methodologies
  • Provision of data: qualitative and quantitative for vital context and narrative.
  • External assurance: adding credibility to ESG reporting by following the principles of an independent auditing of the process.
  • Accuracy: establishing robust systems to bolster the collection and quality of ESG data.

Historically there’s been underinvestment in the systems and processes in the real estate sector to address data accuracy and quality. This can be said in relation to the adoption of technology but also from a resources and experience perspective. The requirements and expectations of ESG reporting in real estate has evolved rapidly and perhaps faster than the pace many companies are going at to address these gaps. Key to success in this is engaging those involved in the foundations of ESG data and with the tools like SIERA and SIERA+.

Take for example Net Zero Carbon (NZC) as a relevant ESG theme. Many real estate companies have made public commitments to reaching NZC by 2050. NZC is now firmly on the radar of Asset and Investment managers who are getting their heads around a new lexicon and learning how they begin to develop asset business plans and investment strategies that mitigate these transition risks.

A necessary first step is to get a baseline of performance to understand the current energy and carbon intensity of assets and funds/portfolios and what the impact of current action plans will be on NZC pathways.

To achieve this companies must get the fundamentals right in terms of having visibility of and centralising information to answer some key questions: where are the gaps in data coverage?, which are the best and worst performers in the portfolio?, What’s the current status of asset action plans?, Where in the portfolio should action be prioritised for improvement on each of these?

Example Portfolio dashboard, SIERA+

Undoubtedly technology plays an essential role here as a tool to drive efficiency and consistency in the data collection process and to centralise that data. However, ultimately this comes down to providing an easy and simple means of engagement and collaboration between Asset & Investment management and Property Managers.

We have developed SIERA+ to better equip property managers in engaging with ESG and addressed the priority needs; provide a simple view on performance against targets, ability to manage data quality and keep on top of actions. Notifications prompt when action is required and it’s generally set up to let users focus on the most material issues.

Example Action Plan dashboard, SIERA+

We also recognise that the culture of Property Managers can vary across diverse portfolios and English is not always the first language. Since this is about improving engagement we have made SIERA+ available in 5 languages.

Get in touch to know more.

Green Building Certification for Operational Buildings: which to choose?

Since the first green building certification standard, BREEAM, was launched in the UK in 1990, the number of sustainability related certification initiatives for the built environment has grown. There are now hundreds operating around the world. While the early certification standards focused on the design and construction of new buildings, there are now a plethora of standards that assess the operational performance of existing buildings. Indeed, the 2021 GRESB Real Estate Reference Guide lists over 70 “operational green building certification schemes”.

From an asset owner’s perspective, there are various drivers for targeting green building certification. One of the most significant aspects is the increasing body of evidence that demonstrates the business case for and value of green buildings, including reduced operational costs, improved occupant productivity and increased asset value.  Results from a recent RICS Global Commercial Property Monitor survey showed that around 75% of global respondents believe that green certified buildings achieve a rent or price premium over comparable non-certified buildings, either through a green premium or a brown discount.

As the demand for green building certification continues to grow, asset owners and investors are now faced with an overwhelming choice of certification standards. The scope and applicability of certification can vary significantly between the different standards. Some can be applied internationally, while others are country or location specific; some provide a holistic consideration of sustainability issues, while others focus on a particular topic (e.g. energy or health and wellbeing); and some can assess a range of asset types, while others cover a single sector (e.g. housing).

To help the real estate sector navigate this diverse green building certification landscape, EVORA has recently published a new guide that provides an overview of four of the leading green building certification standards for operational buildings used in Europe:

While there are various similarities between the four certification standards, there are also considerable differences between the four approaches both in terms of the certification processes and the technical requirements. As such, it is very difficult to compare the merits and value of a specific certification rating for one standard against a rating from one of the other standards. Consequently, the selection of the most suitable certification standard will be project specific and should be informed by the project team’s sustainability aims and objectives for each asset. Location and local market factors may also steer the choice of certification.

Regardless of the differences between the standards, all set requirements that aim to reward performance above standard practice for existing buildings. Therefore, any rating achieved against any of the standards would demonstrate a level of sustainability performance beyond that of an average building of a similar type. Achieving any of the higher ratings would demonstrate projects as being high performing buildings with excellent sustainability credentials.

In a post-pandemic world and with the urgent need for the built environment to decarbonise to meet net zero carbon trajectories, there will be an increasing demand for asset owners and investors to demonstrate the value of their assets, with an asset’s sustainability performance a key factor in this. As such, third party assessed green building certification will continue to be regarded as good evidence that an asset’s sustainability impacts are being appropriately considered as part of its operations and management.

EVORA can advise clients on the most appropriate green building certification for their individual assets or wider portfolios and has in-house experts that are able to deliver BREEAM, DGNB and LEED certification for operational buildings across Europe. If you would like to know more, please contact our experts at contactus@evoraglobal.com.

10 Years of EVORA

It started out as a table on a spreadsheet. A handful of prospects with some numbers against them that added up to £360k. It was September 2010 and I was 44. It was a now or never moment. I’d always wanted to run my own business from a young age, but doing what? For the first time in my life I knew exactly what, there was no doubt in my mind.

I’d trained as an accountant with PWC, left to travel the world with Schlumberger, an oil and gas contractor, dabbled briefly in telecoms and then emersed myself in property for nine years at DTZ. And it was at DTZ that two independent events occurred, which together lit the touch paper and set me off on my journey.

The first event was pure irony. DTZ had invested in a professional coach for me and after a few sessions, my coach said “You don’t fit in the corporate world. I suggest you leave and set up your own business”!

The second event was a Dragons Den type competition where a number of us were asked to pitch to the DTZ Board and management team, an idea or project to invest in. Having been a keen advocate of DTZ’s small sustainability team, I pitched to significantly expand the team and develop a sustainability software platform for the real estate industry. I came last with one vote.

Less than a year later I had left DTZ with my £360k prospect list and a sketchy business plan to create a market-leading sustainability business for the real estate investment market. I just needed some help.

A quick trip to Bolton and Paul Sutcliffe was on board once I’d persuaded his wife Eleanor what a great opportunity it was. Paul was sustainability Director at DTZ and had fantastic technical knowledge.

Evora Siera ESG reporting team

One down one to go. Ed Gabbitas, another great technical consultant, signed up shortly afterwards who jumped at the opportunity. Job done. Three is never a crowd for a new business, it’s the magic number. It provided just the right mix of skills, lots of ideas to bounce off one another and most importantly, a level of resilience. Evora was formed – well, not quite. We started off as Sustainable Commercial Solutions but that’s quite a mouthful. The EVORA name came later.

That was ten years ago. If the strapline back then was “Sounds interesting but maybe next year”, now it’s more like “I need an ESG strategy, can you start Monday”! A lot has changed over those ten years and we’ve been very fortunate with the way market sentiment has changed towards climate change. But it’s also been tough at times and a lot of hard work. When I told Mandy, my wife, my plans, her first comment was, ”Can’t you just get a job like a normal person” but her support has been unwavering. As for Paul and Ed, I marvel at just how amazing they are – no more to be said.

If 3 was the magic number back then, 10 years on it feels like 100 is the magic number now. Having recently employed our 100th employee and gained our 100th client, we’re set to achieve 100% growth this year. If that wasn’t enough we are also bringing a number of highly innovative software products to the market this year through our SIERA ESG platform.

Are we the market-leading sustainability business for the real estate investment market? Maybe, maybe not, it depends who you ask, but I don’t think that’s important anymore. As a business we have a bigger purpose, ‘To accelerate the evolution of real estate sustainability for the planet and its people’, and that is an ambition that needs the whole industry to get behind and collaborate on.

And behind the numbers is an incredible bunch of people at EVORA who all really care – for one another, for the work they do, for their clients and for our planet. Here’s looking forward to the next 10 years.

Finally, for those wondering or vaguely interested, of the £360k of prospects on my sketchy business plan that I enticed Paul and Ed with, £11k came off. And why EVORA? EVOlution of Real Assets through sustainability – you know it makes sense 😊