Real Estate Sustainability: Planning for 2018

The new year heralds new journeys for individuals and organisations as we seek to learn from experiences in 2017 and focus on opportunities that preserve and enhance ‘value’ in the myriad forms that it takes.

It is a tremendously exciting 2018 for EVORA and one that has started incredibly positively. We are looking to forward to working with existing and new clients as we implement best practice solutions that deliver value to their funds, assets and the environment.

Below I identify my predictions for 2018 across five topics. In addition, where risks are identified, I propose solutions, to mitigate and manage.

There are many more areas and topics that could be covered, and this reflects the rapid changes the industry is currently seeing. I’d love to hear your thoughts on my predictions plus any of your own.  I will commit to reviewing these predictions at the end of 2018, to see how things panned out.


GRESB: an evolution

The GRESB survey is in its ninth year and participation shows no sign of waning, particularly in the Real Estate assessments.

GRESB does not suit all fund strategies and our research demonstrates that Core funds, particularly those with a high percentage of directly managed (multi-let) assets, do perform better than those with Opportunistic strategies and / or a high percentage of indirectly managed (single-let) assets. Perhaps this is no surprise. Consequently, GRESB is reviewing the method in which is benchmarks and scores data availability for indirectly managed (single let assets).

Early adopters of GRESB tend to perform better, as investment managers develop (and align) their ESG strategies with GRESB criteria, particularly through the use of structured frameworks such as an Environmental Management System.Click To Tweet

Early adopters of GRESB (with years of experience) also tend to perform better, as investment managers develop (and align) their ESG strategies with GRESB criteria, particularly through the use of structured frameworks such as an Environmental Management System.

To counter the above two points, GRESB has launched a Pre-Assessment module. This survey is designed for:

  • New investment products that are raising capital and / or undergoing initial investor due diligence;
  • Real estate strategies with opportunistic, short-hold or development focus;
  • Real estate vehicles beginning to incorporate ESG into their operations

I expect this ‘toe in the water’ approach will lead on to greater participation in the full survey, despite the fact that GRESB is now charging participants that complete the main and/or pre-assessment survey. This change will have limited impact for participants who are already members or those who pay for the benchmarking reports (which will be issued automatically as part of the service)

The final, encouraging point for 2018, is the increased engagement by GRESB with a wide range of stakeholders as they seek to shape survey components. This is an important facet to ensure that the survey remains relevant to market needs, whilst continuing to push ESG strategies to deliver meaningful performance improvement.

Prediction: Continued growth in the main Real Estate survey, with respondents in North America and Europe leading the field in terms of number of participants. As it is the first year of operation, I expect a small uptake in the Pre-Assessment, which will increase over time as investors and their managers gain awareness of this approach.

I expect the main GRESB survey to incorporate more Health & Wellbeing (H&WB) questions, possibly at the expense of the separate H&WB module. I expect ‘pilot indicators’ for the measurement of social value, H&WB impacts and potentially governance scorecards. Measurement of environmental impacts alone will not be sufficient as the sole indicator of performance for too much longer.

Debbie Hobbs, Head of Sustainability at Legal & General Real Assets will be speaking about measuring social value, alongside Sander Paul Van Tongeren, MD of GRESB, at our industry event on 7th February. Get in touch if you would like to attend.

Resolution: Continue to work proactively with both GRESB and our participant clients.  Last year we supported over 55 submissions.  We expect this to increase significantly in 2018.

Maintain and enhance our clients GRESB ratings through practical and value driven sustainability programmes, as appropriate to their investment strategy. In 2017, our client Hines achieved Sector Leader status and was rated the number 1 non-listed European fund.


Building certifications: more than just a tick-box exercise

Sustainability building certifications have been in operation for around 28 years following the launch of BREEAM in 1990. There are now numerous in-use and design/construction stage standards around the world. Schemes cover individual topics such as water and air quality, to comprehensive multi-themed sustainability / health and wellbeing  standards.

Whilst the use of these standards for new developments is fairly common-place (particularly in the office sector within major cities), the application for existing (in-use) buildings is less so. However, market drivers such as GRESB, who reward participants for holding certification, together with (future) policy standards and incentives for efficient retrofits have, in our experience, increased the interest for in-use schemes such as BREEAM In-Use and Fitwel. It is important that the application of these schemes leads to performance improvement rather than just a tick box exercise.

It is important that the application of these schemes leads to performance improvement rather than just a tick box exercise.Click To Tweet

Prediction: Increased application of certification for standing investments through schemes such as BREEAM In-Use and Fitwel for major refurbishments.

I also predict more, but not many, WELL certifications for new developments. It will be interesting to see if WELL issue a ‘lighter’ certification route that has wider commercial application that the full WELL standard.

Resolution: Grow the number of EVORA employees that are accredited professionals for sustainability building certification schemes.

Support completion of health and wellbeing certifications through the recognised standards (WELL, Fitwel, RESET) that EVORA has expertise in.


MEES: you might feel the pinch come April

I am sure it is well known to most (but probably not all) real estate professionals, that as of 1st April 2018 landlords will no longer able to lease (via new leases and lease renewals) commercial or domestic space in buildings with an EPC lower than an E rating. Unless that is, a five year time-limited exemption applies and is registered on an Exemptions Register.

Previous studies have indicated as much as 20% of the market could be impacted. From our experience, a high proportion of ‘sub-standard’ EPCs (those lower than an E) have improved their ratings when reassessed by a trusted and competent EPC assessor. Many EPCs issued in 2008-09 were completed quickly using default setting for efficiency ratings. Whilst this was acceptable and legally compliant at the time, the resulting EPC typically did not reflect the state of the energy system in place.

That said, there will be a number of F and G rated units that may leave landlords scratching their heads on what to do, when to do it and crucially, IF they have to do anything at all – noting the relative ease that exemptions could be achieved, albeit with some resource implications to administer.

Prediction: Organisations that were slow to respond may feel the bite come April. I expect the regulation to be largely self-policing, via appointed solicitors, as is the case for the availability of an EPCs for lettings (and sales). However, I also expect enforcement (by local authorities) to be weak based on the relative ease of gaining an exemption and the convoluted nature of MEES guidance.

Resolution: Continue to utilise SIERA’s EPC profiling capabilities to assist clients to quantify the risk of MEES against Estimated Rental Value (ERV), lease and EPC expiry dates. We shall look ahead to the hard backstop of 2023 for existing leases.


Blockchain: new ways of working

Beyond cryptocurrencies such as Bitcoin, blockchain has the potential to revolutionise the method in which individuals and organisations digitally transact with one another in a secure and verified environment.

Blockchain came into operation ten years ago. It’s use beyond cryptocurrency is becoming clear (in property and sustainability) through applications such as:

  • Smart contracts – simplifying the retrieval of data through distributed ledgers
  • Governance – transparency is key to blockchain and it could increase the range of publicly available documentation.
  • Intelligent grids – facilitating the buying and selling of renewable energy generated by decentralized systems
  • Data management – countless possibilities for swiftly transferring secure and validated data

One final comment on blockchain (particularly mining of crypto-coins) that needs to be made, is how immensely energy inefficient it is. The process of using individual PCs to mine coins has led to Bitcoin alone having the annual energy footprint equivalent to Hungary, at the time of writing, and this is increasing on a daily basis as more ‘nodes’ are added to the blockchain. Bitcoin transactions require several thousand times the energy of other means, such as Visa transactions (source).

The process of using individual PCs to mine coins has led to Bitcoin alone having the annual energy footprint equivalent to HungaryClick To Tweet

Prediction: An exciting year where I expect Proptech companies to introduce new ways of working (more efficiently) through utilising blockchain applications. It is something that our SIERA team is busily exploring.

Resolution: Continue to track the emerging blockchain market (I will do this on a personal level to ensure I can understand what my software colleagues are talking about!)


Policy Landscape: hopeful for clearer messaging

A continued lack of clarity on future policy measures is one prediction that can (unfortunately) be confidently made for 2018. Through BREXIT and the fragility of global politics, uncertainty on the future of medium term policy instruments shall, I think, remain.

Long term achievements have been ratified by global leaders (minus one), however, specific programmes for achieving this for the building sector will not become clear until 2020. The UK government is yet to confirm the replacement to the CRC or ESOS  (carbon and energy assessment and reporting schemes) beyond 2019, although I do appreciate that consultations are ongoing.

Recent UK government publications such as the Industrial Strategy and 25 Year Environment Plan are welcomed. However, industry needs to understand how the government intends to act on these strategy papers, rather than see recognition that the points covered are important.

Prediction: 2018 is unlikely to herald the launch of forward-thinking and fit for purpose policies that will progress the sustainability agenda.  However, I am hopeful of a clearer message on the future of carbon reporting and disclosure requirements for organisations towards the end of the year.

Resolution: Continue to voice our concerns and aspirations for clear and forward thinking policy through participation in government / industry consultations and working groups.


Join us on 7th February for an industry event that that looks at planning for Real Estate sustainability in 2018 and beyond.

 

£2.8m of energy savings identified by EVORA in ESOS Phase One

ESOS guidance was published by the government on 26th June 2014, with a deadline for ESOS Phase One of 5th December 2015 – 528 days for organisations to achieve compliance – simple, right?

Understandably, with the data for ESOS having to overlap the qualification date of 31st December 2014, a lot of organisations left it until 2015 to arrange compliance approaches. A large proportion of these left it late, with last minute requests rolling in, the last of these, very late requests was received in October 2017 (a mere 22 months after the original deadline)!

Managing large volumes of data for an array of clients is something EVORA is used to as part of our day job, but throw in the need for communication of ESOS findings to top management prior to notification and arranging multiple site visits across the UK at short notice, made for a busy end to 2015.

Read more about ESOS Phase Two here and here.


Our Approach to ESOS Phase One

Each company we worked with had an approach tailored to their requirements to ensure the ESOS assessment fit with their operations. We worked with a range of clients including a ‘Big Six’ energy provider, institutional real estate investors, a tyre manufacturer and a bacon packing firm. This resulted in a large breadth of energy saving opportunities identified across different industries.

Whilst many compliance routes were available to participants, after consideration of the options available, the completion of energy audits was the primary compliance route taken by EVORA. These provided tangible detailed savings across both utility and transport energy use.  However, we believe moving forwards, the uptake of ISO50001 (one of the compliance routes) may increase due to the additional benefits associated with operating a certified energy management system (in place of audits every four years).

Moving forwards, the uptake of ISO50001 may increase due to the additional benefits associated with operating a certified energy management systemClick To Tweet

In October 2017, EVORA was instructed to complete an ESOS assessment which required submission within ten days. Our client had received an enforcement notice from the Environment Agency (which had been passed around departments for over two months prior to our involvement). A tight turnaround to say the least and shows that the Environment Agency are following up with companies they believe to be non-compliant almost two years after the original deadline.


Key Outcomes

28 Companies were supported in total with over 400 assessments (site visits, desktop analysis, transport audits) completed. Over 27,200MWh of energy savings (electricity, gas and transport based) were identified through these ESOS assessments. This equated to potential cost savings of £2m in electricity, £0.2m in gas and £0.6m in transport energy spend. All notifications of ESOS compliance were made to the Environment Agency in line with the defined timescales of the scheme.

Over 27,200MWh of energy savings were identified through ESOS assessments. This equated to £2m in electricity, £0.2m in gas and £0.6m in transport energy spendClick To Tweet

The ESOS assessment request received in October 2017, was submitted to the Environment Agency, inside four days, a full six days in advance of the deadline. A very tight turnaround (which we do not recommend!), but with full data available and buy-in from top management meant it was achievable.

One of the main learning outcomes we found, was that the smaller companies gained more new information through the energy audit process than the larger organisations. The savings identified via the energy audits were the first time a lot of the smaller companies (i.e. those just exceeding the qualification criteria) had been presented energy saving opportunities with clear payback and life cycle costs included. However, the availability of capital to invest in these opportunities was more restricted for the smaller organisations.


Our structured approach supported our success in ESOS phase one and means we enter ESOS phase two confidence of our ability to deliver ESOS compliance to an even wider range of companies.

ESOS Phase 2 – time to start planning!

It is now just two years to the day until the ESOS Phase 2 compliance deadline of 5 December 2019. Don’t be complacent – two years might sound like a long time away, but you will save time, stress, and money if you start taking action now by carrying out energy audits. Read on!


The Environment Agency, Scottish Environment Protection Agency (SEPA), Northern Ireland Environment Agency (NIEA) and Natural Resources Wales (NRW) have jointly advised organisations that they should all start now carrying out energy audits as part of the compliance process for ESOS Phase 2.

With just two years to go until ESOS Phase 2 compliance deadline – start carrying out energy audits now!Click To Tweet

With only a few exemptions for public bodies, the regulations require all other large UK organisations to take three important steps before the compliance date of 5 December 2019 for ESOS Phase 2:

  1. measure their total energy consumption;
  2. conduct audits to identify cost-effective energy efficiency opportunities; and
  3. report compliance to their national scheme administrator – the Environment Agency in England, SEPA in Scotland, NIEA in Northern Ireland and NRW in Wales.

Consideration should also be given at this early stage as to whether adopting an approved energy management system such as ISO50001 may be a more suitable route to achieving compliance (ISO50001 is the internationally recognised standard for best practice in energy management).

If you plan to implement ISO5001, then early action is definitely required. Alternatively organisations caught under the ESOS regulations should now start conducting audits to identify their cost-effective energy efficiency opportunities for ESOS Phase 2.

Organisations should now start conducting audits to identify their cost-effective energy efficiency opportunities for Phase 2Click To Tweet

Early action should avoid some of the issues and that occurred during the first phase of ESOS. According to Carbon Trust, around 2,800 organisations had to send notifications advising that they would be late in reporting compliance, and a number were ultimately fined.

Carbon Trust also reported that of the hundreds of compliance audits conducted for Phase 1, it was found that that just 16 percent of participants were fully compliant. A full three-quarters of audited participants needed to undertake remedial actions in order to become compliant.

A full three-quarters of audited participants needed to undertake remedial actions in order to become compliant.

The Environment Agency has also indicated that in England there were approximately 500 organisations that qualified for ESOS in the first phase but had not engaged with the scheme. There have been over 300 enforcement notifications sent out to date, more will be going out in the near future. Civil penalty proceedings have also been commenced against a number of non-compliant organisations.

During the first phase of ESOS, EVORA helped a number of organisations to comply with the regulation and we would concur with the Carbon trust’s reported findings that cost-effective measures could usually cut energy costs in buildings, transport fleets and industrial processes by about 20 percent.

ESOS reports have been proven to identify real energy saving opportunities. Good governance requires that Directors consider the report recommendations.

Further reading on ESOS:

ESOS Phase 2 Practical Hints and Tips


The EVORA team is ready to support you with ESOS Phase 2 compliance. Please don’t hesitate to get in touch to learn more.

BEIS framework consultation: Streamlined Energy & Carbon Reporting

Last month, the Department for Business, Energy & Industrial Strategy (BEIS) opened a consultation on their new proposed framework for energy and carbon reporting. This process has the potential to bring environmental data smoothly into the mainstream, but could also just create further tangles in the knot that is the current energy reporting landscape.

Between the CRC, ESOS, climate change agreements (CCAs), and mandatory greenhouse gas reporting (MGHG), there’s a lot of existing legislation that either encourages or coerces companies into monitoring, reporting, and acting upon energy and carbon data. It must be easy for companies to get lost in this complex legislative landscape so, with this in mind, the basic premise outlined in the BEIS framework consultation document of streamlining the reporting process makes a lot of sense.

The million-dollar question, however, is how exactly should this new framework be designed? In particular: who should report and what should be reported?


Firstly, who? There are different ways to scope the policy that fit into three broad categories: employee numbers, financial turnover, and energy consumption. Any one or a combination of these could be used to define what counts as a ‘large’ company and hence who will be required to report under the proposed scheme(s).

The consultation also asks whether Limited Liability Partnerships, which are not subject to the Companies Act (meaning they are not covered by the framework in its current form), should be made to report too. This would increase the burden of implementation, but would also greatly expand the coverage of the scheme and the volume of data being reported.

There are different ways to scope the policy that fit into three broad categories: employee numbers, financial turnover, and energy consumption. Click To Tweet

Secondly, what? There are also different things that companies could be made to report. Centrally, there is total energy use, which can be broken down into electricity, gas, transport, and potentially some other categories, and emissions, which can be broken down into scope I, II and III. There are also additional options such as intensity metrics, or listing opportunities identified in audits and whether they have been acted upon. This last one could be a channel to formally tie ESOS requirements into the framework.

This last one could be a channel to formally tie ESOS requirements into the framework.

Finally, another question that should be given more attention is: how? Specifically, how will these large companies manage the data collection process, and how will its quality and accuracy be assured. The presence of good data is integral for pursuing the far-reaching energy reduction goals of the UK Climate Change Act and the Paris Climate Agreement, but the consultation document only asks for recommendations of the guidance that might ease reporting burdens for companies towards the end, and offers even less on how the Government intends to ensure the quality of data.


At EVORA, we recognise the frustrations and resourcing it can take to collate, analyse and report energy data on a national and international scale. It is why we developed SIERA to seamlessly collate, verify and report data to enable decisions to be made on portfolio and building optimisation programmes. Our clients are seeing the positive impact of SIERA, which has helped one portfolio achieve a 3% like for like reduction in one year and individual buildings save up to 26% through operational improvements.

Our clients are seeing the positive impact of SIERA, which has helped one portfolio achieve a 3% like for like reduction in one year and individual buildings save up to 26% through operational improvements.

The consultation also asks for recommendations on possible complementary policies that might help drive further emissions reductions. Currently, there is no additional incentive proposed to help reduce consumption beyond the fact that the published report will be available to third parties and therefore be subject to investor and public scrutiny.

Personally, the outcome I would like to see is a framework that requires large quoted companies & LLPs to report global energy use, total emissions and intensity, whilst requiring large unquoted companies & LLPs to report UK energy use, total emissions and intensity, with all of the above required to undertake ESOS-style audits every four years and then report the opportunities identified and whether they have acted upon them each year. I would align the definition of ‘large’ with the UK Companies Act definition to minimise confusion, and give it a stand-alone bespoke report in the annual report portfolio to exemplify its importance. Such a design would streamline the CRC, ESOS, and MGHG schemes all into one package, greatly simplifying the reporting landscape.

Such a design would streamline the CRC, ESOS, and MGHG schemes all into one package, greatly simplifying the reporting landscape.Click To Tweet

But the important takeaway here isn’t my opinion, it is that this consultation has the potential to radically change the environmental reporting landscape. Therefore, businesses need to make sure they are aware of the proposals and what it could mean for them. We here at EVORA are in the process of producing a company response to the consultation, and if you wish to do the same then the full consultation document as well as information on how to respond is available on the BEIS website.


This blog has done its best to summarise a 40-page document in a few hundred words, but if you need any additional information or assistance regarding the consultation, or any of the other policies mentioned in this blog, feel free to get in touch and our team of experts will be happy to help.

GRESB 2018 Top Tips. Part 2 of 2

Looking to boost your GRESB 2018 score but not sure where to start? Never fear, as here at EVORA we have conducted extensive analysis of results and come up with some tips and tricks for picking up points.

Read Part 1 ‘What have we learnt from the GRESB 2017 results?here.

Visit our GRESB support service page.


GRESB 2018 Top Tips

1. Get an EMS

An Environmental Management System (EMS) is an organisation-level framework for the review, evaluation, and improvement of environmental performance. When aligned with the ISO 14001 standard, an EMS is immediately worth 2.5 points on the GRESB survey. Furthermore, an EMS helps you plan and direct environmental action to areas of the business where it will have the biggest effect, which will in turn generate further GRESB points. If you don’t have one already, our experts here at EVORA can help you develop an EMS uniquely tailored to the wants and needs of your organisation.

2. Data Data Data!

The methods for data collection and the extent of data coverage are huge elements of your final GRESB score, so getting a well-organised process in place is crucial for good performance. Table 1 summarises where data matters in the GRESB survey and how EVORA can help:

GRESB Analysis Fig 4

Table 1: The points available in GRESB 2017 for data capture and management

We are still waiting to hear if there will be any changes to the scoring for GRESB 2018, but we can guarantee that data capture and management will have a huge part to play again.

To find out more about our specialist data management software, visit the SIERA page or give the office a call on +44 (0)20 3266 7333 and we will be happy to tell you more.

3. Get Audited

Conducting technical building assessments is a great way to improve environmental performance, and another opportunity to rack up GRESB points. GRESB does not fully disclose the scoring system for the technical building assessment question, but by analysing client data we have developed a strong understanding of the scoring model used in the 2017 survey, based on the percentage coverage (by lettable area) where audits have been completed:

GRESB Analysis Fig 5

Table 2: Approximate scoring categories for GRESB Q16: Completion of Technical Building Assessments by floor area coverage

Whilst the overall question is scored out of 4.5, each category of assessment has its own limit to the points that can be achieved, and is then subdivided into four scoring categories based on portfolio coverage.

An important point to note is that we found no instances where a portfolio had some coverage but scored no points. This means an assessment of any type conducted anywhere, even on the smallest of assets, will immediately get you GRESB points.

This means an assessment of any type conducted anywhere, even on the smallest of assets, will immediately get you GRESB pointsClick To Tweet

Furthermore, such assessments actively seek to identify opportunities for efficiency improvements. These opportunities not only helps you to save on utility bills, but can improve your scores on GRESB Questions 17 and 18, which relate directly to the implementation of energy and water efficiency measures. Our team of experts is experienced in the completion of all kinds of audits, so get in touch to learn more about what we can do for you.

4. Get Certified

With a global average score of just 46, the Certification & Energy Ratings section is the GRESB aspect where there is most room for improvement. It is also something we know all about here at EVORA.

The scoring for Question 30 (regarding green building certificates) is a little complex, but essentially the portfolio coverage of New Construction and Operational certificates are benchmarked against that of other entities in your region within each GRESB property type, and you end up with a score for each property type of either 2, 4, 6, 8, or 10. All the scores are then weighted based on Gross Asset Value, and combined into a final question score out of 10. A full description of how the scoring was done can be found in the GRESB Reference Guide, or alternatively get in touch and we’ll be happy to explain it in full.

GRESB Analysis Fig 6

Figure 3: Points Scored vs New Construction certificate coverage for European offices in GRESB 2017

The key take-away is that there are real opportunities to pick up lots of points here. This is because the current low level of certification in real estate portfolios worldwide means that the benchmarking procedure used bottom-loads the scoring. As a result, even small amounts of certification coverage in your portfolio can score well, particularly if you have a combination of both New Construction and Operational certificates. Figure 3 focuses specifically on New Construction certificates amongst European offices, a particularly well certified property type, and shows that less than 50% certification coverage would have scored 8 out of 10 for this property type in GRESB 2017. Other property types benchmark even lower, so require even less coverage to rack up points.

BREEAM In Use, as one of the most widely recognised and respected certification schemes in the world, is an ideal choiceClick To Tweet

Of course, as certification becomes more popular worldwide this will drive up the benchmark percentages, but don’t let that dissuade you from an excellent opportunity to improve your GRESB score. BREEAM In Use, as one of the most widely recognised and respected certification schemes in the world, is an ideal choice, and is a service that we can provide. Get in touch to learn more.

Changes for the 2018 survey

Because of the constant shifting nature of sustainability and the real estate industry, GRESB reviews its survey each year and tends to make some changes to the scoring system. These are yet to be announced but, as a premier partner, EVORA is at the heart of the process, has a strong idea of how it will evolve, and is keeping tabs on GRESB releases on our clients’ behalf. Check out this blog by our Founder & Director Ed Gabbitas on GRESB’s ongoing review as an example.

We look forward to supporting you through GRESB 2018!

For enquiries regarding GRESB support or any other of our services, give our office a call on +44 (0)20 3266 7333, or email us at info@evoraglobal.com.

 


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.

What have we learnt? GRESB 2017 Analysis. Part 1 of 2

The GRESB 2017 results show that comprehensive support from EVORA significantly improves performance, helping you maximise and showcase your environmental credentials and add value to your portfolio.

Visit our GRESB support service page.


The GRESB 2017 cycle is officially over. The points have been tallied, the reports released, and the winners named. But there’s no resting up here at EVORA; we are already hard at work helping our clients prepare to do even better in GRESB 2018. This blog will show you how the support of our team of experts has boosted GRESB 2017 performance for our clients, and share some tips and tricks we have devised ahead of 2018.

GRESB Analysis

Figure 1: Overall GRESB score in 2017

In the 2017 cycle, EVORA provided a comprehensive ESG development and GRESB support programme for 26 real estate funds, and the results speak for themselves. Whilst the average score in GRESB 2017 was 63, clients that received comprehensive support from EVORA averaged 67.

GRESB Analysis 2

Figure 2: Comparing the change in GRESB score for funds that took part in both 2016 to 2017

Furthermore, whilst GRESB participation is driving increases in sustainable performance across the board, reflected in the year-on-year GRESB average score increase of 3 points, EVORA is pushing its clients to another level, averaging an increase of 8 points amongst those who took part in GRESB 2016 (Figure 2). One fund we worked with also came first in its peer group, showing that EVORA can help even the most ambitious clients realise their goals.

GRESB Analysis 3

Figure 3: Comparing the average GRESB Aspect scores to that of our clients

Not convinced? Let’s break this down a little further. The GRESB survey is divided into seven key aspects, which are then combined to give the overall GRESB score. Using these categories as indicators, Figure 3 shows how our clients managed to improve considerably more than other GRESB participants. The strong results were driven in particular by high scores on the Monitoring & EMS and the Certification & Energy Rating aspects; key areas of expertise in our consultancy team here at EVORA. Furthermore, our vast experience producing GRESB submissions means we can help you collate all the relevant evidence and script your text box answers to ensure you get every point you deserve, the benefit of which can be seen in the strong Management and Policy & Disclosure aspect results.

Our vast experience producing GRESB submissions means we can help you collate all the relevant evidence and script your text box answersClick To Tweet

Still not convinced? Not sure GRESB is worth the investment? Well, not only does sustainability and resource efficiency reduce operational costs in assets, now environmental and social responsibility are increasingly common demands from investors. GRESB is the world’s leading benchmark for these issues, and a good score will go a long way to proving your commitment to tackling ESG challenges to both investors and the wider public, helping to protect and enhance the value of your portfolio.

Contact us for more information about how we can help with GRESB 2018

Look out for part 2, coming soon!

 


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.

Understanding the GRESB 2018 Fee Structure for Real Estate Assessment

Since its inception in 2009, GRESB has been ‘free’ at the point of use for entities submitted by non-member fund managers or property companies. From 2018, non-members in selected markets[1] will be required to pay a fee of EUR3,500 or USD4,100 per entity (i.e. per submission). Fees for members have also shifted upwards by around 20% depending on the number of entities participating.

[1] The fee will apply globally with the exception of companies and fund managers incorporated or headquartered in Latin America, Africa and parts of Asia where ESG reporting and GRESB coverage are less established

Visit our GRESB support service page.


Why are fees being introduced and upped?

GRESB sets out three main reasons for the introduction of a fee:

  1. Market coverage and recognition: GRESB has clearly captured the ESG benchmarking market for the Corporate Real Estate market and now holds a position that they believe is strong enough to command (higher) fees across all reporting entities. The change will undoubtedly cause some to grumble and as such, investors, now more than ever, need to enforce the expectation / requirement of open disclosure by the vehicles in which they invest.
  2. Member benefits and increased analytics: Following receipt of GRESB results, applying a feedback loop to review performance ratings achieved across the seven GRESB Aspects and two Dimensions is a vital step for planning future sustainability programmes.  Under the new fee system, the Benchmark Report will be provided to all participants (the price of this in 2017 was €2,750, which goes someway towards the overall €3,500 fee for a single entity submission). At EVORA, we develop sustainability roadmaps for all our clients (using Benchmark Reports) to help them plan effective programmes that deliver value to their funds and enhance GRESB ratings.
  3. A smooth reporting process to lessen the burden of reporting: This will be welcomed by many I am sure! Our clients already benefit from SIERA’s seamless asset level reporting and we have recently incorporated further features to make year-round reporting, and scoring, even easier and more transparent.
We develop sustainability roadmaps for all our clients (using Benchmark Reports) to help them plan effective programmes that deliver value to their funds and enhance GRESB ratings.Click To Tweet

The fees

From 2018, entries for non-members will be EUR 3,500 or USD 4,100 per entity, payable once annually. The participation fee does not apply to Developer Assessment participants or for first-year participants who report under the Grace Period.

The range of members fees are increased from EUR 3,250 – EUR 15,900 up to EUR 4,000 – EUR 20,500 (roughly a 20% increase). Full details are shown in the table below.

Put simply, it will be more cost effective to become a member if you are a fund manager or property company submitting more than one entityClick To Tweet

Put simply, it will be more cost effective to become a member if you are a fund manager or property company submitting more than one entity. There will, however, be instances where the membership fee cannot be split across multiple entities and it may therefore introduce a new cost for certain fund managers.

Additionally, GRESB has also introduced a charge of EUR 100 or USD 115 if you require an invoice for payments not made via a credit card.

GRESB 2018 fee table


What Next?

In truth, not much has changed in regards to the GRESB submission process. The increased cost of completing the survey will, however, raise more questions on the value of GRESB. This is where EVORA helps our clients to establish meaningful, practical and, importantly, value driven programmes that improve funds and asset ESG performance.

Contact us to find out how we are helping clients to meet investor, tenant, and other stakeholders demands for more sustainable, greener and healthier buildings.

 


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.

Net Zero and carbon reduction targets: To what extent will it help us achieve them?

This blog is part of our Net Zero series for World Green Building Week 2017 – read more here.


The UK target of Net Zero Buildings (NZB) means that new buildings and major renovations should have a net zero impact on carbon emissions from 2030 onwards. This sets the tone for our buildings of the future but what does this mean for our existing buildings? Projections are that half of the existing building stock will still be around in 2050. Even at a reasonable rate of major renovations this still leaves the property industry with its work cut out.

Policies such as the MEES regulations should definitely help to improve efficiencies in existing buildings through refurbishment works and upgrades to take building spaces up to E rating or better. The MEES regulations have undoubtedly got more companies thinking about cost-effective improvements to commercial properties. However, one of my gripes with the whole EPC scheme is that the rating approach is based on theoretical design performance –  the elephant in the room of course being that actual energy consumed doesn’t feature at all.

This means that it’s entirely possible to have a good EPC score on an office and it still be energy inefficient. This is something I wrote about a few years ago with the Better Buildings Partnership and found it was not an isolated example. Furthermore, there are certain types of energy use not captured by EPCs which only potentially complicates the problem. Let’s not forget that addressing actual energy usage is fundamental to succeeding in meeting national and international carbon reduction targets.

Let’s not forget that addressing actual energy usage is fundamental to succeeding in meeting national and international carbon reduction targets.Click To Tweet

This discrepancy between design intent and actual energy usage has been written about extensively under the banner of a concept most of you will hopefully be familiar with – the ‘performance gap’. Studies suggest that this difference between how we think buildings perform and how they actually perform could be underestimated by as much as 50%.

This brings me to one of my main points. Of course, actual energy consumed is significant but so too is the source of that energy; if energy is consumed we need it to be from renewable or ideally carbon neutral sources. Therefore, yes energy efficiency needs to be addressed but so too does the decarbonisation of those supplies.


Decarbonisation targets are likely to be missed, so what does this mean?

The UK Government has targets to improve the decarbonisation of grid energy supplies but research suggests that this is likely to be missed. Also, with the Government limiting financial support for certain types of renewables, investors are hardly getting the certainty that would really help to boost the market. We’ve seen a number of renewables/solar companies going into liquidation, however, demand on the whole for onsite renewables seems to be maintaining (?)

Clearly, in addition to the grid energy mix there’s a role for decentralised green energy generation. Two trends which will be significant in terms of the overall trajectory of the energy sector are the decentralisation of energy generation and energy storage. These are predicted to both increase rapidly.

Two trends which will be significant are the decentralisation of energy generation and energy storage. Click To Tweet

So what does this all mean for strategies of property owners and investors? Clearly, there’s a business case for investment in energy efficiency because of the financial impact of operating costs. As a proportion of overall costs of occupation, this can be hugely variable depending on the organisation, but can relate to factors such as the regional location of property as an example. Nonetheless, DEFRA/DECCs energy price forecasts are that they will continue to rise faster than the rate of inflation so the costs are not going to reduce. Overtime, the cost of renewable energy should become more competitive but there’s little sense in consuming green energy profligately. This means that the property industry really needs to make decarbonisation of energy in existing property portfolios part of its strategy.

This means the property industry really needs to make decarbonisation of energy in existing property portfolios part of its strategy.Click To Tweet

As my colleague, Paul Sutcliffe,  has said Science Based Targets is an approach that is gaining more momentum and rightly so. However, what’s fundamental to achieving the carbon reductions required is an honest assessment of what can realistically be delivered, at the industry-level, through building efficiency and what will be achieved through greening energy supplies.


To speak to the EVORA team about how we can help your organisation, please contact us.

12 months to transition to ISO 14001:2015 – A Systems Approach

Last week, our Director, Paul Sutcliffe, blogged on the transition to ISO14001:2015. Paul’s blog highlighted the main changes and opportunities associated with the new standard.

As a follow-up, I provide below, a deeper delve into the new standard requirements. It’s now just a year to go until the transitional deadline on 15th September 2018, at which point certificates for the 2004 standard will no longer be valid. Is it time to hit the panic button? Certainly not, but now’s the time to take action, especially since the deadline for many will likely be much sooner.

Is it time to hit the panic button? Certainly not, but now’s the time to take action, especially since the deadline for many will likely be much sooner.Click To Tweet

Prioritisation is crucial – focus on integration

At this stage, prioritisation is crucial. Focus first on any changes to existing organisational processes; get this ball rolling from the outset. The key to be able to best demonstrate many of the new requirements is integration. In my experience, as both a consultant and an external lead auditor, integration of environmental management controls with existing business practices always proves to be the biggest hurdle but once achieved, the full benefits of the environmental management system (EMS) are realised.

As such, section 5.0 of the new standard – Leadership – is where initial efforts should be focused, particularly as this may involve changes to company processes which can often take time to embed. A conversation needs to be had with senior management to emphasise that they are not necessarily expected to do more, but they are expected to know more. This is best achieved through the incorporation of EMS requirements into existing business processes. For example, the introduction of environmental performance progress updates into management meeting agendas. Complying with the other requirements (known as clauses in the standard) will be made significantly easier with this approach. Clauses such as 7.0 Support, 9.0 Performance Evaluation and 10.0 Improvement heavily rely on management and so it’s important these areas are targeted in the first instance.

Focus first on any changes to existing organisational processes; get this ball rolling from the outsetClick To Tweet

Prevent scope confusion – concentrate on context

Next, concentrate on the clauses where there is less of an impact on embedded company procedures, such as 4.0 Context. This clause does certainly require some thought and its importance is often overlooked. If applied correctly, it ensures continuity, clear boundaries and a sense of direction, preventing scope confusion and making everyone’s life, especially the auditor’s, much easier. Providing the previously discussed clauses have been addressed appropriately, the final two clauses left to mention, 8.0 Operation and 6.0 Planning, should be relatively straightforward to comply with. Of course, the industry type certainly makes a difference to the level of work required, particularly with the new ‘life cycle’ requirement under Operation. The ‘life cycle perspective’ sounds a lot more resource intensive than it needs to be, especially for office based companies. Remember, auditors are still finding their feet with the new requirements and will often be satisfied with evidence that this has at least been thought about, seismic changes to the company’s procurement policies are not going to be expected!

If applied correctly, it ensures continuity, clear boundaries and a sense of direction, preventing scope confusionClick To Tweet

Practical solutions for tight deadlines

This blog is designed to provide more information on transition planning. EVORA are well versed and experienced in the transitioning process, so please don’t hesitate to get in touch if you have any questions.

Of course, it should also be mentioned that certification is not always necessary and many of our clients operate environmental management systems aligned (but not certified) to ISO 14001.  Regardless of certification status, the new ISO 14001 standard is a tool that if implemented correctly, provides a robust and effective framework that operates throughout the business, not alongside it. As a result, those with aligned systems should also consider changes introduced by the new standard, that will help deliver benefits.

Regardless of certification status, the new ISO 14001 standard is a tool that if implemented correctly, provides a robust and effective frameworkClick To Tweet

For more information on updating your EMS to ISO 14001:2015, please don’t hesitate to contact us today.

110 Seconds To Understand How SIERA Sustainability Software Can Help You

Watch Our New Video Now!

Watch our new animated explainer video for SIERA, which gives you a high-level overview of everything our innovative sustainability software solution can do for you.

Depending on where you are and how convenient it is to watch a video, you can:

1.     Watch the video with the sound on – recommended

2.     Watch the video with the sound off – the captions will allow you to follow along

3.     Read the video script, which is pasted below for your convenience

We hope you enjoy the video and that you will want to learn more by attending one of our webinar demonstrations or getting in touch to book a one-to-one demo.

Thanks for watching!


SIERA Sustainability Software – the right choice for your business


Video Script

Every year, environmental management becomes more complex and reporting requirements become more stringent.

Which is why the sustainability experts at EVORA came up with SIERA – a unique and innovative software solution.

Not only does SIERA make all your sustainability reporting easy – it also enables you to quickly identify energy savings in your buildings.

Not only does SIERA make all your sustainability reporting easy – it also enables you to quickly identify energy savings in your buildingsClick To Tweet

Never before has collecting and validating your environmental data been so easy. Whether it’s automating data collection, or dragging and dropping your data from Excel files, SIERA makes a complex process simple.

The intelligent modelling capability covers a range of regulatory and voluntary reporting requirements, quickly and intuitively.

In fact, SIERA saves our clients up to 70% of their time spent on GRESB reporting.

SIERA also gives you an overview of your property and portfolio performance, helping you mitigate regulatory risk and prioritise improvement opportunities.

SIERA’s ground-breaking Energy Monitoring and Targeting module automatically alerts you to energy efficiency opportunities.

Savings are easy to identify and can be achieved without any capital expenditure.

SIERA gives you an overview of property and portfolio performance, helping you mitigate regulatory risk and prioritise improvement opportunitiesClick To Tweet

Whether you’re seeking a hands-on solution, or a fully managed service with EVORA’s expert consultants – SIERA is the right choice for your business.

SIERA is already managing over 4,000 properties and is being rapidly adopted by large organisations across the globe.

Isn’t it time you used SIERA too?


 To learn more about SIERA and discover how it can save you time, stress, and money, please get in touch today to arrange a demonstration.

 


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.