Soft Landings: Better Buildings, Better Real Estate

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One topic I am very passionate about is that of ensuring that the buildings we build and operate are fit for purpose. In my mind, this means providing users with an environment to deliver their work in sustainable, efficient buildings that do not impact their wellbeing. For building owners, it is about ‘getting what you paid for’ in terms of efficient design that leads to sustainable operation.

We often find that existing buildings do not operate as they should / could due to age, refurbishment changes, historical maintenance practices and/or BMS set up. This may be shown through high energy consumption, plant equipment impacting asset performance as well as substandard occupant wellbeing and comfort.

Reasons why this is happening need to be understood so that we can adapt and learn for future situations, and in particular, refurbishments. The existing building stock isn’t going anywhere and refurbishments within these properties is going to be important in delivering both sustainability performance (including those aligned with Paris targets) and occupier wellbeing.

Soft Landings – bridging the gap from design to operation

A tool that addresses these issues is Soft Landings. I hear many people refer to Soft Landings as commissioning and handover. This is a misconception. These are critical components of implementing Soft Landings, but it is much more than that. It’s a mindset and approach that should begin at project inception and embed through the whole building’s life cycle. Bridging the gap from design to operation is essential to ensure the building delivers as intended for the end user.

By thinking about the end use at the outset, measurable KPI’s can be established along with roles, responsibilities and ownership. These KPI’s can be championed throughout, with agreed reviews and meetings to understand changes, manage re-occurring problems and capturing the required information to ensure a smooth hand over and aftercare in those early stages of occupancy. Communication and engagement are critical and must play an integral part to ensure information is shared at the right time and interpretation for all level of users is provided where required.

The BSRIA Soft Landings stages and how they align with the RIBA Plan of Work are shown in the diagram below.

Source: BSRIA Soft Landings Framework 2018 (View full-size Soft Landings Map)

BSRIA Soft Landings Map

Adopting this approach, I believe is a firm step forward in addressing the challenges faced across the built environment. Having honest discussions around what works and why things have gone wrong helps us to build and manage better buildings. This, in turn, helps move towards a sustainable built environment to ensure the real estate industry mitigates its climate change impacts.

It’s not a perfect world and things can go wrong during any stage of a project. Soft Landings is not a silver bullet to solve this.  However, it does help identify why and how a problem occurred, providing context and understanding. This is then built into ‘lessons learned’ to improve future project delivery. This in itself is a success story and requires an open approach to project delivery and building operation.

A framework approach

Where possible, Soft Landings should be fully embedded and deployed throughout the project. Not applying the framework in its entirety increases the risk of operational problems, user issues and/or failure in sustainable operation further down the line.

EVORA & EVORA EDGE recognise that this is difficult across many situations. In order to establish the vision of ‘delivering better buildings’, we can support our clients in navigating through the six phases of Soft Landings through the following ways:

Phase 0 & 1:

  • Act as the nominated ‘Soft Landings Champion’ on behalf of the client.
  • Carry out surveys of existing building to help support key project decisions and KPI’s.
  • Define ESG / sustainability objectives, targets, KPIs and responsibilities

Phases 2 to 4:

  • Co-ordinating and managing the Soft Landings ‘Gateway’ meetings.
  • Providing concept and technical design input to support and advice with regards to building services.
  • Ensuring data capture infrastructure is in place e.g. meters and sensors.

Phase 5:

  • Facilitating engagement with Stakeholders to identify solutions to impacts on occupant satisfaction and sustainability performance.
  • Co-ordinating with the project and operational teams to establish building user guides.

Phase 6 & 7:

  • Develop aftercare programmes, including building analytics and utility performance to support ongoing KPIs and performance measurement.
  • Conduct Post Occupancy Evaluation surveys
  • Providing BREEAM In Use, RESET & Fitwel assessments and certification.
  • Providing technical reviews on building system issues to fine tune performance.

Get in touch with our experts if you’d like to hear more about Soft Landings

Social Value Part 1: What is social value?

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Social Value is the quantification of positive public benefits and outcomes. It originates from a collection of principles aiming to improve health, wellbeing, quality of life, and communities[1].

Social Value is considered in a variety of industry sectors, but recent uptake in the built environment has been sharp, and the future is focused on developing implementable social value strategies for commercial real estate.

Key factors for Social Value in the Built Environment

Social Value has been brought to the forefront of planning requirements by The Public Services (Social Value) Act (2012).  The Act gives no official definition or guidance on what process could be followed to implement Social Value. However, research from the U.K. Green Building Council (UKGBC) into Social Value provides comprehensive guidance into the most relevant aspects for development projects.

EVORA Global Social Value blog table Source UKGBC

How do we measure Social Value?

The most asked question in Social Value is ‘how do we measure this?’ Answered simply, Social Value is typically measured by the following 3 methods.
·     Fiscal, including Social Return on Investment (SROI)
·     Numerical quantification e.g. = number of people affected x outcome of action
·     Qualitative (storytelling)[2].

Social Value: Nice to have or must-have?

The rising global population means that the 3.5 billion people currently living in the world’s urban centres is set to increase. By 2030, this number set to rise to 4.9 billion1. As the population grows and our cities become ever closer together, the challenges of living and working comfortably alongside each other are increasing. Understandably, government, the public and investors now expect more from those shaping our built environment. Unforgotten though, is that the built environment is a for-profit industry. It is therefore important to many that sustainability actions can be quantified with financial returns[3]. Social Value reporting gives us an updated set of sustainability principles and a way of quantifying them.

EVORA is now supporting our clients to develop and deliver Social Value programmes. You can read more about this topic in our next blog post in the series ‘5 key challenges for Social Value in Real Estate’.

Alternatively, please don’t hesitate to get in touch if you would like to discuss Social Value in more detail.

[1]Baldwin, C. and King, R. 2018. Social Sustainability, Climate Resilience and Community-Based Urban Development. 1st ed. London: Routledge.
[2] Maas, K. and Liket, K. 2011. Social impact measurement: Classification of methods in Environmental management accounting and supply chain management (pp. 171–202). Dordrecht: Springer.
[3]Emerson, J. 2003. The blended value proposition: Integrating social and financial returns. California Management Review, 45(4), pp.35–51. doi:10.2307/41166187

GRESB 2019: Are you ready for the portal to open?

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With just two weeks until the GRESB portal opens for 2019, the EVORA consultancy team is gearing up for our eighth year supporting clients through their GRESB Real Estate Survey submissions. We are experts in GRESB and that is why at least 80 funds have put their faith in us to manage their submission.

GRESB is by no means a walk in the park, that said with sufficient preparation and ensuring the right stakeholders are engaged from the beginning there is no reason why the process should not be straightforward. EVORA provides clients with an end-to-end service to take the pain out of GRESB.

Top Tips for a smooth journey through GRESB 2019

  1. Start [and aim to finish] early.
  2. At the start of the process and if you responded last year, remind yourself what went well and less well during the 2018 submission – consider both the process and individual question responses.
  3. Review changes to the survey questions (available from mid-February) and the guidance/scoring document (available from 1st March), as soon as they are released. Review these changes in the context of your entity/entities and its/their ability to maintain/improve GRESB scores. These changes may also create possible logistical challenges in gathering the necessary evidence and data in time for survey completion – so the earlier the better!
  4. Engage and educate those that will support you in delivering GRESB. Keep in regular touch with them throughout the process to make sure everyone is on track and is aware of their responsibilities.
  5. Although the survey closes on the 1st July, 5% of all submissions are selected for a Validation Plus interview so there is still a chance you may be called upon. The interview is a detailed review of your responses and the supporting evidence provided. Validation takes place from 1st June – 31st July.
  6. Automate data collection – Our propriety software, SIERA, delivered 65 GRESB submissions in 2018, helping clients to seamlessly acquire and report asset-level sustainability data into the GRESB portal.
  7. Seek external support/advice – Our team of sustainability consultants are experts in sustainability, real estate and [most relevantly] GRESB.

And lastly, GRESB 2020 will come around quickly. The results are released in early September and it is worthwhile putting some time aside to digest them. However, if you can’t wait that long, we provide clients with indicative scoring ahead of submission. This helps with future planning and managing expectations on current scoring.

We work with our clients to put in place a roadmap that aligns with their ESG strategy and which will enable them to continue to improve their GRESB score in the following and future years. If you’d like to speak to a member of the team, please contact us.

Download our GRESB eBook here.

Indoor Air Quality: Every Breath We Take

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At EVORA, health and wellbeing consulting is a key component of our Environmental, Social and Governance (ESG) Strategy and Risk Management service line.

We are increasingly advising our clients on indoor air quality and the emerging third-party standard in this area: RESET Air certification.

First – Why should we care about indoor air quality?

The short answer is because indoor air quality has a direct impact on health and wellbeing.

For example, PM-2.5 is one pollutant of concern in indoor environments. PM-2.5 is particulate matter or solid particles that are smaller than 2.5 microns in diameter – far smaller than the width of a human hair. These particles are so small that our bodies have no natural defences against them. As a result, PM-2.5 can penetrate deep within our lungs – even enter our bloodstream! – and can cause emphysema or lung cancer.

Even seemingly benign compounds from a human health perspective, like carbon dioxide (CO2), can negatively impact our mental performance. CO2 is a gas produced when we respirate and is in every breath we exhale. Yet, recent research shows that when CO2 accumulates in a space, such as when there is inadequate ventilation in an airtight indoor environment, it can significantly impact our cognitive functioning and make it difficult to concentrate.

High indoor air quality thus provides many benefits to worker health and wellbeing; it reduces sickness, decreases absenteeism, and helps raise productivity.

As employees are typically quoted as one of the most expensive costs of running a business, it follows that there is a strong return-on-investment in preserving high indoor air quality.

Second – How can EVORA help?

One way we assist our clients in this space at the asset-level is supporting the application of third-party health and wellbeing accreditation/certification schemes. Certification schemes offer a robust framework for discourse surrounding health and wellbeing in the built environment.

RESET Air (where RESET is short for Regenerative Ecological Social & Economic Targets) is one such certification scheme borne out of Shanghai, China in 2009. RESET Air certification has a focus on protecting human health by specifically targeting indoor air quality.

RESET Air is a sensor-based and performance-driven indoor air quality certification. RESET Air provides a standard for continuous monitoring of pollutants of concern, which must be below acceptable limits during hours of occupancy for a period of three months prior to certification. This level of performance must then be maintained forever more; projects are recertified annually to ensure indoor air quality continues to be within acceptable thresholds. Indoor air quality performance data must also be made publicly available to occupants of the building, continuously and in real time.

The pollutants of concerns include PM-2.5, volatile organic compounds (VOCs), CO2 and carbon monoxide (CO).

There are two different RESET Air project types:

  • RESET Air for Commercial Interiors: The intent is to monitor the quality of air for occupants at the breathing level.
  • RESET Air for Core & Shell: The intent is to monitor the quality of air being delivered by the building’s HVAC system post-filtration.

For certification with either project type, the emphasis is on obtaining three months of data by deploying accredited monitors and providing the data in an acceptable format.

RESET Air is seeing considerable attention internationally and relatively rapid adoption, particularly in certain geographies. Additionally, RESET Air has recently been coordinating and harmonizing with other health and wellbeing certification programs, including WELL and Fitwel. This harmonization helps streamline project documentation for those projects looking to achieve multiple health and wellbeing certifications.

Exploring the nuances of certification schemes, including RESET Air, can get complicated and quickly!

EVORA has multiple RESET Air Accredited Professionals ready to help you understand the standard and – if appropriate – apply it to your project. Get in touch to find out how we can help your project achieve improved – and easier to communicate – health and wellbeing outcomes!

Trends and expectations for sustainable real assets in 2019: Taking Climate Resilience Mainstream

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Climate resilience has emerged as a key field of practice; however, a concern is that thinking and knowledge of this topic, and most importantly actions are not progressing quickly or purposefully enough for real estate managers to adequately prepare their assets for the potentially perilous shocks and stresses caused by climate change.

Resilience is becoming a major consideration for businesses, with impacts on insurance, valuation and rents already starting to show in many countries.

The impact of climate change has vast implications across societal, economic and environmental realms. Building managers and owners have unique responsibilities as stewards of essential economic and social assets. The well-being of communities and economies significantly depends on access to reliable working assets. Consequently, we believe that planning for and adapting to climate change is not only prudent but essential.

Below, we identify five key reasons for integrating climate resilience into asset management and investment planning decision-making.

  1. Increasing performance reliability – Assets capable of operating during climate crises will exhibit greater long-term return predictability.
  2. Sustaining and increasing asset value – Value will be protected for assets that are not significantly affected operationally by climate-related events, or that do not need significant capital expenditure after such events (when other assets may be experiencing downtime). There may also be opportunities for operational cost reductions through efficiency and resiliency gains.
  3. Identification of future opportunities – Demand for resilient assets is likely to increase. Investors are exhibiting increasing interest and understanding in climate resilient assets, particularly in sensitive areas. Investors are mindful of the economic consequences of disruptions and emphasising reliability and resilience is central to their requirements.
  4. Growing trust – Assets are designed to provide effective services throughout times of peak demand/need. Assets that operate most effectively during times of climate disruption are therefore likely to generate increased trust from tenants and other key stakeholders and thus retain financial, economic and societal value over the long term.
  5. Increasing influence – Investors who lead the evaluation and adaptation of assets and demonstrate the thoughtful performance of fiduciary duties are likely to have a more respected voice within policy discussions.

Progress

As mentioned above, resilience has emerged as an important topic. Whilst there is a long way to go, progress has been made. Some communities and assets around the world are embracing plans to be resilient to what the future will bring — and what the present is already delivering.

We identify five key marks of progress in the practice of resilience:

  1. The knowledge base on resilience is expanding
  2. Tools supporting resilience are increasingly available, yet remain difficult to select and use
  3. Science and practice are increasingly working together, but more collaboration is needed
  4. Resilience mandates are emerging in some countries and cities
  5. Funding from philanthropy and government has been crucial in field growth.

So, what should real estate companies do?

Consistent with our belief that investors need to deal with the risks of climate change as a practical issue now, rather than put it off into the distant future, we encourage a systematic assessment of the vulnerability of assets to climate risk, ideally by utilising an analytical modelling framework. This will enable the identification of risks, assessment of materiality and provide guidance to investing, considering the need for climate resilience in assets, new investment opportunities and the broader business plan.

Given the relatively short timeframes during which an investor might own a particular asset, a common attitude is that climate risk is of low priority for evaluation. However, by evaluating whether assets are vulnerable to business disruption due to the impacts of climate change, investors may be able to implement resilience measures that positively increase an asset’s valuation.

Modelling future climate and risk scenarios can assist climate due diligence by enabling consideration of how the asset may fair against risks posed by tomorrow’s climate and not just todays.

We advise a process for evaluating climate risks:

  1. At portfolio level to:
    – Identify relevant geographic climate risks
    – Score and map assets in the portfolio based on criticality and vulnerability
    – Prioritise climate risk mitigations in accordance with ratings
  2. At asset level to:
    – Evaluate key climate risks and their relative impacts on a physical assets condition, operational capacity, and for regulatory implications (fines, penalties)
    – This can then support development of a mitigation strategy which develops action plans based on highest value risk mitigation options per vulnerability reductions

Our conclusions

The cost difference between being pro-active now compared to being reactive in the future will be significant. Early actions have the potential to reduce losses in the short term as well as create significant value by enhancing the resilience of assets in the long term. Forward thinking investors alert to the implications of climate change can integrate adaptive strategies. This will avoid being caught off guard by climate shocks and incurring large remedial costs that could severely disrupt investment returns.

The real estate industry will adapt further as the resilience discipline itself evolves. Best practice is not universal across the sector, and the science and our ability to devise innovative solutions is constantly evolving. As we move through 2019, we recommend that all real estate firms consider resilience by asking the following questions; What does resilience mean? What risks are faced and how can they be mitigated? Progress towards development of a Resilience Strategy is a true win/win – good for business and good for the planet.

This post was originally posted on GRESB Insights

Real Estate Sustainability Performance (& Skydiving)

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Skydiving can make you anxious. You may be reluctant to try it, you may not even entertain the thought of doing it. You’d certainly want to know that safety has been thoroughly planned, that you’re dealing with an experienced crew and a plane that actually works.

Once you do it though, you’ll probably love it, want to tell everyone about it and do it again, but next time from even higher! Fortunately, if you don’t want to do it, no one is going to force you out the plane. This is not the same, when it comes to setting real estate fund and asset sustainability performance targets.

Taking a few steps back though, I have seen many similarities in people’s thought process when considering performance targets, as you may see when skydiving for the first time. Like skydiving, that hesitation has a rational basis. Companies may not want to set a performance target due to barriers including:

  • Knowledge– where does one start
  • Uncertainty- how to drive forward improvements
  • Cost- a lack of budget
  • Responsibility- a lack of authority
  • Ultimately- a fear of failure

Planning, with the right expertise, can overcome all of the above barriers.

There are two common approaches to performance targets:

  • Top down– identifying where you want to be (often in the long term and often with far reaching improvement targets) and then setting about to accomplish the target through a series of strategic goals. This approach is commonly seen when setting Science Based Targets.
  • Bottom up– identifying improvement actions and setting a performance target based on the expected improvement to be gained from each action. Consolidating a range of asset level improvements can lead to the establishment of portfolio level performance targets.

EVORA is experienced in applying both approaches. Often, it is a combination of approaches that delivers most success for a simple reason that people find it harder to associate with (and then take accountability for) a long-term target and then recognise how it can be achieved. This is particularly true in commercial real estate where asset transactions in funds concerned can cause disruption.

There is plenty of literature available on setting top-down Science Based Targets and I draw your attention to our posts.

Less guidance is available on delivering successful bottom up strategies, and it is often these shorter-term targets that help companies on the road to longer-term more ambitious journeys. As such, we provide below, a staged approach, using insight from our experiences.

  • Stage 1: Prioritisation – Understand your portfolio and prioritise action at assets that have the greatest impact, greatest opportunity for improvement and/or where you have greater influence over performance.
  • Stage 2: Identification and analysis – Undertaking energy audits is a necessary step to identify performance improvement actions; EVORA has experience of more than 400 audits in the past eight years. Recommendations need to be technically and economically feasible, and importantly, aligned with the asset business plan to gain most chance of approval.
  • Stage 3: Asset level improvement plan – From our experience, this is a critical step. Property and Asset Management teams must work to agree and budget for implementation of specific actions within agreed and defined timescales with responsibilities and budgets clearly set out. Change does not happen without action and action does not happen without buy-in.
  • Stage 4: Portfolio level performance target – Portfolio level performance targets can be set through rolling up multi-year savings expected from asset level improvement plans. Establishing an accurate baseline and having clarity on reporting outputs and metrics is essential at this stage.
  • Stage 5: Implementation and tracking – Improvements can rely on operational and technology change. At EVORA, we have experience of both. Our SIERA Monitoring & Targeting software has led to operational energy savings up to 30%. While our engineering EDGE team has substantial experience on design, specification and project management of M&E installation. All performance data should be tracked in sustainability software such as SIERA to enable review.
  • Stage 6: Communication – Finally, and importantly, success must be shared with stakeholders including tenants and investors. Often the value of communicating responsible investment practices can be greater than the value of energy saved through such programmes

The above approach has proved successful for our clients and helped many get underway with performance targets. The process works as it delivers assurance to key stakeholders at all levels that the programme is practical, feasible and, importantly, adequately resourced to deliver success.

As for the obligatory targets, there is already certainty that these are coming for new and existing buildings.It may be driven by a combination of legislation and industry wide programmes but we can see these coming on the horizon. Planning now will help you keep pace with the industry.

If you want to go sky diving, please make sure your trip is planned, on a well-maintained plane and with an experienced crew (and don’t forget to share the news with us!). Happy flying!

To find out how we have assisted clients to develop and then achieve UK and pan European performance targets please do get in touch.

This post was originally written and published for GRESB Insights

Addressing Environmental Risk in Shopping Centres

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

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

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

Proactive

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

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

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

Legal Compliance

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

Examples include:

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

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

 A Structured Approach

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

On reflection, I think there are multiple reasons:

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

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

To Certify or Not to Certify

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

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

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

HQE (Haute Qualité Environnementale) certification for buildings in operation: how does it compare on health and wellbeing?

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Although many may not be overly familiar with it (in comparison to the likes of BREEAM and LEED), HQE certification has the strongest presence in Europe by area, with buildings totalling approximately 85 million m2 certified at the end of 2017[1].

While HQE was first developed in France, the new international platform Cerway has brought it to an international audience.

Overall, HQE certification presents comparably comprehensive coverage of sustainable construction to BREEAM In-Use and LEED certifications, with a major focus on overall quality and assurance of the result. Additionally, HQE certifications present a non-prescriptive nature, which aims to rely less on application standards and specific thresholds, and rather account for local context and conditions, therefore providing a flexible, yet clear guidance.

HQE’s non-prescriptive focus addresses primarily:
1) Environmental and Energy Performance
2) Health and Comfort

In the first category, attention is focused on sustainable practices and management, with a particular distinction drawn between on the one hand, the intrinsic environmental quality of the asset, and on the other hand, the effectiveness of environmental practices.

The second category focuses upon the assets’ qualities that contribute to the health, comfort and wellbeing of its occupants.

So where does health and wellbeing fit in?

While BREEAM In-Use and LEED allocate substantial coverage to the environmental and energy aspects of a building, their coverage of health and wellbeing is to a lesser extent in comparison to HQE. HQE embraces both equally and provides an approach that aligns with current trends in the real estate sustainability sector. In my opinion, HQE has adopted a proactive approach which has foreseen and been able to react to the increasing need for stronger health and wellbeing monitoring. HQE’s direction aims to ensure that the assets will benefit equally from a reduction in energy consumption, good management of resources and better health and productivity for the occupiers. Hence, it has the potential to deliver long-lasting value for real estate investors and tenants, whilst providing enough flexibility on the “how” to achieve them through its non-prescriptive nature.

EVORA Global HQE image one

GBC, F. (2015). International Environmental Certifications for the Design and Construction of Non-Residential Buildings. Paris: France GBC, p. 4

Approximately 50% of the HQE certification focuses on health and wellbeing, whereas in BREEAM In-Use the scoring is split is 17% in part 1 and 15% for parts 2 and 3, respectively, based on the proportion of the overall available points.
BREEAM’s definition of health and wellbeing encompasses a wider range of aspects (outdoor rest space, active lifestyle options, safety and security); however, the percentage coverage dedicated to health and wellbeing in the BREEAM In-Use certification is smaller than in HQE. LEED puts less emphasis upon health and wellbeing, with a focus on general indoor environmental quality, and a more limited weighting coverage for comfort.

Out of the fourteen categories, the HQE rating system requires an asset to perform highly in at least three categories and achieve a basic level for a maximum of seven categories. Categories are not weighted, as they are considered to be equally important to obtain the certification[2], which further strengthens its duality in its coverage of energy and comfort.

Is HQE for you?

If you wish to challenge your assets with a new certification, HQE offers a balanced assessment of both energy and environmental factors and health and wellbeing features. This being said, certifications are continually evolving to remain relevant. All certifications will likely be aiming to grow their coverage of health and wellbeing factors as the topic begins to become more of a mainstream consideration in real estate sustainability. In my opinion, at some point it will become as equally important to ‘sustainability’ as energy currently is. Additionally, there is a growing realisation that these aspects are heavily interlinked. Working on one aspect will benefit the other, which will help to achieve greater sustainability overall.

All in all, HQE provides a useful, comprehensive and straightforward evaluation of an asset regarding management and performance, with equal attention paid to sustainable construction and, management, comfort and health & wellbeing, which would secure a comprehensive and solid assessment of your assets. Irrespective of whether the certification is being obtained for identifying improvement opportunities, benchmarking between assets, marketing or GRESB, the end output should be a certification which meets your needs and expectations. If those expectations include a good balancing of energy performance and health and wellbeing, then the HQE certification may be more suited to your needs than the more widely known certifications of BREEAM and LEED.

If you would like to receive more information about which certification would be most relevant to your assets, do not hesitate to get in touch with our consultancy team here at EVORA.

  1. HQE, Ceerway (2017). HQE Certification: Whom for? What for? How?. Paris France, p.6
  2. Bernardi, E., Carlucci, S., Cornaro, C., & Bohne, R. A. (2017). An Analysis of the Most Adopted Rating Systems for Assessing the Environmental Impact of Buildings. Sustainability, p. 10.

Clean Energy for all Europeans Package: future implications for the real estate sector

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On the 13th of November the European Parliament adopted new targets for energy efficiency and renewable energy generation as part of its wider package of clean energy initiatives.

The “Clean Energy for all Europeans Package” aims at moving towards a renewable future with reduced dependence on coal, gas and oil. The new agreements adopted this week target a 32.5% energy consumption by 2030, as well as requiring 32% of energy spend be on renewably sourced energy by 2023 within the bloc. Additionally, 14% of fuels utilised in transportation will have to be issued from renewable sources by 2030.

The legislation, divided into three major documents, stipulates that member states will have to roll out specific measures to address disparities in energy production and provision, and make renewable energy available for citizens to produce, purchase and sell.

Each member state will be asked to develop a 10-year national plan addressing energy and climate, detailing objectives, contributions, policies and measures, by the end of 2019. This will then have to be updated each decade.

What does it mean for real estate investors with pan-European portfolios? 

The agreement aims at reducing CO2 emissions, maximising energy efficiency, reducing energy costs for European consumers, and fighting global warming. These are goals that have been growing in prevalence over the past decade and are now at the heart of the EU’s agenda, with this recent legislative development further evidencing its importance to the bloc. With buildings consuming around 40% of the energy used worldwide, real estate is inherently at the heart of this commitment.

Firstly, real estate investors with pan-European portfolios can expect a wave of new incentives and regulations promoting renewable energy over traditional energy sources. The design, extent, and stringency of new legislation could however vary from country to country as each is being allowed to develop its own action plan. Considering renewable energy projects at your assets or switching to green energy contracts, now available from most major suppliers, are great ways to contribute toward these goals and enhance your portfolio’s environmental credentials.

An additional benefit of moving toward renewable energy sources is reduced exposure to the price volatility of traditional energy sources such as coal and oil as a result of geopolitical, legislative and environmental dynamics. Not only is renewable energy better for the planet, it may not be long before it comes at a lower and more stable price.

Real estate investors with pan-European portfolios can expect a wave of new incentives and regulations promoting renewable energy over traditional energy sources

It is unclear as to whether national-level plans will mainly apply to primary energy producers, and the extent to which they will involve public and private bodies. It is likely, however, given the scale of this new European directive, that such national goals will to some degree affect all stakeholders involved in the energy supply chain.

As the real estate sector is at the very core of the fight against climate change and in the reduction of greenhouse gas emissions, real estate investors may be expected to comply to new emission thresholds, standards and increased transparency, in order to meet new national targets. This will certainly require additional resources and capacity to be devoted to better, more structured and regular energy and environmental reporting to external governmental and institutional bodies. Moreover, these new commitments should act a trigger for creating a more transparent energy supply chain for buildings. Re-evaluating and adopting a better step-by-step energy supply strategy will become increasingly important in the years to come.

Real estate investors may be expected to comply to new emission thresholds, standards and increased transparency, in order to meet new national targets

Finally, the initial Energy Efficiency Directive of the European Commission clearly stated the overarching goal of this agreement. By reducing greenhouse gas emissions, improving air quality and using resources efficiently, the idea is to move towards a healthier, more comfortable and respectful future for people and the environment. It is of fundamental importance that all stakeholders understand the role that businesses and investments play in shaping the years ahead, and how this legislative step fits into a larger framework of creating resilient value for the future.

Sources:

  1. Energia, efficienza e rinnovabili al 32,5 e 32 per cento nel 2030. La Repubblica. Published.
  2. European Commission. 19 June 2018. Energy efficiency first: Commission welcomes agreement on energy efficiency American [Press release].
  3. European Commission. 13 November 2018. Commission welcomes European Parliament adoption of key files of the Clean Energy for All Europeans package. [Press release].
  4. European Commission. Buildings.