As COVID-19 coincided with our spring peak reporting season, our reporting clients have had to consider adjusting their reports to suit. Despite the focus on the 2019 reporting calendar, many have chosen to acknowledge COVID-19 within the introduction or even a dedicated full chapter, allowing stakeholders to considerately judge the effectiveness of the organisation’s response.
This crisis has also placed an emphasis on social criteria. We have observed more reports focusing on the treatment of employees, suppliers, and relationships with local communities. Changing stakeholder priorities means that organisations are increasing attentions on social issues to demonstrate responsiveness to the highest priorities at the present time.
We perceive next year’s reporting to be the most changed by the disruption has caused. Accordingly, EVORA is developing aspects of reporting, including:
Re-examining materiality assessments to ensure the true identification of sustainability issues that are important to both stakeholders and business continuity.
Presenting further disclosures, to provide effective insight into an organisations COVID-19 response.
Continuation of reporting on standard, year-on-year ESG data and performance, which will allow readers to evaluate the organisation’s resistance to shocks.
Backing data with contextual explanations. We perceive that there will be significant reductions in environmental performance data reported, such as energy and travel. This fall in carbon emissions will undoubtedly accelerate the attainment of sustainability goals. However, this distortion will require a full narrative with expectations for future trajectory.
Stakeholder scrutiny of how organisations are responding to the COVID-19 pandemic is bringing heightened attention to the importance of corporate transparency on sustainability issues. EVORA design reporting strategies for organisations, enabling them to apply frameworks, communicate meaningful sustainability outcomes and impacts to key stakeholders and use reporting as a tool to improve sustainability performance. Get in touch with the EVORA reporting team today.
We are delighted to announce that EVORA Global has joined nearly 100 other organisations in signing The World Green Building Council’s Commitment.
The World Green Building Council (WorldGBC) is a global network leading the transformation of the built environment to make it healthier and more sustainable. Their Net Zero Carbon Buildings Commitment calls for companies, cities, states and regions to reach Net Zero operating emissions in their portfolios by 2030, and to advocate for all buildings to be net zero in 2050.
The aim is to drastically reduce operating emissions from buildings, and in doing maximising the chances of limiting global warming to below 2 degrees.
Sixty-two of the 96 Commitment participants are businesses and organisations, and collectively our action alone will reduce more than 3.3 million tonnes of carbon emissions. Additionally, 28 cities and 6 states and regions have signed the Commitment, signalling a shift in political will towards net zero policy.
“Since launching EVORA in 2011, I’ve seen a monumental shift in opinion. Not just in the real estate industry, but the whole conversation of suitability, responsibility to the environment and climate change. We are excited to join and promote this important initiative. We shall continue to use our influence to challenge traditional approaches to demonstrate both the necessity and business case for ensuring climate and ESG related risks are systematically assessed throughout the investment process. ESG is here to stay and we intend to be at the forefront of tackling climate change and ensuring a sustainable future.”
Chris Bennett, EVORA Managing Director
The WorldGBC’s Commitment for zero carbon buildings places energy saving at its heart. This approach is completely aligned with EVORA’s commitment to reducing operating emissions from buildings and belief in building a more sustainable future.
https://evoraglobal.com/wp-content/uploads/2020/06/Advancing-Net-Zero-social-media-image-1-scaled.jpg7851500EVORAhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngEVORA2020-06-05 08:21:352020-06-05 08:21:36EVORA become signatories to the Net Zero Carbon Buildings Commitment
Earlier this month, BRE released the latest version of the BREEAM In-Use International Scheme, Version 6. The uptake of BREEAM In-Use assessments has increased significantly over recent years, so there is no doubt that the requirements of the new standard will have a wide-reaching impact.
With this in mind, let’s take a look at the headline changes below.
“Overall, the bar to achieve ratings has well and truly been raised, so it’s important these changes are fed into BREEAM In-Use Improvement Programmes as early as possible.”
Removal of Part 3
In the BIU 2015 scheme, Part 3 (Occupier Management) required considerable tenant engagement and was rarely assessed. BRE have therefore only included Part 1 (Asset Performance) and Part 2 (now called “Management Performance”) in the scheme.
New Categories
Resources category combines issues from the Materials and Waste categories of the BIU 2015 manual bringing together circular economy principles.
Resilience category considers an asset’s physical, social and climate change risks and has improved BIU 2015 elements on natural hazards, durability, security and climate related risk management.
Minimum Standards
Previously only in Part 3, minimum standards are now in place for Part 1 and Part 2. Note that for Part 2 a sustainable procurement plan (Rsc 05) and fire risk assessment (Rsl 09) is required to achieve anyrating, a significant change.
Exemplary Credits
Introduction of exemplary credits can be achieved for performance levels beyond what is recognized by standard criteria and are each worth 1% (regardless of the category weighting) to the overall score (up to 10% boost capped at 100%).
Notable Changes to Weightings
% decreases were seen in Land Use and Ecology, Transport, Pollution, Management, Energy
% increases were seen in Health and Wellbeing, Water, Materials and Waste
Weightings are now as follows:
Integration of Key ESG Topics
Alignment with TCFD e.g. Rsl 06 Emergency plans and climate-related physical risks and Rsl 07 Climate-related transition risks and opportunities.
Social value focused e.g. Rsl 08 Social risks and opportunities considers the wider risks and opportunities for the asset. These include social disruption, public health (such as pandemics), poverty, and forced labour.
Greater context to UN SDGs provided across a number of categories e.g. Goal 3 (Good Health and Wellbeing) under ‘Health and Wellbeing’, Goal 6 (Clean Water and Sanitation) under ‘Water’, Goal 7 (Affordable and Clean Energy) under ‘Energy’, Goal 11 (Sustainable Cities and Communities) under ‘Transport’ and ‘Resilience’, Goal 12 (Responsible Consumption and Production) under ‘Resources’, Goal 15 (Life on Land) under ‘Land Use and Ecology’.
A route to Net Zero certification may be possible for assets that achieve 50/50 in the energy section. This section takes the operational CO2e intensity of an asset and compares it against the relevant ‘Reference Benchmark’ CO2eq emissions (established by BRE) using a sliding scale, with a maximum of 50 credits being awarded for a zero carbon building, and 0 credits awarded where the assessed emissions are more than four times the ‘Reference Benchmark’ emissions. An additional five exemplary credits are available for buildings that are carbon positive.
Greater Emphasis on Performance
Credits now awarded for the completion of energy audits (ENE 22) and reduction of carbon emissions over time (ENE 24).
More Flexibility in Achieving Credits
A note has been added to each of the evidence requirements in each issue to allow for a wider range of acceptable evidence types e.g. assessors’ own site inspection report, communication records, documented interviews.
Land Use and Ecology use was rarely a section when you could score high due to limitations with inner city assets, but it now allows the enhancement of ecological value offsite (within 2km e.g. local park).
Certification Process
There are no more renewals required each year in between the three year recertification period; each certificate will be issued with a three year expiry date. Note assessments on the old scheme will still need to be renewed.
The survey remains open post submission/certification and answers can be changed at any time in the middle of the three-year cycle without re-certification. This includes adding a new Part to certification which will not reset the three-year cycle.
Certification fees are only required if you make significant changes (≥10% change to score) or want to recertify with a new score. Mid-cycle submissions can be made up to 10% of the score via desk-based audit, anything more will be treated as an initial certification and will require a site visit. Note that mid-cycle submissions will not reset three-year expiry dates.
Transition Period
Up until 4th May 2021, it is still possible to assess on the old 2015 scheme. Assets assessed on the 2015 scheme up to this date will then have three years to transition to the V6 scheme. There can therefore still be assets on the 2015 scheme up until May 2024, though the vast majority would have transitioned long before then.
Assets currently assessed under the 2015 scheme will be able to wait until recertification is due (after three years from initial certification) before needing to make the leap to V6. The earliest an asset would have to transition is May 2021 if initial certification was achieved in May 2018.
Eligibility Criteria
Stricter occupancy requirements for Part 2 – ≤20% of the GIA can be classified as ‘vacant’ over the reporting 12 month period.
More clarity for Part 1 – ≤20% of the GIA can be classified as ‘unfitted’ at the point of submission.
Relaxed eligibility criteria for multiple building single assessments – the removal of “Connected to and share common services” requirement has been replaced with “All buildings must be located on the same site”.
For assets residing in other National Scheme Operator (NSO) regions (e.g. Germany, Austria, Netherlands, Spain, Norway, Sweden), they will be updating their own schemes later this year, closely aligning to the V6 scheme.
Overall, the bar to achieve ratings has well and truly been raised, so it’s important these changes are fed into BREEAM In-Use Improvement Programmes as early as possible. There are of course many other minor changes that our BREEAM assessors and consultants are getting to grips with, but the feedback from the team so far has been very encouraging. We believe BRE have done a phenomenal job in driving positive change, and encapsulated many of the key ESG issues the real estate market faces today.
https://evoraglobal.com/wp-content/uploads/2020/05/nicolas-tissot-217876-scaled.jpg10001500Joe Ellishttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngJoe Ellis2020-05-28 10:50:392020-05-28 10:50:40BREEAM In-Use Version 6 Released – Headline Changes
We are now in a critical period requiring rapid and urgent action to retrofit our buildings in a bid to address climate change. The Paris Agreement set a global imperative ¹ to restrict global warming to 2⁰C or below. To achieve this ambition, global greenhouse gas emissions need to reduce rapidly today with developed economies ultimately becoming Net Zero by 2050. We cannot afford to bide our time and cut emissions later.
Several policy drivers are now facilitating a step change in emissions reduction not within the next 30 years, but within the next 10 years. For example, under the European Green Deal, the EU Commission has recently furthered its ambition to reduce emissions by 50% by 2030 from 2005 levels. Also, the Energy Efficiency Directive (EED) aims to improve energy efficiency by at least 32.5% by 2030 with the Energy Performance of Buildings Directive (EPBD) setting out regulations to increase the rate and depth of building retrofit programs. Countries are also formulating long-term national strategies to achieve ‘Net Zero carbon’ targets by 2050 including mobilizing significant investment in innovation and sustainable economic activity such as renewable energy and decarbonization of the energy system.
Those leading the way in commercial real estate have signed the BBP’s Climate Change Commitment and will be disclosing plans to achieve Net Zero carbon by 2050 by the end of this year. ² It is today’s actions that will determine whether intermediate and long-term targets are achieved, but it is crucial that immediate action is coupled with longer term planning in order to minimize costs.
Risks & Opportunities
In the transition to a low-carbon economy, investment manager’s fiduciary responsibility will increasingly include assessment of how climate-related ‘transition’ risks, such as the legislative risks described above, will impact asset values. Such considerations will need to be included in future investment strategies and decision making.
Buildings where energy and carbon performance is not improving in line with emission reduction targets may be exposed to “stranding” risks. These risks could include a reduced investor, market and tenant demand, and exposure to increasing energy costs and carbon pricing. As a result, these assets may require significant capital investment to meet stringent energy and carbon performance regulations.
The recommendations from the Taskforce for Climate Related Financial Disclosure (TCFD), that are currently progressing towards mandatory disclosure, will require investment managers to identify, assess and effectively manage these potentially material financial risks. But it’s not all about risks. TCFD will also require investment managers to identify opportunities as improving energy and carbon performance increasingly serves to enhance and preserve asset value and secure long-term income streams by minimizing associated costs.
To improve forward-looking decision making and aid financial planning, specific tools are becoming available such as the Carbon Risk Real Estate Monitor (CRREM) developed in partnership with institutional investors and industry bodies including GRESB. The CRREM tool provides country and property use emission intensity benchmarks that are aligned with global warming scenarios of 2⁰C or below. It projects current building emissions intensity, allowing for factors such as grid decarbonization, and assessment of low-carbon transition “stranding” risks where factors such as future carbon pricing can be analyzed under a number of scenarios.
Data, data, data
Transition risks will increasingly be associated with whole building energy consumption and emissions intensity. To begin to assess risks, set targets to reduce building emissions and plan for Net Zero, the full picture of the current whole building energy consumption is needed.
Existing assets will most likely include tenant-controlled areas, which pose challenges for data acquisition especially for those with difficult-to-reach tenants on FRI leases and long-term leases in core strategic assets. ³ In addition to leveraging green lease clauses, building good tenant relationships will be key to unlocking tenant data. The installation of AMRs and partnerships with data collection agencies, will both be crucial to circumvent the inherently inefficient process of collecting data manually from property managers.
The Future is Decided Now
With only two retrofit cycles left to 2050 ⁴, long-term initiatives must be carefully planned to ensure intermediate emission and energy reduction targets are met while aiming towards a Net Zero emissions future.
Conducting this forward-looking assessment to meet these targets, and assessing the transition risks and opportunities at an asset level, may require changes in the process by which investment managers currently plan renovations and M&E upgrades across the asset hold period. However, by identifying the worst performing assets and implementing programs of Net Zero audits across portfolios, investment managers can begin to identify and plan the required measures to meet this ambition. It is also important to ensure sufficient depth of retrofit as opportunities arise within the retrofit cycle. Initiatives such as long-term Building Retrofit Passports, as proposed under the EPBD, will also help advance this agenda and assist in the planning process.
The usual practice of like-for-like replacements may no longer be sufficient but by making significant investments in energy efficiency and taking maximum advantage of retrofit opportunities in the short and medium-term, these costs can be minimized.
2050 may seem like a long time away, but investment managers need to act now to implement sustainability programs with the associated risks assessments and financial planning to ensure portfolios and investment strategies remain resilient as we transition to a low-carbon economy.
¹ The international community convened in 2016 to sign the Paris Agreement, committing to limit global warming to well below 2°C and pursuing efforts to limit it to 1.5°C. ² http://www.betterbuildingspartnership.co.uk/node/877
https://evoraglobal.com/wp-content/uploads/2020/04/clem-onojeghuo-198573-scaled.jpg9461500EVORAhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngEVORA2020-04-21 10:24:022020-04-21 10:24:03A 2050 target but no time to spare!
When people hear about sustainability, typical thoughts circle around travel, consumerism, buildings, the physical world. Conceptually, the web and the devices that allow us access to it, appear clean in their usage, far removed from belching power plants and noxious fumes.
But the reality is that every search performed on Google,
every Netflix show watched, every Spotify song listened to, triggers servers
somewhere to process and output data and then more servers to transmit it,
consequently consuming electricity and burning fossil fuels.
The industry is taking steps to reduce CO2 emissions. New movements encourage designers to consider sustainability in the web site design phase. Internet behemoths such as Google, Facebook and Amazon have made promises to go net-zero. Some have found novel ways to consume less by submerging data centres or building data centres in cold environments (a lot of electricity is consumed by just cooling the servers)
But there are actions we can take as users that will also help reduce those emissions:
Drop the quality.Video streaming accounts for the biggest volumes of data sent over the internet. Watching something in HD makes everything super-realistic but consider the impact. Go for the SD version and you can still enjoy the content, but drastically reduce the data streamed.
Do you need to search? When you know the web address to go to, open your browser and type it in. Or save it as a bookmark. Entering a keyword into the browser’s address bar (such as “BBC”) will provoke a search. Each search consumes some electricity. Cumulatively, those searches have a massive impact.
Download rather than stream. Is something on heavy rotation on Spotify? Then download it. This will also save your data.
Unfortunately, emails harm the environment, accounting for a huge carbon footprint. Consider not sending that email. Could you just phone? If you need to send it, just take a moment to think does everyone cc’d need to read this?
Change to a more sustainable search. There is a greener alternative to Google. Ecosia.org plant trees from the money they make through you using their search and claim 100% renewable energy usage. And they appear to be true to their word.
Switch off. The ultimate sustainable method!
Of course, the Internet has brought huge benefits to a more sustainable world. Online meetings have reduced the need to travel. The consumption of the written word has moved more online, reducing the number of books and newspapers printed. But it’s just a conscious move for everyone to recognise that their Internet use still consumes fossil fuels. And as Berners-Lee says,
“When we take a small action to cut carbon, it’s a message to yourself that you care about the climate emergency.”
https://evoraglobal.com/wp-content/uploads/2020/02/bench-accounting-C3V88BOoRoM-unsplash-scaled.jpg10021500Alex Grahamhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngAlex Graham2020-02-25 15:13:452020-02-26 08:50:42A sustainable Internet: What is the cost of our current use?
In the discourse on social value and the built environment, we most often hear about infrastructure, multi-residential developments, and office spaces. However, 15% of the UK’s real estate market value is held in logistics and industrial parks [1]. These sites support many business types, with e-commerce businesses now taking up a larger proportion of tenants than in previous years. In fact, the manufacturing, transport and storage industries support just less than 4.6 million jobs in the UK alone [2].
In 2018, the manufacturing, transport and storage industries generated an estimated 30% of the UKs carbon emissions. Carbon emissions are a direct driver of climate change. Climate change is a global process which, carries with it significant social impacts. This short article makes the point that we should be considering the social value potential of all asset classes, especially those with greater environmental impacts.
What are the social impacts of climate change?
Impacts such as rising temperatures and poor air quality have the ability to affect the physical and mental health of the population, as well as their wider quality of life. By 2020, sustainability-conscious landlords are already familiar with monitoring consumption data to reduce their emissions. This often translates to prioritising initiatives focussed on energy usage. Although these activities are vital to reducing the extent of the climate crisis, sustainability programmes should continue to address the existing environmental, but also social impacts of climate change. This can be done by undertaking social initiatives at the asset level.
Taking Action
Individual assets have the scope
to improve the lives of their occupants, visitors and surrounding communities. To
address the social impacts of climate change, social value initiatives should
seek to improve the physical and mental health of these people, as well as
their wider quality of life.
There are a number of practical
ways to implement social value and social impact improvements at individual
assets.
Tenant engagement can kickstart a productive, bottom-up approach to establishing specifically what these actions might be. For example, tenants may identify that due to rising temperatures or extreme weather events, their work environment is sub-optimal.
Valuable, quick-win opportunities include provision of facilities to increase public transport use or cycling/walking, encouraging use of the stairs for building users and making healthier food options [3].
Access to the natural environment both internally and externally can both improve the mental and physical health of tenants, as well as supporting climate adaptation through green infrastructure.
Due to the location of buildings within logistics and industrial parks, there are opportunities at the wider estate and public realm level, managed by landlords to provide social benefits to tenants.
In the longer term, employment and community initiatives can look to support education, work placement or employment opportunities for members of the community.
It is possible to quantify and report the positive impacts of the above. For example, certification schemes BREEAM and FITWEL have resources to assess and certify health and wellbeing aspects of buildings in multiple asset classes [4]. Whilst BREEAM encompasses most asset classes, FITWEL currently covers office, multi-residential and retail buildings.
Assessing the social value outcomes for occupants and visitors to buildings can also be done through quantitative social value metrics. EVORA has used HACT in past projects to assess outcomes of community engagement programmes.
To let us know your thoughts, please don’t hesitate to get in touch.
[1] Statista. (2020). Commercial property investment value UK 2017 | Statista. [online] Available at: https://www.statista.com/statistics/747082/commercial-property-investment-value-in-the-united-kingdom/ [Accessed 12 Feb. 2020].
[2] Ons.gov.uk. (2020). EMP13: Employment by industry – Office for National Statistics. [online] Available at: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/datasets/employmentbyindustryemp13 [Accessed 12 Feb. 2020].
https://evoraglobal.com/wp-content/uploads/2020/02/oleg-laptev-hwu-uFaXzOU-unsplash-scaled.jpg10041500Emily Dayhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngEmily Day2020-02-20 11:05:572020-02-26 10:46:45Addressing the social impacts of climate change: What if we unlocked the social value hidden in the UK’s industrial and logistics assets?
With a new decade upon us, there is now a call more than ever to address the proliferating global challenges facing our planet.
Governments can no longer fight this battle alone and need individuals and businesses to take action and deliver an agenda that provides a sustainable path for both the planet and society.
Clearly, this is no easy task – so how can real estate connect with and relate to global challenges? What is the motivation behind the bigger picture? And how can real estate owners, operators and occupiers oversee their potential impact in the long term?
Let’s begin to unpick the ‘Big Questions’….
‘What’
In 2015, the 2030 Agenda for Sustainable Development was put forward with world leaders setting out 17 goals with 169 targets aimed “to end poverty, fight inequality and tackle climate change”. The breadth of the Sustainable Development Goals (SDGs) aims to provide sustainable development for all persons and aspects of businesses and look for them to fully immerse into a new way of thinking that will positively impact the people and planet.
Figure 1: SDG goals (UN Framework: 2015)
‘Why’
Given that the real estate industry accounts for half of global wealth, 40 percent of the world’s consumption of primary energy and a third of all anthropogenic CO2 emissions there is no mistaking that the industry can contribute to achieving certain Global Goals… As the real estate industry is chiefly responsible for the development and management of assets and is also vulnerable to the impact of climate change, it goes without saying that the industry should be one of the main leaders fighting the cause of environmental stewardship.
So, why is it that the sector has barely scratched the surface of the SDGs since their deployment in 2015?
An agenda centred on 17 SDGs does run the risk of simply being too broad, complex or immaterial for businesses to address. In fact, a study conducted by PwC found that only one percent of companies stated they would assess their impact across all 17 goals. But are targets on No Poverty or Zero Hunger achievable or even relevant to the wider real estate industry?
Our own research conducted among 25 real estate companies achieving at least one five-star GRESB rated fund identified commitment to 13 of the 17 SDGs to some extent. Carbon and energy covering SDG13 (Climate Action – 70% adoption) and SDG7 (Affordable and Clean Energy – 52% adoption) proved the most common for actions relating to the operation of real estate assets. SDG5 (Gender Equality – 52% adoption) proved the most popular actions that are internal to each organization. Fewer than half of the sample group aligned with any other SDGs despite the notable impact real estate can have on SDG3 (Good Health and Wellbeing) and SDG 11 (Sustainable Cities and Communities).
Figure 2: Proportion of the sample committing to selected SDGs (real estate)
‘Where’
With global frameworks, it’s all about scalability – with 169 sub-targets to consider, it is difficult to pin-point what impact your business could specifically make. However, many activities and initiatives within your business may well align to SDGs already – whether this be indirectly or directly. The key here is to break down the goals into more manageable and understandable objectives that relate specifically to how you as a business operate.
First, ask yourself…
What is material and what are the relevant impact categories you want to address?
Reflect on your activities and the risks to people and the environment, as well as on beneficial products, services and investments. While doing so, consider both operations and the broader value chain. One way to make this simple is the use of a materiality assessment. In short, a materiality assessment is an exercise in stakeholder engagement designed to gather insight on the relative importance, and impact, of specific environmental, social and governance (ESG) issues. The key to getting real value from a materiality assessment is starting with a clear understanding of what information you are looking for, choosing the right stakeholders and applying the appropriate methodology to present the information effectively and make informed decisions.
Breaking down analysis into environmental, economic and societal factors allows you to understand the impact your activities have, and the programmes needed to mitigate adverse risks or exploit beneficial opportunities. Consider not only your objectives but your audience and who is involved. What topics are of most importance to your stakeholders? Who needs to take responsibility?
By this point, you will have developed a sense of what impacts you as a real estate business could have and their overall importance. Now, you must define objectives that could contribute to your SDG priority targets, including identifying the indicators used to measure progress against then.
Now for the ‘How’
Outcomes of a materiality assessment should be channelled into a structured framework, such as an environmental management system (EMS), to ensure programs are managed through a coordinated strategy. Building the SDGs into the strategy is a way to stop isolated work or seeing the global goals as somewhat as an additional task.
The strategy should define what metrics and indicators can be used to set appropriate targets, defining the outcome from each impact areas. It is important to consider how progress will be tracked and communicated. High-quality data is essential for making informed decisions and prioritizing action. Take, for instance, SDG13 Climate Action – here you may wish to monitor and report on energy usage and carbon dioxide emissions. The use of dashboards to easily convey current performance (at asset and portfolio level), track against historical periods, and importantly, communicate progress to stakeholders is a vital step in achieving climate goals.
Figure 3: Energy and Carbon Dashboards (SIERA)
Final Thoughts
An EMS provides a framework to increase focus within your business’ strategic planning process and understand the context and scope of impacts. Essentially, it answers the bigger question of ‘Where’ you can make an impact as a business. The key here is to be straightforward! No matter how big or small the change, it is important that you know your objectives and communicate them in a way that is both easy to understand and relevant to who you are targeting.
The SDGs can be perceived as global goals that are difficult to relate to the industry, let alone a business itself. However, they can act as a powerful tool in shifting the conversation to the bigger picture. Given the degree of involvement the real estate industry plays in these global challenges today, there is no denying that you as a business can play a significant role in contributing to these goals. However big or small, the time to act is now.
https://evoraglobal.com/wp-content/uploads/2020/01/dimitar-belchev-eYbq5wCaZcM-unsplash.jpg9971500Claudia D'Almohttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngClaudia D'Almo2020-02-10 11:13:042020-02-26 10:47:13SDGs: Answering the Big Questions for the Real Estate Industry – What, Where, Why and How?
Do the companies you partner with – your supply chain – understand your approach to ESG issues, and can work with you to meet your goals?
Supply chains can often be global, highly complex and of significant scale. Historically, technical quality, cost-effectiveness, speed of delivery and reliability has been the focus. Sustainability has now been added to the procurement and sourcing criteria because of operational, financial, regulatory and reputational risk drivers.
Real estate organisations are encouraged to embrace resiliency and responsibility in their supply chain management to adapt to externalities such as geopolitical conflicts, changing weather patterns and new legislation in areas such as modern slavery; and to improve their impacts on the workforce, local communities and the environment in the places where they develop, manage and invest. By improving ESG performance throughout their supply chains, organisations can enhance processes, save costs, uncover product innovation, achieve market differentiation and have a significant impact on society.
As organisations
apply a sustainability lens to the design, development, management and
marketing of their buildings and services, the inputs, construction methods,
labour conditions, workforce health and safety practices, and environmental and
community impacts of these processes will be under growing scrutiny.
The continuous improvement process expands supplier relationships significantly beyond auditing and monitoring, investing in training and incentivising top performers. Organisations share commitments with suppliers in order to achieve their sustainability goals. Procurement process preference is given to suppliers who can help them achieve these goals.
Leading organisations recognise that the sustainability attributes of their assets can offer market differentiation, resulting in increased lettability and stronger and long-term relationships with tenants.
They achieve competitive advantage in the supply chain through establishing meaningful, collaborative dialogue between themselves and their suppliers, alongside technology innovation, greater efficiency and supplier diversity. Suppliers are viewed as an extension of their business with a shared sustainability ethos integrated seamlessly throughout.
Figure 1 – Maturity model supply chain
EVORA provides consultancy support for the development and implementation of an effective strategy to endorse sustainability within supply chains, including:
Assessment of materiality to focus on the most pressing issues
Development of sustainability criteria and alignment with the procurement process
Providing training and knowledge sharing capabilities across the organisation and with suppliers
Stretching existing sustainability goals beyond direct operations, to include tiers of the supply chain
Advice on deploying technology to increase accountability and transparency through comprehensive supplier performance metrics
Guiding participation in industry collaborations and initiatives to leverage buying power and influence towards supply chain sustainability
Disclosure of supply chain information within integrated reporting, beyond stand-alone sustainability reporting mechanisms.
https://evoraglobal.com/wp-content/uploads/2020/01/marc-olivier-jodoin-an8KAYg2nBo-unsplash.jpg10011500Joanna Tomlinsonhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngJoanna Tomlinson2020-01-20 10:22:362020-01-20 10:22:37Seeing the Value in Real Estate Supply Chain Sustainability
In June of 2019, the UK became the first major economy in the world to pass laws requiring net zero greenhouse gas emissions by 2050.
‘Zero carbon’ is an ambitious challenge and one that we at EVORA Global is well-poised at untangling.
So what do we mean by ‘zero carbon’?
Though there are two important contributors of carbon emissions in a building – embodied carbon and operational carbon – the focus of this article is on operational carbon. An operational zero carbon building is one that generates or purchases enough renewable energy to offset emissions from all energy consumption in the building over a year.
Does your project have a zero carbon goal in mind but is stymied with uncertainty of where to begin? Consider the following strategies:
Go all-electric
Going all-electric is a key to unlock zero carbon buildings – it enables the installation or purchase of renewable energy to offset the building’s total energy use.But what are the common barriers inhibiting this paradigm shift from conventional gas-fired heating to electric heat pumps? The legacy of gas-fired heating has, in part, been enabled due to historically low natural gas prices compared to electricity. Further, many facility management teams have inherited training to maintain conventional gas heating systems. As a result, it has been a challenging transition for facility managers to learn to maintain newer electric heat pump systems.
Yet times are changing. In contrast to trends seen in previous decades, the World Bank forecasts that natural gas prices from 2020 to 2030 will steadily increase [1]. Moreover, the UK government predicts wholesale electricity prices flattening in the next decade, likely due to the concurrent greening of the electricity grid and the falling levelised cost of renewable energy [2]. Hence, an all-electric building does not solely unlock the potential for achieving zero carbon – it also minimises financial risks by reducing reliance on ever fluctuating fossil fuel commodities.
Furthermore, legislative drivers like the UK gas heating ban for new homes by 2025 are further facilitating maturity of the electric heat pump market and improving contractor familiarity with electric heating technologies.
Deep retrofits and passive design strategies
Zero carbon buildings will require retrofits deeper than “simple lightbulb savings” and operational quick wins.
The deep retrofits required will ultimately need to include improvements to the building fabric, defined as everything that separates the interior from the exterior of the building. To meet operational zero carbon goals, it will be necessary to consider high performance window glazing and installation of external or internal insulation to reduce heat loss through the building fabric. A tighter building fabric will not only help reduce heat loss in the building – the overall size (capacity) of the required HVAC systems will also be smaller, garnering additional energy savings and carbon reductions. For tenants, a tighter building fabric also results in a more thermally comfortable space to work in.
As mentioned previously, HVAC systems with gas-fired heating should be retrofitted with efficient electric heat pump systems. One replacement option is a variable refrigerant flow (VRF) system that can provide heating and cooling. A VRF system is highly efficient and, with proper controls installed, can even provide simultaneous heating and cooling to different spaces. For example, if a perimeter space (say, an office receiving solar gain from the windows) requires cooling and an interior space (say, desk cubicles where the sun does not reach) requires heating, it is possible for a VRF system to capture and redirect the heat from the perimeter space to the interior space.
Additionally, lighting retrofits should extend beyond installing energy efficient LED lighting. It is recommended that spaces maximise natural daylighting opportunities by installing controls to dim or shut off artificial lighting where there is enough natural light in the space. Studies have shown that providing indoor access to daylight can improve tenant satisfaction and productivity, while also conferring health and wellbeing benefits by aligning occupant circadian rhythms with the natural day and night schedule.
Clean, renewable energy
With a highly energy efficient building in hand, the remaining carbon emissions associated with operations should be offset by carbon-free renewable energy.
Although achieving zero carbon can be achieved using either on-site or off-site renewables, it is encouraged to prioritise on-site renewable generation.
On-site generation brings many benefits. In addition to alleviating pressure on the national grid, on-site generation also benefits tenants by providing resilience against power cuts to ensure business operations continue to run as usual.
If on-site renewable generation is not possible at the building, or is insufficient to offset the building’s operational carbon emissions, then purchasing off-site renewable energy should be considered. Power Purchase Agreements (PPAs) allow for the purchase of electricity directly from a renewable energy generator. For landlords, this provides a path to zero carbon without incurring large capital expenditures.
Zero carbon is set to be the gold standard for sustainable real estate. The EVORA Global team of experts are ready to discuss strategies to get your project on the path to zero!
https://evoraglobal.com/wp-content/uploads/2019/12/EVORA-blog-net-zero.jpg8001200Ryan Sithttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngRyan Sit2019-12-04 13:31:002020-05-12 10:56:51Getting to (Net) Zero
Climate Resilience has been the buzzword in the market for some time, but what does it mean and why should you care?
Climate Resilience is ‘the capacity of companies and funds to survive and thrive in the face of social and environmental shocks and stressors’ [GRESB]. By shocks, we mean short term acute events like fires and floods. Stressors are the longer-term chronic vulnerabilities such as increasing heat days and precipitation levels.
Why should we care?
The need to disclose climate resilience is not going to go away. Momentum is building globally for companies to identify, manage and disclose their climate risks and opportunities.
Investor demand
You only need to open a paper, watch the news or even look on the streets to see that climate action is gaining momentum. The public and society as a whole are becoming more literate and conscientious about the issue and this, in turn, is influencing the investment community.
As the effects of climate change on economic activity become more significant, there is increasing demand from investors, trustees and other fiduciaries for consistent, comparable, actionable information in company reports. Investors increasingly expect Boards and Executives to actively assess and respond to climate risks.
In May 2017, a shareholder resolution at Exxon Mobil called on management to produce a report detailing the implications of a 2 degree scenario and received 62% support[1]. This, along with similar results at other oil and gas companies’ AGMs, signals that the majority of investors in the world’s biggest fossil fuel producers see value in having this information. This is likely to extend to the real estate sector as the climate change agenda continues to gather momentum.
Physical risk
35% of REIT properties globally are geographically exposed to climate hazards, including inland flooding (17%), typhoons or hurricanes (12%), and coastal flooding and sea-level rise (6%)[2]. Investment managers and investors for directly held assets currently use insurance as their primary means of protection against extreme weather and climate events. However, insurance will cover damages from catastrophic events; it will not cover higher capital expenditure and operational costs and loss in value from a reduction in the asset’s liquidity.
Litigation risk
A pattern is emerging of activist shareholders filing resolutions against corporations, particularly major energy companies, demanding increased transparency surround climate change risks and company policy [Norton Rose]. For example, in Australia in 2018, 23 year old Mark McVeigh filed legal action against Retail Employees Superannuation Pty Ltd (REST), seeking information regarding what the trustees know about the impact climate change will have on its investments and what they are doing in response to this knowledge.
Fiduciary responsibility
A fiduciary duty is a requirement that informs investment and management practice in a similar manner to aspects such as costs and investment returns. A failure to take account of ESG issues could be seen as a breach of their fiduciary duties. Fiduciaries, therefore, need to show they have identified and assessed the risks to companies and to their portfolios.
Increasing disclosure on climate resilience
The driving force behind more effective disclosure in climate resilience is the TCFD – the Taskforce on Climate-related Financial Disclosure. TCFD is a global voluntary disclosure framework launched in mid-June 2017 to allow organizations to identify the climate risks and opportunities they expect to face, and ultimately to disclose the financial impact of these in their annual reports. As of May 2019, 648 organizations have shown formal support for the TCFD, including 118 asset management organizations.
TCFD is a global voluntary disclosure framework launched in mid-June 2017 to allow organizations to identify the climate risks and opportunities they expect to face, and ultimately to disclose the financial impact of these in their annual reports
Stockland an Australian Securities Exchange (ASX) 50 organization and Australia’s largest diversified property group, has been an early adopter of disclosure in alignment with the TCFD framework. Stockland has been identifying risks and opportunities relating to the impact of climate change for over a decade. The business response to these is guided by a Climate Change Adaptation Plan which is regularly reviewed, and a detailed Climate Adaptation Strategy, as well as business unit sustainability strategies. Whilst Stockland did not disclose the actual or potential financial impact of their identified climate risk and opportunities (which is of specific interest to investors), in February 2018, the organization lodged “Stockland’s Climate-related Financial Disclosures” on the ASX as part of their half-year reporting suite. This made Stockland the first Australian property company to disclose its climate risks and opportunities to the ASX in accordance with the Task Force recommendations.
In 2018 GRESB launched the Resilience Module within which the Climate Resilience Indicators are aligned to the four pillars of the TCFD framework, namely Governance, Risk Management, Strategy and Performance Metrics and Targets. The Resilience Module was unscored in 2019 but is expected to be integrated into the wider GRESB framework in 2020.
What next?
It is now widely considered industry best practice that organizations should consider climate change in the context of their strategic and operational risk management. As a first step, organizations should conduct a gap analysis against the TCFD reporting framework with a view to identifying and addressing the gaps across the Governance, Risk Management, Strategy and Performance Metrics and Targets pillars.
If you’d like to learn more, please do contact one of our experts.
https://evoraglobal.com/wp-content/uploads/2019/05/EVORA-blog-climate-resilience.jpg6861200Ed Lockhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngEd Lock2019-11-29 11:02:232019-11-29 12:13:06Climate Resilience: Why we should care
Resources category combines issues from the Materials and Waste categories of the BIU 2015 manual bringing together circular economy principles.
Resilience category considers an asset’s physical, social and climate change risks and has improved BIU 2015 elements on natural hazards, durability, security and climate related risk management.
Previously only in Part 3, minimum standards are now in place for Part 1 and Part 2. Note that for Part 2 a sustainable procurement plan (Rsc 05) and fire risk assessment (Rsl 09) is required to achieve any rating, a significant change.
Introduction of exemplary credits can be achieved for performance levels beyond what is recognized by standard criteria and are each worth 1% (regardless of the category weighting) to the overall score (up to 10% boost capped at 100%).
