EVORA become signatories to the Net Zero Carbon Buildings Commitment

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.

A 2050 target but no time to spare!

By Lucy Curtis and Peter Willcocks

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.

This article was originally published on GRESB Insights

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.



Does the UK’s net zero future need the EU ETS?

The 2008 Climate Change Act already commits the UK to an 80% reduction in emissions compared to 1990 levels by 2050. However, the unwritten long-term target hopefully is, or at least should be, to achieve complete carbon neutrality.

Since its inception in 2005, the European Union Emissions Trading Scheme (EU ETS) has been Europe’s flagship climate policy. It has two stated aims, namely:

  • To reduce greenhouse gas emissions in an economically efficient manner.
  • To promote investment in low-carbon technologies and energy efficiency improvements.

Approximately 15400 installations, accounting for around 45% of EU greenhouse gas emissions, are now covered by the Scheme, over 1000 of which are in the UK. However, with the Brexit negotiations looming, the UK’s place in the EU ETS is under threat.

As an EU member, the UK is currently subject to the Emissions Trading Directive, but this is unlikely to be the case by the end of the negotiation process as such a position is not compatible with the incumbent government’s Brexit rhetoric of removing European Court of Justice (ECJ) jurisprudence.

The only obvious option for the UK to remain involved in the EU ETS, whilst avoiding ECJ jurisprudence, would be to create a UK ETS and then negotiate a unilateral or bilateral linkage. Switzerland has been undergoing just such a process over the past decade, culminating in a technical-level agreement in January 2016 that is awaiting ratification.

Before beginning to debate how a UK-EU ETS relationship should be formed however, the question that we should be asking first is: is it worth it?

This seemingly simple question has a rather more complex answer. The UK economy is large enough to have an emissions trading scheme of its own, however being part of a larger trading scheme with more participants carries efficiency benefits, through increasing the volume of available low-cost abatement options and through increasing market liquidity and stability.

What is not clear is the extent to which the UK receives these benefits. Given that the EU ETS is now in its twelfth compliance cycle, there seems to be remarkably little research into the extent of the benefits the Scheme produces. With the March 2019 Brexit negotiation deadline fast approaching, the Government should give serious consideration to commissioning such a study for the UK.

The EU ETS is also far from perfect which, to be fair, is to be expected given that it was the first, and continues to be the largest, emissions trading scheme in the world. The large surplus of allowances, a lingering remnant of the 2008 financial crisis, and the persistently low and unstable allowance price are the stand out issues, and add up to mean the EU ETS is not functioning as well as it could.

[clickToTweet tweet=”The majority of the EU ETS’ regulatory design features could be replicated in an independent UK ETS” quote=”The majority of the EU ETS’ regulatory design features could simply be replicated in an independent UK ETS”]

If the UK Government wishes, the majority of the EU ETS’ regulatory design features could simply be replicated in an independent UK ETS. Therefore, the decision of whether to remain involved in the Scheme boils down to weighing the aforementioned economic efficiency benefits against the issues the EU ETS is facing and the challenges of negotiating an acceptable linkage deal for both parties.

The UK business community should seek to take greater ownership of this issue, firstly by pushing the Government to conduct the necessary research to make this decision properly, and secondly by each firm reflecting themselves on what the EU ETS does or does not do for them in the pursuit of carbon neutrality. As the global threat of climate change grows, stricter environmental regulations are inevitable, but high costs don’t have to be. Emissions trading schemes are a proven mechanism for producing low-cost emissions abatement, but to get the most out of them they must have the right design. Is the EU ETS right for the UK? This is something we need to work out.

This blog was originally published on