The legislation for sustainability disclosures in Europe will be reformed in 2021, as part of a major overhaul of financial market regulation. Importantly, these reforms include plans to create accompanying reporting standards.
Similar to financial accounting, sustainability reporting is essential for improved corporate management of risks and opportunities. Focusing on relevant and meaningful disclosures is key to produce high-quality and decision-useful reporting for organisations and investors alike. Using information reported on risks and impacts connected to climate change and broader sustainability matters, investors can best understand an organisation’s activities and strategies.
The European Commission will present a proposal for a reform in early 2021, while the EU Parliament will vote on the issue in Autumn.
EU Commissioner for Financial Services Mairead McGuinness clearly stated in December 2020 that “the rules of the game must be transformed to fully integrate sustainability at every step of the financial value chain” and identified the reform of the EU Non-Financial Reporting Directive as “one of the priorities to strengthen the foundations for sustainable investment”.
Other reporting proposals have also recently stirred the reporting landscape, including:
A Statement of Intent to Work Together from five reporting framework and standard-setting organisations that emphasises alignment and harmonisation;
A proposal from the International Financial Reporting Standards (IFRS) Foundation to create a new Sustainability Standards Board (SSB) that would develop global sustainability standards;
The World Economic Forum International Business Council white paper that puts forth a common metrics for consistent reporting disclosure, building on existing sustainability reporting standards and frameworks.
These developments imply future changes to an organisation’s reporting structure and process. They lay the groundwork for framework that has close linkage to financial reporting, ultimately meaning that companies will need to treat sustainability information with a higher level of rigor, akin to information included in financial reporting.
EVORA works with companies all along the reporting journey, from those working on their first sustainability report to expert reporters who need help developing a long-term reporting strategy. By reporting, they capture numerous external and internal benefits, including meeting regulatory requirements, improving relationships with stakeholders, enhancing trustworthiness and reputation, clarifying on ESG performance, and identifying sustainability risks and opportunities.
https://evoraglobal.com/wp-content/uploads/2021/01/sunflare_461157133.jpg9961500Joanna Tomlinsonhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngJoanna Tomlinson2021-01-08 10:50:262021-01-08 10:50:28The State of Corporate Sustainability Reporting in the EU
With market uncertainty pervasive and belief in business deteriorating, using the annual sustainability report to restore confidence with all stakeholders is more important than ever.
Your next report will need to provide a clear, trustworthy narrative, detailing specific insights on how the pandemic has impacted on your sustainability strategy, business model, risks and stakeholder commitments.
Sustainability frameworks enable companies to provide reasonably comparable and useful information. However, no such template exists to compare how companies have responded to COVID-19.
EVORA have been making in-roads in accounting for the COVID crisis in our reporting for clients since March, learning more with each report, and share key areas below to consider during your next round of reporting:
1) Controlling the content
COVID-19 has impacted people in many ways. Employees may have experienced challenges adapting to a new way of working; property managers dealing with a whole new set of procedures and protocols to follow; tenants juggling the ‘return to work’ safely and local communities may have experienced unexpected environmental and social impacts.
By including a COVID-19 one-off section in the report; the opportunity may be missed to communicate the impacts of the pandemic in a more nuanced way, tailored to the different stakeholders affected. Instead, it will be more authentic weaved in specific messaging throughout the sustainability reporting, where relevant, through the voice of the affected stakeholder, for example a direct quote from an employee or a tenant.
We also encourage the simplification of the message – avoiding jargon, cliches and overly technical language, and, instead, using straight-forward, clear and concise language.
2) Mapping what is material
Materiality assessments inform meaningful sustainability communications, enabling companies to identify sustainability issues that are important to both their stakeholders and to business success. Used to their full potential they can help shape company strategy, galvanise internal functions and gain senior buy-in, as well as uniting disparate teams and processes.
As society deals with the pandemic, materiality assessments should be reassessed to better integrate sustainability into business strategy and to explore the relationship between a company’s impacts on a sustainability issue and the impact of that issue on the business.
3) Dealing with the data
The shift to homeworking presents a unique challenge. Companies will be demonstrating a reduction in Scope 1 and 2 greenhouse gas emissions in line with the reduction of office building energy consumption.
This presents several possible issues for the reporting company:
Any movement in reported emissions could mask the impacts of any genuine reduction activities
Distortion against targets set
Justification may be required for smaller energy reductions than others in the sector, or anticipated, because they have seen a lesser impact from the pandemic, for instance through keeping offices open, with higher ventilation requirements, rather than closing buildings completely.
Emissions have not been eliminated, rather they have been relocated to employee homes beyond the company’s direct control. Some might argue that the decrease in commuting related emissions makes up for this. In order to provide a credible comparison of year on year performance, quantifiable homeworking emissions should be considered for recognition.
Our initial response is to always explain data with fully contextualised narrative.
4) Shift to online-first
We recommend an online-first approach for corporate sustainability reporting. This enables the audience to more easily search, navigate and locate information. This format can enhance storytelling – enabling more in-depth features and linking direct to other relevant documents.
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.
https://evoraglobal.com/wp-content/uploads/2020/11/max-bender-olXfar5J3WE-unsplash-scaled.jpg10011500Joanna Tomlinsonhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngJoanna Tomlinson2020-11-09 13:29:312020-11-09 13:29:32Communicating COVID-19 impacts through Sustainability Reporting
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.
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 register assets on the 2015 scheme. Assets will then have one year to complete the assessment and a further three years to transition to the V6 scheme. There can therefore still be assets on the 2015 scheme up until May 2025, 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 10:50:392020-11-09 10:52:17BREEAM In-Use Version 6 Released – Headline Changes
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?
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?
EVORA Global are delighted to announce that Philippa Gill will be
joining on February 1st as Director and will be merging Verdextra into EVORA’s
existing business operations.
Verdextra are a specialised Sustainability, Health and Wellbeing
and Operations Consultancy and have emerged as thought leaders in the Health
and Wellbeing arena. We are very excited to be integrating Verdextra’s
capabilities into our services portfolio as a key part of our commitment
to broadening and upscaling our service line offerings.
We are absolutely delighted that Philippa has agreed to join us. Philippa’s deep heritage in global real estate and current thinking in emerging key topics such as Health and Wellbeing will not only add to EVORA’s depth of capability, but will really add strength to our senior leadership team and help drive our international reach. This is a truly exciting time for EVORA and we look forward to 2020 being another key milestone in our development.
EVORA’s Managing Director, Chris Bennett
Philippa brings truly world class pedigree to EVORA having
previously occupied a range of senior sustainability leadership roles within
Global Real Estate organisations. Philippa has a proven track record of driving
real change through an extensive portfolio of Sustainability
Transformation Programmes, spanning construction through to software and
intelligent building management technologies.
Philippa also brings extensive experience from within the Private Equity community and will play a key role in driving our international growth plans and supporting bringing new Value Propositions to Market.
Verdextra and EVORA’s business expertise and philosophy align so well, and I am delighted to be merging our business with theirs. The opportunity to combine my own experience with the sector leadership EVORA embodies is truly exciting and I am looking forward to harnessing our joint capabilities.
Philippa Gill, Partner at Verdextra
https://evoraglobal.com/wp-content/uploads/2020/01/james-padolsey-152010.jpg11251500EVORAhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngEVORA2020-01-20 15:34:342020-01-20 15:34:35Philippa Gill to join EVORA Global as Director
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
Upon entering the 2020s, which some dub ‘a decade for
delivery’ to improve sustainability across the board, it is perhaps wise to
consider the breakout trends that will carry forward. After all, a new year
always inspires new endeavours. It
provides a clean slate to readjust and redeliver, as well as a fresh opportunity
to realign and build upon past achievements.
The 2020s may have a lot in store for everyone across the real estate space; so what should we be looking out for?
Net zero heroes
This commitment has been on the lips of government officials
and real estate investors alike, marking a significant promise to achieve net
zero carbon across the UK by 2050.
In September 2019, 23 of the UK’s leading commercial
property owners have signed a commitment launched by the Better
Buildings Partnership (BBP) to tackle the growing risks of climate change,
pledging to decarbonise. Covering over 11,000 properties, this type of
agreement is likely to inspire more companies throughout the next decade to
also commit time and resource in the fight against climate change.
It is therefore expected that the dynamics behind climate strategy will shift in tow, with awareness of a pressing deadline introducing the need for a new radical mentality for rapid decarbonisation across a vast sector. The path to complete overhaul will not be simple, nor one that can be touched lightly, it will require serious engagement and in effect be one of the most major driving forces for change across the industry. Certainly, one to watch intently and something EVORA is already leading clients through the challenges and opportunities of.
New alignments and disclosure
Recent interest in broader ranging initiatives within the
real estate space have been gaining traction in the past several years. These
alternative policies are likely to continue to influence the direction of how
companies tackle sustainability issues, standing apart from the more prominent
examples such as GRESB, LEED and a host of others.
The 2015 United Nations Sustainable Development
Goals (SDGs) is one such example, acting originally as a framework for
nations to engage in improving global sustainability across areas such as
environment and energy, equality, health and wellbeing, alongside peace and
justice. Five years since their inception, it is the real estate sector which
is taking command of the targets put in place, using them to guide investment
and strategy for an all-around approach to sustainability. Aligning with the
SDGs is rising in popularity, and it is likely that a more open approach could
inspire newer players to also play their part, committing time and resource to
key targets.
Another key shift beginning to happen in 2020 focuses on the effective disclosure of climate resilience and risk to businesses through alignment with the Taskforce on Climate-related Financial Disclosure (TCFD). TCFD is a global voluntary disclosure framework launched in 2017 to allow organisations to identify climate risks and opportunities, and ultimately to disclose the financial impact of these in their annual reports. Awareness and mitigation of these risks is necessary to avoid any sudden losses in asset value and the associated impact on the wider investor market. Businesses engaging with this voluntary scheme provide greater transparency for stakeholders, but also gain an advantage when addressing wider strategies by actively moulding the methodologies behind TCFD, as well as gaining a footing ahead of competition for improving capital value. TCFD – based reporting is to become mandatory for PRI signatories from 2020.
Renewables reinvigoration
Off the back of net zero and related policies put in place
by nations across the globe, renewables investment is a key piece of the puzzle
to deliver ambitious targets by 2050.
It is no secret that renewables investment has been growing substantially over the previous decade, with total stock of the most widespread small-scale variant in the UK in terms of number and generating capacity (up to 5MW) – solar photovoltaic (PV) – growing from a total supply of just 88 MW in November 2010 to a staggering 13,305 MW in November 2019 according to the Department for Business, Energy & Industrial Strategy (BEIS).
This trend is set to continue, and not just for solar, as it is speculated that across the piece the total capacity of non-hydro renewable sources is set to expand by 91% on current values, reaching 80.3 GW by 2030 [1] as shown below in Figure 1.
Figure 1 – Installed capacity of non-hydro renewables through time, alongside forecast capacity out to 2030. Source: GlobalData, Power Database
Policy has been a major driver of this initiative in the UK;
however, it should not be forgotten that globally the price of renewables has
fallen drastically, reaching the lowest point to date making it ripe for
investment.
Cost reductions for solar and wind power technologies are set to continue to 2020 and beyond. Current auction and power purchase agreement (PPA) data suggests that by 2020, onshore wind and solar PV will consistently offer less expensive electricity than the least-cost fossil fuel alternative worldwide, according to IRENA [2]. And for the UK as shown in Figure 2, the current expected trajectory for wind technologies is to dip below the cost of gas, closely followed by solar which is expected to reach the same level in the late 2020s if not sooner.
Figure 2 – UK costs (£ per kWh) for various technologies. Source: Carbon Brief, 2019
With costs expected to fall, the integration of renewables will become easier and the investment more worthwhile as payoff times also decrease. This is despite the removal of the Feed-in Tariff (FiT) scheme in March 2019, however commercial contracted energy still proves to pull in promising numbers for those willing to invest in generation. Furthermore, the Smart Export Guarantee (SEG), a partial replacement for the FiT, came into force on the 1st January 2020 setting an obligation for licensed electricity suppliers to offer a tariff and make payment to small-scale low-carbon generators for electricity exported to the National Grid.
This could provide a valuable route to market for businesses wishing to put money aside for renewables, serving to cut electricity costs due to self-generation, but also providing the opportunity to export and earn money by supplying back to the grid.
Furthermore, the benefits for businesses from Corporate Power Purchase Agreements (CPPAs), specialised agreements for the supply of energy to specific sites or assets from a generator, have also grown in recent years. This differs from the standard green tariff opportunities presented by utilities, as energy is directly sourced from a known generation site which in turn spurs the delivery of greater grid investment into private energy sources as significant hurdles for generators are bypassed. Engaging in this market has proved to be a reliable means of utilising renewable energy over short term (6 month) to as long as 15-year contracts relatively inexpensively, alongside proving a positive look for companies to boot.
Who knows, perhaps this could grow into something larger? The prospect of peer-to-peer trading of energy or smart grids to efficiently serve grouped assets could also take off from greater private investment; effectively lighting the fuse for a more sustainable real estate sector, and aiding the push of ambitious policies to grow the market.
Grand designs
Changing up building management and design is also a crucial
factor to consider, in order to provide more efficient, healthier and happier
buildings for tenants to grow their businesses in.
One example of how legislation is progressing this scene is
the recent Minimum Energy Efficient Standards (MEES) for non-domestic
commercial buildings strategy, published on the 15th October 2019 by
BEIS, which
we reported on last year.
Under the consultation, the government propose a new plan to raise the minimum EPC rating from ‘E’ to ‘B’ by 2030. In order to achieve this, a great deal of investment will be necessary, as an estimated 85% of non-commercial buildings will require improvements to meet these standards.
Improving new build design is a clear route to achieving this across portfolios, by integrating more passive design choices, smart technologies and more controllable systems for fundamentals like HVAC systems and lighting. These include such changes as tighter building fabrics to help reduce heat loss in the building, double glazed windows as well as greater exploitation of sunlight with Passivhaus like architecture. Not only will this reduce energy usage and as a result improve the returns from markets such as the SEG for renewables, it will also result in a more comfortable space for tenants to work in, improving wellbeing from the get-go. Furthermore, buildings can also engage in improving other factors such as the integration of biodiversity into building design with green walls and roof gardens alongside open planted plazas that not only serve as refuges for wildlife but for pleasant places for employees to enjoy for increased social value.
However, this is easier said than done, as the vast majority of buildings which will be used in the commercial space have already been built. Therefore, a great deal of effort will need to be focused on deep retrofitting to bring buildings up to scratch, allowing them to stay competitive and sustainable for years to come.
Big data for bigger change
At the heart of spurring the aforementioned changes is our
understanding of the ongoing trends, causes and solutions to issues at hand;
and how is that really possible without proper evidence?
As the world mobilises towards an ever more data-centric model to drive cost analyses, environmental modelling and of course the progress of sustainability, appropriate levels of data access are necessary to implement effective and lasting change. Therefore, a growing need for data coverage and reporting will likely manifest throughout the 2020s, improving the understanding of where and when energy is being consumed across a portfolio to identify, implement and track improvements.
The key to engaging here is being proactive about monitoring how businesses run and how properties are managed. An example includes the continued smart meter rollout which showed promise earlier in the 2010s, however, it has fallen short of what is required as the original deadline of 2020 is pushed back to 2024. Therefore, big data companies and real estate investors may begin to invest more heavily in their own solutions to provide better coverage of how assets perform. Furthermore, by partnering more closely this could prove to be more productive than just face value cost reductions.
By engaging with tenants directly to shape their ‘energy behaviour’ from a top-down policy and technologically driven view, visible and accessible evidence of energy usage can itself inspire change from the bottom up, with tenants altering how they perceive energy usage and the impacts of their day to day. Attacking from both ends in this way may prove an effective weapon.
Big data also stretches to the social issues that real estate faces on an ongoing basis, after all, people drive business. More widespread and granular coverage of social value, health and well being among other strategies could help change the perception of how usually qualitative analyses is treated, providing quantitative means to expand the efficiency of implementing changes into businesses.
EVORA will, of course, examine the growth of these trends (as well as many more) throughout the year, as we expect a great deal of exciting activity is upcoming. So, watch this space!
https://evoraglobal.com/wp-content/uploads/2020/01/brandon-griggs-wR11KBaB86U-unsplash.jpg10001500Stuart Leaverhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngStuart Leaver2020-01-13 12:06:522020-01-13 12:28:57Five sustainability trends for the 2020s: what’s in store for real estate?
For those of us old enough to remember the amazing and thought provoking Baz Luhrmann song of the late 1990’s ‘Everybody’s free to wear Sunscreen’ you will be amazed to know that it is twenty years since this early viral internet phenonium grabbed our attention.
You will also no doubt recall those thought provoking and immortal words of the writer Mary Schmich, the original author of the words that were wrongly attributed to Kurt Vonnegut. For those of you too young to remember the song I recommend you hunt it down and listen.
It was whilst listening to a recent BBC World Service programme of the history of the song it occurred to me, as somebody who has spent the past 30 plus years in the sustainability world, what advice would I most like to pass on to the younger generation about the climate change challenge and living sustainably. So in honour of Mary, Baz and the amazing voice Lee Perry, here goes my reinterpretation of their lessons in life….
Ladies and gentlemen, Readers of EVORA Global.
Act on Climate Change
If I could offer you only one tip for the future,
Acting on climate change would be it.
The long term impacts of climate change have been shown by scientists whereas the rest of my advice has no basis more reliable than my own meandering experience.
I will offer my advice on how to address this challenge now.
Take seriously the power and passion of youth.
Dismiss this at your peril.
You may not understand the power and passion of youth until you have children and grandchildren of your own.
But trust me, in 20 years from now you’ll back at this time in a way you can’t grasp now and wonder why you didn’t act when there were still possibilities to change our trajectory and how many opportunities acting now could open up before you.
The future is not as hopeless or as difficult as you imagine.
Don’t worry about the science, but know that worrying is not effective or going to change the outcome.
The real challenges in modern life are our relentless consumptive behaviour in pursuit of false happiness but know that it’s not about having what you want but wanting what you have; the simple things in life such as spending time with family and friends is free.
Do something every day that challenges the perceived wisdom.
Publish your commitment to act on climate change.
Don’t be reckless with our resources and don’t be reckless with other counties resources.
Don’t accept the suggestion the world has endless capacity.
Recycle.
Don’t waste; do more with less. The world has evolved over billions of years and everything in the universe is recycled. Time is endless and our future uncertain but our place in history is not guaranteed.
Be respectful.
Remember your successes and learn from any mistakes but don’t let them restrict you; the journey in tackling climate change is challenging and we are all in it together.
Display any awards for best practice; it will keep you motivated. Don’t throw away your utility bills; it’s valuable data that can help you improve management of your assets.
Innovate.
Don’t feel guilty; you don’t know how yet. Embrace the possibilities and engage with technology. Some of the best businesses I’ve known didn’t know how to innovate at the start of their sustainability journey; some of them have been able to secure Government grant funding to help them.
Embrace the power of the Sun.
Preserve the rainforest, biodiversity and ecosystem services you’ll miss then when they are gone.
Maybe you’ll strive to solve the challenge on your own.
Maybe you’ll partner with others to work together.
Maybe you’ll offset your carbon.
Maybe you’ll just go veggie and reduce meat consumption.
Whatever you do don’t congratulate yourself too much or be defeatist; the future of humankind is in our hands today. So is the rest of life on Earth.
Get plenty of exercise; walk cycle run; don’t over eat or poison your body with unhealthy substances, it’s the only one you’ll own.
Pause…..take time to look around you and marvel at the wonders of life.
Read and keep abreast of climate science; it’s moving fast.
BEWARE of the fashion industry; it contributes more to global warming than aviation and shipping combined.
Celebrate and respect your culture and heritage; we can learn lots about good lives from our ancestors that can guide our future.
Work together with your peer group; they understand your challenges and together you can find mutual respect and encouragement in the future.
Spend time with family and friends; enjoy preparing and eating local seasonal food together; avoid cheap fast foods.
Work to bridge the gaps in geography; although the challenges can differ slightly between countries the essential issues are the same. Think global, act local.
Only travel sustainably.
Accept certain inalienable truths; carbon taxes will come.
Politicians will eventually legislate.
You too will get older, and when you do you’ll fantasize that taxes were reasonable, politicians were noble, and will recall it was our children that made us aware of the threats of climate change to life on earth.
Respect Mother Nature.
Maybe you need financial support, maybe you can reinvest some profits, but be under no illusion, time is running out.
Don’t rush ahead without considering proper science based targets or by the time we hit 2050, you’ll realise you’ve been chasing the wrong goals.
Be careful with those who sell existing stuff carefully repackaged with a green claim. Get proof of their credentials with an appropriate assurance or verification certificate. Engage a good independent consultant to help you.
But trust me on the seriousness of climate change.
by Matthew Brundle, Associate Director
https://evoraglobal.com/wp-content/uploads/2020/01/sebastien-gabriel-IMlv9Jlb24-unsplash.jpg10001500EVORAhttps://evoraglobal.com/wp-content/uploads/2017/06/EVORA-logo-for-small-applications-WHITE-300x172.pngEVORA2020-01-08 16:45:092020-01-09 10:15:57Act on Climate Change
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%).
