In association with The Planet Mark
Greening the legacy stock
Greening the Legacy Stock: Regulation, Reputation and Investment Funds Driving Sustainability in the Property Sector
Property Affiliates Event in association with The Planet Mark
If we are to radically reduce carbon emissions and drive sustainability in the property sector we need to re-structure the relationship between investors, landlords, property managers, occupiers and facilities management and vendors. Along with greater knowledge sharing and collaboration, this was one of the findings from Greening the Legacy Stock, the inaugural Property Affiliates event on 25th April 2019.
The event, in partnership with The Planet Mark and ThisWeekinFM.com, brought together multiple stakeholders from the sector to share knowledge on the risks and opportunities in sustainability that will transform the UK’s existing property estate.
Mike Green, MD Property Affiliates Ltd provided an opening address to set the scene, “Our goal is to bring together experts from across the property industry to address the challenges of our time. We chose sustainability for our first event as there is no greater issue facing us than climate change and its related impacts.”
Three guest speakers discussed the role of regulation, reputation and the leverage of investors in driving change through the property sector.
Lord Redesdale, CEO of the Energy Managers Association and architect of the recently launched Streamlined Energy Carbon Reporting (SECR) regulation, said: “SECR will have the largest impact on energy efficiency in built environment in recent years as it mandates that company board members to sign off on their carbon footprint and energy efficiency measures each year to Companies House.”
Streamlined Energy and Carbon Reporting (SECR), comes into force this month, requiring businesses with more than 250 employees and an annual turnover of £36+ million, or an annual balance sheet of £18+ million, to report their UK energy use efficiency measures and emissions from the use of gas, fleet vehicle fuel , waste, travel, and products.
The effect of this regulation will be to bring occupiers, property management companies and landlords together to share information on carbon emissions in their estate and measures undertaken to reduce emissions and energy consumption.
Jon Lovell, Co-Founder of Hillbreak, who provide environmental, social and governance (ESG) advice in the property sector, discussed how ESG has moved to the mainstream of property investment decision-making and that institutional investor pressure (and corporate occupier expectations) are now driving the market.
The continued growth of sustainability certification, benchmarking and reporting (from the UN Sustainable Development Goals and GRESB to Well Building and The Planet Mark) along with policy and more ambitious investor ESG strategies, indicate a maturing of ESG in the property sector. The major shift in disclosure requirements, including climate-related reporting, is helping to promote more informed investment, lending and insurance underwriting decisions.
Jon highlighted that asset managers are beginning to receive climate-related questions from investors and shareholders, offering examples including:
- Did you conduct a climate scenario analysis, describing the implications of one or more scenarios?
- What impact would physical and transitional climate effects have on the value of assets?
- Do you conduct materiality assessments to identify key climate risks? What are the main risk factors identified?
The consensus in the discussion session was that, whilst there may be pockets of knowledge regarding climate issues and ESG imperatives in the property sector, there was a general lack of awareness and existing and new forums would be needed to communicate to stakeholders across the value chain. The group agreed that the relationship between service providers in the property sector needed to be remodelled, transparent and collaborative.
In her opening address, Sarah Gillett, COO of the Planet Mark, began the session by stressing the increasing responsibility of all businesses to cut carbon emissions and demonstrably contribute to society. “This is not just a regulatory issue,” she stated. “There is a global movement coming from all angles that poses great risk along with great opportunities for any and every business.”
Citing the growing expectations of the millennial generation, she went on to stress the increasing brand risk from inaction on climate change. “The built environment contributes around 40% of the UK’s total carbon footprint. About half of this is due to the energy required for functional operation of buildings and the other half is from energy ‘in-use’ by occupiers. Stakeholders in the property sector have an opportunity and responsibility to address both.”
The recent demonstrations by Extinction Rebellion and Schools Strike for Climate were raising the public awareness around climate issues and sustainability. They are bringing the commitment of brands and businesses into the public eye and their reputation and ethics into question. The group recognised the rapid pace of change in awareness and discourse and the similarities to the campaign to drive out single use plastic, and plastics generally. The question was posed, is the property industry well-placed to respond to rapidly changing demands?