The Better Buildings Partnership Climate Change Commitment has inspired 24 major commercial property owners representing over £350bn AUM to commit to the delivery of net zero carbon buildings by 2050. The details of this ground-breaking commitment merit attention, not least because alongside the landlord controlled emissions, it includes the embodied carbon of development, refurbishment and fit-out works and, crucially, emissions from the occupiers’ space.
Occupiers activities make up as much as 70-80% of a building’s total footprint so are too significant to ignore. But, despite aligned net zero objectives, effective owner-occupier collaboration on the ground remains elusive on many assets. The complex interaction of strategic, legal, technical and behavioural issues, means that even the most dedicated advocates are up against it.
Owners and occupiers have long been inextricably linked through a complex system of property rights and related responsibilities. The transactional, commercial nature of their negotiation sets the tone of the relationship between the two parties. Collaboration in this context is challenging to say the least. The speed with which deals are done and the imperative to secure occupiers in a tough market means that environmental matters are often an early casualty. And let’s not forget the critical role of the agents – those who understand the value of sustainability to both owner and occupier are still a rare species.
However, with owners and occupiers being driven harder by many stakeholders to get their real estate in order, the conversation is changing. Owners being asked by investors to de-risk and de-carbonise their portfolios can no longer point at lack of demand from occupiers as an excuse to do nothing. Equally occupiers are raising their own standards. While the ‘base building’ lays the foundations for an efficient space, it is the fit-out that will determine the energy efficiency of a let space for the length of the lease. It will also determine the air quality and comfort enjoyed by people working in the space, arguably the most expensive and valuable resource businesses have. Although for occupiers energy demand may not be a board level concern, the health and wellbeing, productivity and retention of staff most certainly are.
Getting owners and occupiers to coalesce around the shared agenda of delivering net zero carbon buildings is not only about combating climate change. It’s a vital step forwards in transforming a combative, transactional-based relationship into a collaborative pursuit of environmental, social and economic value for owners, occupiers and all of their stakeholders
Beyond the market drivers, the contentious issue of who pays and who benefits or ‘split incentives’ also remains a challenge. Why would owners invest to secure sustainability outcomes if the financial benefits accrue to the occupier? Why would an occupier take on additional service charge for an improvement that won’t pay for itself until beyond their lease term? The practical challenges are equally daunting – how to deliver technology at scale without disrupting occupiers’ operations; measuring and accounting for impact when it is still not common practice to sub-meter energy consumption by end-use; engaging building users so that they know when and how to manage their space within a building efficiently.
Right now, time is short to fix this, but fortunately, solutions are out there. BBP case studies and industry publications such as Hammerson’s Reshaping Retail report highlight many examples of owner-occupier collaboration. However, it’s going to need more than a few case studies to deliver the market transformation that is needed.
This is why the BBP, as part of its Climate Change Commitment, is launching a new owner-occupier forum and is calling for occupiers to come forward and participate. This call for interest is being supported by several major occupier bodies including The Climate Group, CoreNet Global UK Chapter, the Hospitality Carbon Reduction Forum and Innovation Gateway. The forum will provide a much-needed opportunity to share knowledge, address industry wide challenges with practical tools and support a culture of collaboration between owners and occupiers.
Getting owners and occupiers to coalesce around the shared agenda of delivering net zero carbon buildings is not only about combating climate change. It’s a vital step forwards in transforming a combative, transactional-based relationship into a collaborative pursuit of environmental, social and economic value for owners, occupiers and all of their stakeholders. There is much to win here and nothing to lose so please do join us.
Occupiers interested in the BBP Owner-Occupier Forum should contact Sarah Ratcliffe: s.ratcliffe@betterbuildingspartnership.co.uk.
Sarah Ratcliffe is chief executive of the Better Buildings Partnership
