A year ago 25 major property owners with a combined portfolio value of more than £300bn made a big commitment to the planet. They not only joined the growing ranks of businesses that have pledged to be net zero carbon by 2050, but they pledged to show how they were going to get there as part of the Better Buildings Partnership’s climate commitment.
One year on from the signing of that commitment and with just three months left on the deadline to have net zero pathways published, how are the signatories getting on, what impact has the climate commitment had on real estate’s role in the fight against climate change and how will the commitment evolve for year two and beyond?
For BBP chief executive Sarah Ratcliffe, the first big win of the commitment was the fact that so many property owners signed up to it.
“When we started to work on the commitment it was thought that if we got 10 to sign up that would be a strong signal that the industry was committed,” says Ratcliffe. “When 25 signed up we were delighted. It was a really good expression of the industry wanting to be part of the solution.”
An exacting commitment
The commitment is not an easy target to sign up to. Many business across the wider built environment have committed to becoming net zero by 2050, with many aiming for an even more ambitious deadline of 2030, but agreeing to show exactly how they plan to get there and opening themselves up not just to scrutiny but to potential criticism is not something that the real estate industry has typically been in favour of.
But, says Ratcliffe, the science behind climate change was the only driver that businesses needed to know that this was an imperative.
And, adds Louise Ellison, group head of sustainability at Hammerson and chair of the BBP, the requirement to publish has given the commitment an extra edge. It has forced businesses to not just engage internally with different divisions to understand what a net zero carbon pathway looks like, but across the industry too.
“It really hit a nerve with people,” she says. “We were wanting something. There has been so much talk, but for the property sector to have something tailored to the nuances of our sector has been really helpful.”
The net zero pathway has made signatories focus on what they really mean by net zero,” says Ratcliffe. “They have had to examine in real detail what their carbon footprint is
– Sarah Ratcliffe
“The net zero pathway has made signatories focus on what they really mean by net zero,” says Ratcliffe. “They have had to examine in real detail what their carbon footprint is.”
She says that has made business look at the lifecycle of their business and buildings to get a more detailed picture of how to get to net zero. “It sounds like a small step,” she says. “But it really is big.”
Of the pathways that have already been published, it is clear that property owners are putting a lot of effort into understanding the impact that real estate has on the planet and its true contribution to climate change.
Derwent London was one of the first of the signatories to go public with its net zero pathway. The REIT’s pathway outlines how it plans to reduce energy and carbon emissions across its portfolio through the use of all-electric heating and cooling in new developments and retrofitting older properties, through using renewable electricity and green gas, including looking at ways to generate power from its 5,000-acre estate in Scotland, and how it plans to work more closely with its tenants to reduce emissions through its supply chain.
Putting a price on carbon
It is also looking to establish a carbon accounting tool that will create a metric for the financing community and will enable the firm to establish the carbon liability of any acquisitions and the carbon benefit of redevelopment or repositioning of an asset.
Ratcliffe says this move to put a price on carbon by signatories is one of the benefits of the commitment. She says because it has had to be signed by the chief executive it has raised awareness of the issues around sustainability at board level.
As part of its pathway to becoming net zero, British Land has levied on itself a £60 charge for every tonne of embodied carbon it produces between now and 2030. Some of that charge will be used to buy carbon offsets, while the balance will go into a “transition fund” that will be used to help pay for the retrofitting of its existing assets.
As well as making property owners focus in on their portfolios and their true carbon footprints, Ratcliffe says she has seen the commitment initiate a response from those business that supply services to property owners too. “It has given the rest of the industry the confidence to advocate for sustainability all the way through the supply chain,” she says.
And it is understanding the whole lifecycle of a building, all the players involved and all the nuances of the property sector that will form the next stage of the commitment programme.
Next steps
All 25 of the signatories are working hard to have their pathways to net zero published before the end of this year and BBP is soon to publish a framework to help them further on their journeys. It will set out the expectations of the commitment and provide greater transparency around the scope and implementation of the pathway.
There will be those that don’t quite hit the deadline, however, and while that will be understandably disappointing, for the BBP the focus has to be on property owners getting their pathways right.
“What we need is action,” says Ratcliffe. “But for that to occur we need to grapple with the detail. Year two for the commitment will be about doubling down on the detail. We will look at how we challenge the leasing process, procure FM services better, upskill the industry and work better together.”
There is a hard deadline on stemming the damage already done to the planet and while delivering on how real estate is going to become net zero is one can that cannot be kicked down the road, the devil is nearly always in the detail.
BBP Climate Commitment signatories
- AberdeenStandard Investments
- Aviva Investments
- British Land
- Bruntwood
- Canary Wharf Group
- Capital & Regional
- Derwent London
- DWS
- Federated Hermes
- Frasers Property
- Great Portland Estates
- Grosvenor
- Hammerson
- Intu
- Landsec
- LaSalle
- Legal & General Investment Management
- Lendlease
- Low Carbon Workplace Partnership
- M&G Real Estate
- Nuveen Real Estate
- Schroders
- SEGRO
- Transport for London
- Workspace
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