[London, July 13th] — Real estate owners must achieve a 60% saving in terms of total energy use per asset on average if they are to reach net zero by 2030, attendees at a webinar hosted by Alfa Energy Group heard.
“A fundamental way to achieve these savings will be installing intelligent technology to understand how to optimise energy use”, according to Vicky Cotton, ESG Director at Workman LLP, one of the main presenters at ‘The Key to Future-Proofing your Real Estate Portfolio: An ESG Perspective’.
Cotton explored a broad range of ESG future-proofing aspects including refurbishment standards, EPC analysis, procurement, and net zero pathways, as well as technology including intelligent building operating systems (such as Workman’s IBOS tool) and data.
“Intelligent building tech is a real focus for Workman at the moment,” said Cotton. “We find this technology is fundamental towards driving to net zero. If we don’t understand what’s going on with a building in granular detail, we can’t do anything to change it.”
While large multi-site asset managers can buy smart tech with relative ease, this is not necessarily the case in smaller buildings, where owners and occupiers need to track the performance of the building but don’t have a BMS.
ESG data is an increasingly important aspect of the due diligence process. Whereas owners used to assume they could retrofit a building to achieve green standards, they now insist on understanding the environmental risks inherent in buying a property.
Both smart tech and ESG due diligence use data to describe the building’s design, its performance to date and the extent to which it can reach green standards. “It’s important to understand what a building was designed to achieve,” says Cotton, “how a building’s being used now, the energy intensity of the asset, so the client knows exactly what they’re buying, exactly what that’s going to cost and how quickly they can get there.”
An additional benefit of smart tech arises when occupiers put their own data into the managing agent’s or owner’s technology. This provides visibility of what’s going on in the building and can act as an engagement tool.
Cotton also described how the Minimum Energy Efficiency Standard (MEES) is “starting to bite.” As of April 2023, all existing leases whether an F or G EPC will become unlawful. Cotton predicts “there will be significant penalties levied” as it becomes simpler for local authorities to levy penalties. Ultimately, all EPCs must have a B rating in 2030 and this is where Cotton says the sector must focus now.
While the legislation makes it clear it’s the responsibility of the landlord, the EPC rating will be based on how tenants fit out the property. Therefore, communication between the landlord and tenant will be crucial in order to reach a mutually agreeable solution.
Paul Edwards, Operations Director at Alfa Energy Group, commented:
“Communication between real estate businesses, their suppliers and clients is critical to achieving better service standards and therefore relationships to ensure longer-term engagement. Innovative proptech solutions facilitate engagement and collaboration, providing the centralisation and quality of data capture, analysis and reporting real estate businesses need to keep on top of the challenges of managing complex fluid portfolios and to report and act effectively on an ESG strategy.”
According to Edwards, equally as important is having a strategy and systems to manage and mitigate financial risks associated with energy supply costs. “Ensuring appropriate governance is in place, will protect real estate businesses from situations like the current energy crisis. The need for a carefully planned strategy for buying energy, has really hit home the benefits of risk managed flexible energy contracts to protect budgets and enable more effective financial planning and management. Of course, the strategy must also account for the management of a fluid portfolio.”
While buying energy effectively to reduce exposure to market forces is crucial, it is becoming ever more important from an ESG perspective to understand the best way to purchase renewable energy from both a quality and cost perspective. “Inadvertently taking the wrong approach could send unintended signals which don’t align with an ESG framework” stated Edwards.
Additionally, and where a longer-term solution is possible, Power Purchase Agreements are an important option to consider as well as on-site renewables if feasibility studies indicate an appropriate return on investment and carbon reduction can be achieved.
Other ways to mitigate risks and meet the ESG agenda, enhancing both assets and reducing exposure to markets, include energy efficiency analysis, site audits, and the implementation of recommendations for both improvements in processes, behaviours and technology to reduce carbon emissions.
The importance of data in relation to real estate was very clear: how it is collected, stored, analysed and reported on to enable effective action and decision making within an ESG framework.
To make effective decisions, Edwards firmly believes “centralised energy and sustainability data management systems (and embedded processes) are critical to understanding how and where energy is used by landlords and tenants, as well as to measure and report on the impact of any subsequent actions taken to reduce emissions.”
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Paul Edwards
Operations Director, Alfa Energy Group
Paul is an energy professional with more than 30 years of energy industry experience and an extensive knowledge on real estate energy solutions. During that time, Paul has worked for energy consultancies and energy suppliers, managing complex multi-site clients. As Operations Director at Alfa Energy, Paul is responsible for delivering an end-to-end process of risk managed procurement solutions, bureau and sales support services and ensuring excellent levels of customer service.
Vicky Cotton
ESG Director, Workman LLP
With 25 years’ experience in real estate, including 13 in property management, Vicky is extremely experienced and well educated on ESG in the built environment. Vicky firmly believes that the climate emergency is one of the greatest threats that the property industry – and indeed the whole world faces. Well versed within the field of environmental and sustainability management in the wider property industry, Vicky has strong relationships with many leading real estate investors and is Chair of the Better Buildings Partnership’s (BBP) Managing Agents Partnership (MAP).
Workman LLP
The largest, independent commercial property management and building consultancy firm in the UK. Workman operates from a nationwide network of 12 UK offices and two in France. The firm has more than 700 staff, including 250 in property management accounts and 100 in building consultancy. There are an additional 350 site-based staff employed at its clients’ assets. Workman’s clients include leading institutional and sector-specialist investors, private property companies, public sector bodies and a growing number of overseas investors.
If you would like more information about this topic or to discuss any energy and sustainability related matters with Paul Edwards or Vicky Cotton, please contact Lisa Turner at +44 (0) 20 3994 5806, or email lisa.turner@alfaenergy.co.uk.
