Target net zero: five areas to unlock the opportunity
As more asset owners and occupiers declare net zero targets, real estate strategies should be aligned with corporate climate commitments and support the construction and occupation of a new generation of buildings.
Buildings and their construction together account for 36 percent of global energy use and 39 percent of energy-related carbon dioxide emissions annually, according to the United Nations Environment Programme. With two thirds of the world’s economy now committing to binding net zero targets by 2050, nations could make stricter demands of business ahead of the UN Climate Summit next year.
In the UK, the Government’s recent pledge to mandate carbon disclosure for listed and large private business will inevitably place companies under greater corporate scrutiny to cut carbon from their operations including buildings.
The funding landscape is already changing. The ability to secure investment for the development of new assets will increasingly be conditional on a commitment to net zero from some institutional investors. For example, Janus Henderson, the global asset manager, has pledged to become operationally net zero across its UK property fund by 2030. The commitment will apply to all buildings owned by the portfolio by 2030.
Against this backdrop there is a need for real estate clients to move from paying green lip service to carbon and embrace a net zero mindset, which shapes both the construction and operation of their buildings.
Put simply, net zero societies will not exist without action from built environment professionals.
Making this leap will require attitudinal and behavioural change. Data-led decision-making and technology will be important enablers too. There are five areas organisations should look at in support of their wider corporate strategy of transitioning to net zero. These should inform not only the construction stages, but also the operation of buildings:
1) Aligning strategies with ambition and vision
Clients need to provide their supply chains with clarity about their corporate net zero vision, what needs to be achieved and the route to achieve it. The aim should be to develop a fit-for-purpose strategy for a building/estate, which is an extension of an existing set of corporate objectives.
This means that any transaction related to the building needs to be delivered with a clear understanding of environmental outcomes by everyone undertaking work irrespective of new build, refurbishment or maintenance projects.
The benefit of a strategy like this is that it provides clear governance and decision making, drives net zero principles and completely aligns with procurement activity and future execution strategies.
2) Procuring for net zero
Clients must have a contracting and procurement strategy with their information, data and technology standards embedded. Otherwise each stakeholder will provide their own interpretation, which is very difficult to retrofit and expensive to integrate.
By being clear and consistent with contractors/vendors and their associated supply chain, everyone is aware of their role, what they must build into their solution and the data it produces.
3) Delivering value engineering with a new mindset
There is a need to tackle the threat of value engineering, which can fundamentally affect whether a building will deliver net zero. The issue is that value engineering is often undertaken in isolation, without understanding the impact of the decisions being made.
Value engineering occurs at multiple points during the asset lifecycle, with clients and suppliers looking for ways to ‘cut the cloth’ to fit a budget or requirement.
It’s critical that all disciplines understand the required long-term environmental outcomes and do not work in isolation.
If value engineering is to be undertaken, it’s important that it considers the long-term impact of decisions in terms of totex, solution interoperability and whole life carbon, as well as the environmental performance of the asset.
Successful value engineering should be about considering the whole ecosystem and the way that packages for a build might be procured. I was recently working with a client who was about to let three bespoke work packages for a new access control system, upgrade of the BMS and replacement of the CCTV system. The benefit of managing the value engineering with a holistic mindset was that we significantly reduced overall spend by adopting an integrated solution and helped to embrace IoT solutions, addressing their wider carbon agenda.
4) Addressing the legacy estate
The fourth area is addressing the legacy estate, in particular the occupation phase and the ability to build a baseline and ask: ‘can we do better?’ The answer should always be a resounding yes, but it’s important to be clear about the baseline.
For many buildings there are 15-20 key baseline metrics which will focus on areas such as, reducing operational energy, decreasing embodied carbon, or increasing renewable energy supply. Clients and asset owners need to consider these in granular detail, understand the environmental target they need to achieve, and work collaboratively to develop the strategy and plan to meet the target.
Invariably, the data will be the sticky point, not only getting it in a usable format, but then aggregating and visualising it in a way which informs decision making and allows measurement.
A simple way is the adoption of sensor tech/IoT solutions in building zones to understand occupier behaviours, energy consumption and how the mechanical, electrical and plumbing system is used. Most organisations can build a plan within two months and start obtaining good data within three, unlocking the ability to analyse trends and fine tune the workplace.
5) Operating net zero buildings
A challenge is making sure the net zero designed building continues to operate as net zero; design intent should result in operational intent. A common obstacle are factors outside the owner/operator’s control.
Examples are multi-tenant buildings, change of building use over time or simply the design was geared towards achieving an environmental credential, but hasn’t transferred into how the building operates.
The truth is there are currently very few good examples of net zero buildings.
What we do know is success is achieved through having excellent data, rewarding the right behaviours, and linking this to communication, change management and incentivisation.
The collaborative relationship between landlords and occupiers is key to delivering net zero. The future may well need to see financial incentives for occupiers that outperform environmental targets for their buildings. Alternatively, it could see increased rents for occupiers that do not operate a low carbon building correctly.
Action in a climate emergency
With a climate emergency, real estate teams simply cannot overlook the essential elements of low carbon construction and occupation. Corporate net zero targets for all businesses also must not sit in isolation to their operations.
Clients now need to embed these strategies into the construction and operation of their assets. They can do this with aligned procurement, improved use of value engineering, ensuring that projects out-perform baselines and more collaborative behaviour between landlord and occupier – these are the foundations of net zero buildings.
Reducing the 39 percent of energy-related carbon dioxide emissions from buildings annually is an essential part of meeting this target. It will require unprecedented change across the built environment and the steps we take in the next decade will be critical to making the transition.