Posted by: Matthew Tippett
Energy & Sustainability Services
Who thinks that energy will be abundant and get cheaper and cheaper over the medium and long term? That there will be security of supply that does not have significant political ramifications? And who thinks that there is an unlimited capacity for humans, as we enter the Anthropocene, to transfer carbon from the ground into the atmosphere – and for the climate to remain stable?
Those are the big questions. To ground it more for this audience:
“Climate change is shifting the value drivers of real estate investment”
Protecting value in real estate through better climate risk management, Institutional Investors Group on Climate Change (IIGCC)
So having said in a loud voice why performance indicators and measurement is important, in a quieter voice, there is perhaps more alignment between leading disclosure protocols and initiatives than first meets the eye – which is good news!
I’ve been (proud to be) involved with and, contributed to, not just GRESB, but also the Global Reporting Initiatives Construction and Real Estate Sector Supplement (GRI CRESS) and the EPRA Best Practices Recommendations for Sustainability Reporting (EPRA sBPR). All of them build on each other and share some very important underlying characteristics.
First, they focus on operational performance – i.e. metered consumption of existing portfolios of buildings. Certification of design-intent has its place, but saving theoretical carbon is not enough on its own (as explored in this report).
Second, they distinguish and define three different kinds of indicator/performance measure, namely:
- Absolute – this is a measure of the impact on the environment.
- Like-for-like – the simplest way to check if performance is getting better or worse due to management activity.
- Intensity – perhaps the most sophisticated way to measure performance over longer time-frames, though this is the least-prescriptively-defined by the protocols of the indicators (with good reason).
There will be more on the strengths and weaknesses of these different forms of performance measure in the upcoming blogs in this mini-series.
Third, these leading real estate disclosure protocols make distinctions between consumption that is:
- landlord-obtained(bought or generated by the owner of buildings); and
- tenant-obtained(bought or generated by the occupiers of buildings).
With landlord-obtained consumption, these real estate disclosure protocols all require that itemisation of consumption for the exclusive benefit of individual tenants be done on sub-metered basis (i.e. not just allocation as a share of floor area). The remainder of landlord-obtained consumption (after the sub-metered to tenants is subtracted) can be thought of as consumption for landlord shared services.
For those whose eyes are glazing over – why does this matter? Because who buys what for whom matters in order to allocate responsibility for consumption and associated emissions – in line with the ‘polluter pays’ principle. This will become more and more important where landlords and tenants seek to reduce those parts of the total cost of occupation which can most easily be managed. Clearly, as and when greenhouse gas emissions become more expensive, neither party will want to foot the bill for others’ liabilities.
As Elsbeth says in her blog details of reporting performance indicator data will be further explained the ‘how’ and ‘what’ blogs in the coming weeks … stay tuned!