14 February 2022

Sustainability: Strategic planning for real estate projects

Managing Director of sustainability consultants Element Four, Georgia Elliott-Smith, and Commercial Real Estate Partner, Vicki Towers, join podcast host, Miri Stickland, to discuss the advantages of strategic sustainability planning within the real estate sector, the concept of Net Zero, why you shouldn’t assume that a BREEAM excellent rating necessarily means a high EPC rating and the direction of travel for the energy rating of buildings.

In this episode we were joined by:

Acronyms, certifications and standards explained

Georgia talks us through some of the most commonly used acronyms, certifications and standards in the world of sustainability and real estate:

BREEAM

"So BREEAM is the Building Research Establishments Environmental Assessment Method and it is a really widely used method for assessing how environmentally friendly a building is it can be used in a number of different ways for different types of projects so you have new construction, refurbishment and fit-out standard, you've got an infrastructure standard and one for communities which you use for master planning projects. There is also a BREAAM in use standard as well which you can use for operation buildings to work on things like energy efficiency, water efficiency and so on. So it is split into ten categories – ten different ways in which you can focus on your building and looks at things like pollution, waste, energy, ecology and so on and in each of those different sections you are able to achieve points and the more points you get – credits they call them within the Scheme – the higher your score and your overall rating. So, the ratings are broken down into a grading system so you have a simple pass – you then go into good, very good, excellent and the highest rating is outstanding.

The good things about BREEAM is that it holds your design team's toes to the fire and given that certain performance standards are required it means that some of those things cannot be value engineered out, so it is really good for making sure that design intent is followed through. Some of the negative and some of its critics say that actually it is simply an environmental assessment method and nothing more. It isn't really an indicator of true sustainable development and actually the design team don't require a great deal of client or investor engagement in order to deliver a BREEAM high level of standard and so it doesn't take into account a lot of fundamental sustainability considerations but overall you know it is very well recognised, very popular and a good standard."

GRESB

"GRESB is the standard for the Global Real Estate Sustainability Benchmark and it is a globally applicable benchmark for Environmental Social and Governance issues (ESG). It is, as the name suggests, specifically for the real estate sector and it is aligned by the GRI Initiative which is the Global Reporting Initiative which is a global sustainability reporting standard. What it does is you self report to GRESB so there are tools online that you can access for free where you go in you answer many questions. There are hundreds of questions – as I say you don't enter GRESB lightly but you go in, you answer questions and you provide data on the environmental, social and governance issues for your business so that will be things like disclosing information about your carbon emissions, your water consumption, the sorts of impact that you have on communities and employees, data to do with things like gender balance and the living wage provision and so on so it is a very broad very wide ranging question set and that is a way of getting a benchmark score for your approach to ESG and it is a way of communicating and reporting with your stakeholders on how you are doing as an organisation.

You can then see as well how you have scored in different sections of the GRESB rating so you can see whether maybe you are acing it on environmental issues but you are not doing so much on social and community issues so it is a way of prioritising your investment moving forward and it is also aligned with lots of other certifications so if you achieve BREEAM, Well Building or perhaps Fit Well Certifications on your real estate they will add points in different sections of the GRESB standard so it seeks to align a lot of different moving parts across the sector and give you good quality information to share with the market."

NABERS

"It actually stands for the National Australian Built Environment Rating System. It came over to the UK a couple of years ago back in 2020/2021 and the Better Buildings Partnership took stewardship of trialling the scheme in the UK. It had been incredibly successful in Australia as a mechanism for designing and operating buildings in line with true energy efficiency. So, what it seeks to do is close what we call the design gap so the design performance gap is that when you intend the energy performance of a building to be often doesn't play out in operation of the building. That is what we call the compliance gap there, so you design a building in order to get a certain EPC rating in the UK what we then find is that the building is not operating in line with its predicted energy efficiency in practice so there is this big gap between design intent and actual performance. NABERS closes that gap and what it requires that you do is that instead of designing the building for compliance with a particular EPC rating you add in other bits of the energy jigsaw that you wouldn't normally have to assess for compliance so things like small power, looking at what is likely to be the small power draw in a building, you add in things like data servers which again are not part of a standard building compliance model for energy, you look at actual hours of operation of the building based on the local demographic or the type of industry in that area rather than just falling down on a compliance assumption so you use much more accurate modelling of what the energy performance is likely to be of the building and then you design the building according to a target energy performance. It means that NABERS is much much more accurate when it comes to predicting the actual energy performance of a building – much more accurate than EPCs and it is really the new kid on the block but I think it is going to take off very very quickly.

It was originally launched in September 2021 it is now managed by the BRE as a certification scheme – there are two stages to it so one is the design for performance stage (DFP) that is the design stage so where you design team actually do the building modelling and they design the building to achieve a certain energy performance. The second stage of the certification where you get final certification is after 12 months of building operation you then take a look how it has performed during that 12 months you will have monitored its performance, you will have done some fine tuning and tweaking of the energy systems in the building and if your building is operating as per the design intent after 12 months then you can get your final certification so it is a really good robust scheme that means that our buildings are likely to perform in a much more efficient way."

WELL Standard Building

"The WELL Building Standard came to the UK in 2014. It was developed in the USA. It’s a standard and the first standard internationally that focusses entirely on the occupant experience and the health and wellbeing of the occupants of the building and the neighbouring community.

So, when we look at other standards that are much older, BREEAM for example has been around since 1990, but BREEAM is an environmental assessment method and there are parts of that standard that do look at local community but they are only incidental really and very small parts of that assessment. Well is entirely about human experience and it was really revolutionary when it came to the UK when it was released because we are looking at buildings. As we had been looking at lot of the environmental impact of buildings for many years but although we were trying to design buildings that were healthy and good for people there wasn’t really a yard stick for measuring that and there wasn’t really an agreed design standard for how you go about assessing and improving buildings for human health. So WELL came on to the scene in 2014. Since then it’s been revised a couple of times and now we have Well version 2. It’s applicable for both whole buildings and also core and shell so landlord demise. You can also do a commercial interior project if you are just doing one or two floors for example as a tenant of a building. It is made up of what we call pre-conditions which are basic requirements that every single project must achieve and then other credits that are called optimisations and the way that the scoring works is that all buildings have to achieve the pre-conditions and then you build up your optimisations and the more points you get through optimisations the higher your final rating and the ratings are silver, gold and platinum. So, there’s three that are available. Very similar to BREEAM you work through it with your design team from the very beginning of the project so what we do as consultants we create a pre-assessment where we will look at all of the various bits of the standard, work with the design team and what are the achievable levels and then try and challenge them to go further and do more and the things that they focus on. There are ten, what we call concepts which are essentially the chapters, but they are things like air, water, light, movement, nutrition and so on and it goes on through ten of those different factors. It’s really striving to achieve clean air, lots of good available drinking water, movement through the building is really important so trying to drive people into using the stairs rather than lifts for example. And making sure that our indoor environment is healthy so making sure we are not bringing products into that space whether it’s cleaning products or furniture that are bringing pollutants into the space and our understanding, the science of human health and how it’s impacted by our buildings has just gone off the scale recently and I think particularly with COVID there’s this new appreciation of the stuff that we are breathing in, you know, what we surround ourselves with. And the importance of things like daylight, of exercise, of improving our mental health through socialising, communicating you know, the effect of good sleep and good nutrition. And we know that our buildings can really impact on our quality of life. So Well seeks to distil all of that science into some design features that can be implemented.

The other thing about WELL which is new and really quite revolutionary is that it’s not just a design standard, it’s about the operation of the building. So, you cannot achieve Well certification until after occupants have moved into the building and have been working in that space for at least three months. At that point you will have what’s called a performance verification visit where an auditor will come to the site and will check that people are using that space in the way it was designed and intended to be used and that the space is performing. So, they will come and take air quality readings, they will come and do sampling of the drinking water quality, they will check light levels and they will check that everything you have said at design stage was happening actually is happening in the building. The certification once you get it is valid for three years so it really is a living standard that you then have to maintain through operations so one of the big changes between this and I think BREAM is that your facilities managers, all of the building occupants, people like the cleaning contractors, the caterers all need to understand how the Well Standard works and what bits of their job are really important to maintain this healthy indoor environment and what has to be done. But what that means as a result is that when you walk into a Well certified building you can tell it’s different, it feels different, it looks different, the way you interact with it is different and there is a lot more awareness as well amongst the people inside of what a great space they are in and the communication of that is really powerful I think for people particularly post-COVID."

RESET Standard

"The Reset Standard is an international quality standard for indoor air. So, it came from China where it was originally developed where municipal air quality is notoriously poor particularly in urban areas and they wanted to develop a standard that would demonstrate that the indoor air quality in buildings was good, so the reset standard was developed by the organisation GIGA which is a Chinese organisation.

It has become really popular now in the era of Covid and post Covid in order to demonstrate that the equipment that we are using and the way in which are monitoring indoor air quality is of a good standard so at the moment indoor air quality monitoring kit is a real world test you can go onto the internet and for a few pounds you can buy a little plug in air sensor that just plugs into your computer and gives you readings of the air quality. You can also spend £10,000 on a piece of air quality testing kit. You know, how are you supposed to know which one is good and which one is reliable and whether they are accurately calibrated and whether the componentry is good and all of that stuff. It is really difficult to be able to discern good kit. Reset has two parts to it really. One is that is creates a quality mark for the tech for the kit so it certifies the particular indoor air quality sensors are of a high standard and you can go onto their website and see which of those pass their test and so which are recommended and then the second part is that they provide a quality design standard that says where you put the sensors for exampled that they need to be within the breathing zone which is at between about 5/6ft high in your space. They need to be in certain areas so you know you don't end up with your sensors just in corridors they need to be in the arears that are occupied by people regularly so what it does it sets out a design standard for where you put the sensors and the quality of the sensors. What you then do is that there are two versions of the standard that you can certify to. One is the base building standard for landlords and what that does is that you put a sensor on the outside of your air handling kit to monitor the external air quality and then you put sensors the other side of the air handling kit so the air intake post filtration and what that then does is it verifies the quality of the air that is actually being delivered to the floor plates so that all of your tenants know that they are getting good quality air coming through into their floors.

The other standard is the commercial interiors standard and that is really where you put the sensors in the floor plate and you will then see changes depending on how many people are in the space, whether the cleaners are in and spraying chemicals everywhere, you know you will see differences in temperature, humidity and so on and that is really the exciting bit that you can see live what is going on in your space and how your activities are impacting on the air quality. The requirements of both standards is that data is consistently monitored and uploaded so for both the landlord's standard and the interiors standard you need to have a live display showing the air quality at that time that any occupant or visitor to the building can access so it really does keep people alert to the conditions in that space and it means that you can then look back at that data and you can see what happened aligned with different events so if you have a big town hall meeting in your space you can see how that impacts on the quality of the space. If you have got, like I say, cleaners coming in and the idea is that they are supposed to be using low toxin chemicals, low toxin products in order to maintain good air quality you can see whether that is happening and you can directly see the impact so it actually develops this ownership over the air in the space and a lot of education and you get people getting quite geeky about it and quite excited it is really cool when you do it I mean it is definitely not something to be entered into lightly because you cannot just plug it in and forget about it you do need to constantly be checking, be aware, you need alerts in the system to tell you when something is going on but because of that people within the space can be assured that their facilities managers, the people that run the building, are really on top of it and are aware of the air quality in the building."

TCFD

"TCFD stands for the Taskforce for Climate related Financial Disclosures. This was established in 2015 and it was established by Mark Carney and Michael Bloomberg as an initiative and it started out as a voluntary initiative and really what it was about was getting major fund managers, asset managers, the financial institutions to start examining and disclosing information about how their investments impacted on the climate and how the climate changing then impacted on their investments so it was this two way street looking at how much carbon are we emitting, what are our liabilities and also looking at changing where the patterns with moving populations and so on related to climate how is that going to impact our funds. So that is how it started as a voluntary initiative but it has been really successful and has been picked up by the UK government now in October 2021 to coincide with COP the Government announced that as of April 2022 the TCFD rules are going to become mandatory for large UK companies so that is for companies that are listed in the London Stock Exchange, any company that is required to produce a non-financial statement and it is going to be for private companies as well and limited liability partnerships that have more than 500 staff members and the turnover of more than £500m. So that is basically who is going to be included in the scheme – the way that the TCFD's rules are set up is they have four what they call pillars and the pillars are governance, strategy, risk management and then metrics and targets and within those four pillars they have got 11 recommendations and those are things like describe the risks to your organisation of in the short, medium and long term of climate change. Describe your carbon emissions related to your investments and things like that. Now, at the moment, we are not exactly clear on the wording of the mandatory requirement for Government but what we do know is that from April this year those largest companies are going to have to start reporting in line with the TCFD rules."


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