Sustainable Real Estate – More Change ComingAnna Alquati
In recent weeks we have seen encouraging signs that sustainability is becoming the industry standard for Retail and Real Estate rather than an afterthought. On the world stage there’s a palpable sense of green momentum across both sectors following Earth Day last month and in the lead up to the COP26 UN climate change conference, set to take place in Glasgow on November 2021 (postponed due to COVID-19) – which will be led by a partnership between UK and Italy.
At Innesco we have been keeping a close eye on the latest moves by companies accelerating the climate conversation and considering what the future holds for sustainability in Real Estate.
Retailers themselves are leading the way in the business world, with a string of announcements in the last fortnight signalling a mass push to improve on green credentials. This week Ikea launched its second-hand reselling initiative, incentivizing customers to return used furniture through a discount scheme. On the groceries front, Co-op announced it will match all of its plant-based ‘Gro products’ prices with their meat equivalents as part of a new ten-point climate change blueprint to be carbon neutral by 2040. The UK’s Big Six supermarkets are pitching in too. Following a promising trial in Leeds, Asda’s clothing brand George will sell secondhand clothing in 50 UK shops as part of the retailer’s ‘George for Good’ initiative, which aims to reduce garment waste while advocating for ethical procurement.
These kinds of individual initiatives are great to see. But for Real Estate, one might argue the picture is slightly more complex. To get to the bottom of key environmental issues – and to even become the solution – green innovation in real estate needs to be collaborative and structural, providing a clear framework and incentives for change.
A prime example is Canary Wharf Group and JLL recently signing the first green lease clause on the agency’s new Docklands offices, committing to procure renewable energy for the building, reduce waste, and agree on a set of performance or energy goals.
Last week we also saw Unbail-Rodamco-Westfield become the latest real estate company to link its financing to sustainability credentials, refinancing more than £2bn to its sustainable target score – a measure based on the landlord meeting particular KPIs on energy intensity, carbon emission reductions, the percentage of assets with BREEAM In-Use certification and the percentage of URW employees that have participated in CSR training.
We expect to see legal and financial incentives such as these to become increasingly common in Real Estate –particularly from the industry’s big guns.
Commercial landlords are also now faced with a significant opportunity to make better – greener – use of vacant space in the wake of recent closures brought on by the pandemic. In the same week that Debenhams announced the final closing date of its last remaining stores, it was also reported that some high street retail units, including the likes of Debenhams, Homebase and River Island, across England and Wales have been converted into climate emergency centres, run by communities, which offer a range of activities that focus on both addressing the climate emergency and bringing people together. These include activities such as art exhibitions, exercise classes, sustainable living workshops, bike repair facilities and vegetarian and vegan cafes.
But what of new buildings? According to Defra, 63% of waste in the UK in 2016 was attributed to construction, demolition, and excavation, totaling 120 million tonnes – statistics which surprised us all. This week, @Bisnow spoke with Marco Abdallah, Head of Engineering UK at Real Estate management consultancy Drees & Sommer, who highlighted the concept of the Circular Economy as key to unlocking long-term sustainability in Real Estate. Abdallah says that the important philosophy is to “rethink the design of buildings from the start — from where raw materials are extracted from the ground in another continent, until the end of life for the product and beyond.”
The truth, as we all know, is that buildings take time to build, and to adapt – and the urgency of the UK climate crisis calls for immediate action. As Sam McClary aptly wrote in last week’s EG Editor’s Comment “The earth is shifting under the Real Estate industry’s feet and the future is one of much greater responsibility.”
The industry is undoubtedly making strides on the journey to a more responsible future. Real Estate boasts some of the world’s greatest innovators and collaborators and has the potential to be a beacon of sustainability – but only if it is united in its approach and commitment.