Sustainability Metrics for Commercial Real Estate Assets

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Sustainability Metrics for Commercial Real Estate
Assets Establishing a Common Approach
Louise Ellison Investment Property
Forum Patrick Brown British Property
Federation European Real Estate Society
Conference Milan, June 2010
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Introduction

• Aims
• Property Industry Alliance/Green Property
  Alliance
• Current position
• Methodology
• Data
• Recommendations
• Conclusions

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Aims of the work

• Develop a common framework for measuring and
  reporting sustainability for property assets
• Informed by investors, owners and occupiers
• Focus at the building level
• Existing tools are the starting point
• To support the industry response to sustainability

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Who/what is the Green Property Alliance

• Property Industry Alliance
• IPF, RICS, BCO, BPF, BCSC
• Umbrella organisation that enables the
  organisations to work together on specific issues
• Green Property Alliance
• Sub-group of the PIA focusing on sustainability
• Broader membership CoreNet, UKGBC, BRC
• Plus industry PRUPIM, Hammerson, Drivers Jonas,
  GVA Grimley, Gardner Theobald, JLL.
• Aims to ensure cross-industry communication

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Context

• Many benchmarking systems established
• Little consistency in metrics
• No coherent set of data developed
• Limited ability to compare performance
• Deters businesses from starting to collect data
• Weakens industry response to the sustainability
  agenda

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Current Position

• property investors increasingly alert to
  sustainability as a risk issue and taking steps
  to monitor it within their portfolios
• Sustainability benchmarking systems and tools are
  widely available but measure sustainability using
  a range of different variables and metrics
• Existing policy interventions have been
  disappointing in their ability to make
  sustainability data more widely available
• Data is increasingly required for environmental
  and climate change regulation but is not commonly
  available in a consistent, analysable format
• Examples of good practice amongst developers,
  investors, fund managers

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Methodology

• Key sustainability factors identified from
  previous research
• Energy
• Water
• Waste
• Carbon
• Normalisation factors for each
• Limited to UK largely
• No social factors

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Methodology

• Focus on existing benchmarking systems and
  company reports
• Desk study
• 13 benchmarking tools
• 11 Company reports
• Physical characteristics
• What was reported
• Metrics used for carbon, energy, water and waste
• Produced a list of common metrics
• Industry workshop to review

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Data Building characteristics

• Little overlap
• No data on occupancy levels
• No clear data on building classification

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Data - energy

• All the tools and majority of reports capture the
  data
• kWh is the most commonly used metric
• Energy here refers to that used within the
  operation of the building

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Data renewable energy

• Captured by majority of tools and reports
• kWh again used by the majority

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Data - Water

• Routinely collected data
• Most using M3
• Common position should be achievable

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Data Water recycling

• Less commonly captured for company reports
• M3 the common metric
• of total usage important

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Data - Waste

• Commonly reported
• Little consistency in reporting format
• Issues arose regarding origination of waste and
  accountability

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Data waste recycling
Capturing data Waste by route Tonnes by waste type Facilities in place Total in tonnes Recycled proportion of total unspecified
Tools (13) 7 2 1 2 2
Reports (11) 9 3 2 2 2

• Wide range of metrics used
• Issue of origination is again key

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Data - Carbon

• Commonly reported
• Clear split in basis of reporting
• Increasingly important
• Abstract concept for industry need resource
  targets too

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Recommendations - data
Resource How measured Metric Performance indicator
Energy/renewable energy Landlord services/tenant supply metering kWh kWh/m2 NLA or occupancy/year
Water used/recycled Reference to bills M3 M3/M2 NLA or Occupancy year ratio of total
Waste/recycled waste Direct measure or survey tonnes Tonnes/occupancy or M2 NLA/year Ratio to total waste
Carbon Defra reporting factors Metric tonnes/ CO2e Kg/CO2e/m2 NLA or occupant/year
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Recommendations - normalisation
Criterion Metric How measured
Type of building Type by use Office/retail etc
Occupancy Number of occupants NLA occupied
Vacancy Space unfilled NLA
Days of use Days Days used per week
House of use Hours Hours used per day
Air conditioning? Yes/No/ with ac stated
EPC? Yes/no grade If yes specify grade/year
DEC Yes/no grade If yes specify grade/year
Green rating Yes/no grade If yes specify grade/year
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Conclusions

• Analysis shows some commonality
• Suggests a level of standardisation in reach
• A short list but manageable
• Reveals specific areas for further work
• Occupancy levels
• Measurement of waste
• Standardisation of energy measures
• Landlord/tenant split
• More consistency will encourage reporting
• List will gradually grow
• Further discussion with industry

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