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

Introduction

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

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

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

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

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

Methodology

• Key sustainability factors identified from previous research– Energy– Water– Waste– Carbon– Normalisation factors for each

• Limited to UK largely• No social factors

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

Data – Building characteristics

Building details metric Capture

data net lettable area

gross lettable area

total floor area M2

total usable floor area

date of last refurbishment

Tools (13) 8 5 1 6 Reports (11) 8 1 1 5 3

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

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

metric number

to capture data

kWh gj epc not specified

Benchmarking Tools (13)

13 6 2 1 4

Reports (11) 9 6 2 1

Data – renewable energy

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

metric Number

to capture data

kWh gj minimum % from renewables or onsite

unspecified

Benchmarking Tools (13)

10 5 2 1 2

Reports (11) 8 4 2 2

Data - Water

• Routinely collected data• Most using M3

• Common position should be achievable

metric Number to

capture data

M3 or M3pa total withdrawn by source

millions litres

kilo litres or kl/m2

unspecified

Benchmarking Tools (13)

8 4 1 3

Reports (11) 11 6 1 1 2 1

number to capture data

M3 or M3 pa millions litres/m2 p.a.

% total volume recycled

facilities in place

unspecified

Benchmarking Tools (13)

8 3 1 1 1 2

Reports (11) 4 1 1 2

Data – Water recycling

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

Data - Waste

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

accountability

Waste number to capture data

tonnes to landfill/ incineration

net waste to landfill

total waste in tonnes

kg/m2/ year

Waste by route

unspecified

Benchmarking Tools (13)

7 1 2 1 3

Reports (11) 9 2 1 3 2 1

Data – waste recycling

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

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

Data - Carbon

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

Carbon metric Number to

capture data

defra grid mix standard and fuel emissions standards

ghg protocol not specified

Benchmarking Tools (13)

10 5 3 2

Reports (11) 9 2 7

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 yearratio of total

Waste/recycled waste

Direct measure or survey

tonnes Tonnes/occupancy or M2 NLA/yearRatio to total waste

Carbon Defra reporting factors

Metric tonnes/CO2e

Kg/CO2e/m2 NLA or occupant/year

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

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