How EPD can help deliver investor confidence
Environmental Product Declarations are key to demonstrating sustainability, which property investors increasingly see as critical to reducing risk and increasing value
Report from – Damien Carr
Broadgate (Image: British Land)
The past few years have seen property investors progressively shift their view of sustainability away from something that primarily poses regulatory risk or enhances reputational value. Sustainability – and by extension health and wellbeing – is now recognised as not only crucial to mitigating the wider risks associated with climate change and urbanisation, and but also improving the long-term value of their assets, such as attracting and retaining tenants in commercial real estate.
In an article published this month in Property Week, for example, Bill Hughes who heads up L&G’s Real Assets team, talked about the need for a long term view of regeneration that takes into account the societal challenges.
“We believe responsible investors should account (and be accountable) for the social and environmental impact of a scheme. This is impact investing; moving beyond a one-dimensional view of green credentials of a building towards assigning a monetary value to the long-term impact on the economy and community,” he wrote.
This shift in attitude can be demonstrated in real terms by the way that industry is responding to investor through increased reporting and certification.
Take the rise of GRESB, the investor-driven organisation that annually assesses and benchmarks the environmental, societal and governance performance of real estate assets. Founded in 2009, GRESB now has more than 250 members, 60% of which pension funds and in January 2017 it launched a sustainable real estate index along with an investment fund to track the index in partnership with Northern Trust Asset Management, which manages assets worth $946Bn.
Then there is the increase in green building certification, such as BREEAM which has certified 561,200 developments globally since it was launched in 1990.
Clear evidence is also starting to come through that shows how sustainability can improve the bottom-line, particularly if viewed through the lens of health and wellbeing. Last year, for example, Skanska revealed it had saved £28,000 through the reduction in sick days in 2015, related to improvement of its Northern England Hub. Meanwhile, in the Netherlands, CBRE Global investors increased visitor footfall to its shopping mall Heuvel Eindhoven from 5.6 million in 2013 to 7.8 million in 2016 (39%) and in the same period reduced its tenancy vacancy rates from 12% to 4% due to improved environmental features.
As Sarah Cary, Head of Sustainable Places at Real Estate Investment Trust and developer British Land tells Building4Change: “Green building certification is recommended and sought out by our institutional investors. They want us to increase certification and aim high.”
And as investors begin to link sustainability directly with the bottom line, so the need for greater transparency is starting to filter down throughout the supply chain, with Environmental Product Declarations (EPD) granularity. This is because, within ISO 14025 and EN 15804, EPDs can provide companies with a standardised way of quantifying the environmental impact and life-cycle of a given construction product, including such things as its energy and resource efficiency, emissions and content of the material.
Cary again: “EPD clearly help our buildings achieve high green building certifications, like BREEAM. On top of this, the use of EPD has helped British Land pull its supply chain into an area that is thinking about pollution, emissions and the use of limited resources. In my mind EPD are not dissimilar from our target to reduce embodied carbon – both are ways of helping us to understand materials.”
British Land is a well-recognised leader when it comes to sustainability. Not only was it GRESB European Sector leader for retail and offices, scoring 81% in 2016, but in the same year it was in the top 96th percentile of the FTSE4Good and Dow Jones Sustainability Indices.
The British Land approach
The REIT, whose developments include Broadgate in the heat of the City of London, Glasgow Fort retail Park and the Leadenhall Building (better known as ‘The Cheesegrater’), has a holistic 2020 strategy that encompasses wellbeing, community, future-proofing assets and skills.
Within that, British Land has a comprehensive ‘Sustainability Brief for Developments’, which sets out overall sustainability targets for all projects over £5m overall targets, along with a process and guidance for delivering those targets. Each stage of the document is aligned with both the company’s construction stages and RIBA’s Plan of Work 2013 stages and crucially it assigns responsibility for implementing the Sustainability Brief to senior management across the business as well as the supply chain.
So in the case of materials and waste, the latest version of the document has set a 15% reduction in embodied carbon per square metre, with zero waste to landfill FSC and PEFC ratings on all timber used. In Stage 3 (Detailed Design), responsibility for this falls with the architect/structural engineer) and in Stage 5 (Construction) with the contractor.
“EPDs are integral for us to achieve this 15% reduction in embodied carbon because we are able to see where the materials come from and therefore the amount of energy and carbon that has been used to create it,” says Cary.
“This is why British Land is very supportive of the whole industry moving towards declaring the impact of products and why our shareholders believe we have a role in leading industry towards better understanding the sustainability of materials and any associated risks.”
EPD Conference, 2017
Sarah Cary will be speaking about EPDs from the client perspective at the EPD Conference – Declaring your data’ on 28 June in London.
The day will bring together leading thinkers, practitioners and construction sector organisations across the supply chain to present their perspectives on the topical EPD issues, drivers and barriers.
- When: 28 June, 2017
- Where: Saint-Gobain, Multi-Comfort Visitor Centre, 95 Great Portland St, London W1W 7NY
- Ticket: £95.00 plus VAT
- Register: http://www.bre.co.uk/eventdetails.jsp?id=15075