EIC report: Driving Energy Efficiency in Commercial Property Portfolios


A positive opportunity for the UK approaching Brexit, the Environmental Industries Commission has published a new report revealing ways to transform energy efficiency in commercial buildings by focusing on property portfolio owners rather than individual buildings. A copy of the report, 'Driving Energy Efficiency in Commercial Property Portfolios' can be downloaded, HERE

EIC’s Executive Director, Matthew Farrow, said:

“The Government has made clear that the UK will remain a climate leader outside the EU, and with the Fifth Carbon Budget set and the Paris Agreement ratified by Parliament we now have to deliver.  Energy efficiency must be a major part of the solution, but emissions from commercial buildings have not fallen for a decade.  Brexit is an opportunity to review existing energy efficiency regulations and strengthen them to ensure that owners of property portfolios have the right incentives to transform the energy use across their portfolios.  Energy Performance Certificates should include more information, a forward trajectory for tightening Minimum Energy Performance Standards should be set out, and ESOS should be more than a ‘tick box’ exercise.”

The report recommends: 

• The improvement of key pieces of legislation, including Minimum Energy Efficiency Standards, Energy Performance Certificates and the Energy Savings Opportunity Scheme in light of Brexit – which allows us the opportunity to go further, and faster. 

• The greater promotion of ‘green leases’ to provide a more balanced split between energy management investment costs and the money saved.

• A more holistic approach to the role of the ‘energy manager’, with the position being recognised at Board level – or, alternatively, for energy management to be covered as a specific line item in a company’s report.

• The promotion of reputational market drivers for those at the leading edge, such as the Better Building Partnership, NABERS, GRESB, and the Carbon Disclosure Project.

• Further work on closing the ‘performance gap’ – either through Government-led like the Green Construction Board, or industry-led initiatives such as CBExchange. Payback periods, even when long, need to be reliable if they are to unlock investment.

• Better understanding of millennial attitudes and new approaches to holistic building management, such as the WELL Standard.

• The re-introduction of a Government delivery agency such as the Carbon Trust or Energy Savings Trust, which would set standards, provide information to businesses, and pass on market intelligence. 

These recommendations were guided by an industry-led taskforce of leading EIC member companies, and following a series of in-depth interviews with key industry stakeholder – covering investors, landlords, portfolio and facilities managers, and industry representation bodies.  

Michael Rudd, Partner at law firm Bird & Bird said: 

“The stakeholder interviews evidenced a diversity in opinion on the barriers to energy efficiency in property portfolios and the solutions to those barriers. Diversity also existed in the extent to, and manner in, which each stakeholder is deploying energy efficiency solutions to its property portfolio. The recommendations in this report reflect this diversity, including the importance of public policy balancing multiple considerations – particularly the benefits of standardisation which still enable adaptation to suit situational needs. While Brexit has led to a mood of cautiousness, it is hoped that with the right policy signals this will only temporarily abate the positive momentum in energy efficiency investment in commercial properties.”

Alison Crompton, Regional Director (Sustainability) at AECOM and Chair of EIC’s Task Force which produced the report, added: 

“For possibly the first time, here is a study which focuses on those who own and manage portfolios of non-domestic buildings, asking them to identify the drivers and the challenges encountered when planning energy efficiency programmes on a portfolio-wide basis. The report highlights the apparent contradiction between strengthened international climate change agreements, and current uncertainty over the forward implementation of carbon and energy policies in the UK to deliver these ambitions. The Government urgently needs to take steps to address that perception, to drive delivery of the maximum benefits from proposed legislation, and to encourage companies once again to take energy management and carbon reduction seriously – for mutual gain.” 

A seminar to promote the report was recently held at the London HQ of report sponsor and international law firm Bird & Bird, and featured a panel of speakers including Land Securities, Legal & General Investment Management and AECOM. 

Author: Sam Ibbott
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