Sustainability Metrics for Commercial Real Estate Assets – Establishing a Common Approach

1. 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

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

3. 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

4. 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

5. 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

6. 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

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

8. 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

9. Data – Building characteristics • Little overlap • No data on occupancy levels • No clear data on building classification

10. 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

11. Data – renewable energy • Captured by majority of tools and reports • kWh again used by the majority

12. Data - Water • Routinely collected data • Most using M3 • Common position should be achievable

13. Data – Water recycling • Less commonly captured for company reports • M3 the common metric • % of total usage important

14. Data - Waste • Commonly reported • Little consistency in reporting format • Issues arose regarding origination of waste and accountability

15. Data – waste recycling • Wide range of metrics used • Issue of origination is again key

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

17. Recommendations - data

18. Recommendations - normalisation

19. 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