Aug

Environmental issues won’t go away because of a cost-of-living crisis

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ESG – Environmental, Social and Governance – has become something of a mantra in the financial world where investment funds have been diverting the attention of their investors to those investments which best demonstrate constituent companies’ ESG credentials.

From private to public corporations, government, education and health institutions, all are under increasing pressure to demonstrate their commitment to gradually improving their ESG credentials in their property portfolios.

Whether you are a property owner, occupier, investor or developer these issues cannot be ignored, they are becoming increasingly important, not only are they driven by the need to demonstrate social responsibility, they are important elements in achieving your environmental, energy efficiency, human resources and commercial goals.

Investors and other stakeholders, as well regulators and the general public expect organisations to be thinking about and moving towards higher ESG compliance. In an era where evidence of climate change increasingly underlines the importance of adhering to stringent social and environmental standards, landlords face being left behind if they don’t start planning now.

Energy Efficiency

With city buildings soaring higher, urban centres getting bigger all the time, and summers getting hotter, the rate at which global energy is being used will continue to increase exponentially – you only need to look at the predictions for the increase in air condoning use, especially across Asia but also in Europe.

Most existing commercial and residential buildings in established urban areas were constructed well before anyone considered the importance of energy efficiency, with construction methods, glazing and levels of insulation proving totally inadequate, not withstanding the recent dramatic hikes in energy costs.

UK buildings are responsible for over 40 per cent of energy consumption in the UK. Nearly 70 per cent of that energy consumed in commercial buildings is used to provide heating, lighting, air conditioning and hot water. The potential economic and environmental savings are enormous.

Property owners and operators should now be planning and working to improve energy efficiency by applying a range of solutions that can help meet socially desirable targets, and will be highly beneficial long-term.

Formulating a plan

Owners and operators along with building occupiers need to work towards a long-term strategy with clearly defined and understood goals, targets set for achievement goals along the way. A survey whether carried out in-house or by external consultants should identify those measure that will be lease expensive and provide quick-fix solutions, followed by a hierarchy of priorities which become increasingly expensive.

Planning the works will necessitate working around occupiers’ needs, tackling improvements by moving ongoing works around, or waiting until buildings become vacant.

A focus on energy efficiency is a good starting point. Reducing energy consumption using a more efficient heating and ventilation system, better insulation and glazing, and using methods to self-generate energy to supplement the buildings total energy usage will provide a big hit.

Government drive to net zero

Commercial owners and occupiers will face an energy efficiency drive in the near future, with Government proposing two upcoming “compliance windows”, the first of which being from 2025 to 2027. From 1 April 2025, all non-domestic rented buildings in the scope of the Minimum Energy Efficiency Standards (MEES) regulations will be required to have a valid EPC, and if one has expired, a new one will have to be obtained.

The owners of commercial buildings including many institutional buildings such those used for educational purposes, student accommodation, hospitals and other institutional will be have to achieve a minimum Energy Performance Certificate (EPC) rating of at least C, if not B, by 1 April 2030, as well as being required to comply with more stringent inspections of heating and air conditioning systems.

Further tough measures are expected in the future regarding carbon reduction, where there will be introduced industry-wide standards and requirements for measuring and reporting carbon emissions.

Electric vehicle charging facilities

Especially in the case of institutional operators such as hospitals, education establishments and large employers, there will be increasingly a need to provided large scale electric vehicle (EV) changing points. There are projected to be millions of electric vehicles on the roads by 2030 when manufacturers will no longer be offering internal combustion engined car for sale.

The Department for Transport has announced funding of £500m to be made available to kick-start the roll-out of a national electric car charging network. The aim is to increasing the number of electric vehicle (EV) public charging points in the UK by tenfold over the next eight years, to make the network more accessible for drivers.

The money will be allocated via the Local Electric Vehicle Infrastructure (LEVI), providing local authorities with finance for the improvement of local facilities, along with a £950m Rapid Charging Fund to increase to 6,000 the number of EV rapid charging points on the UK motorway network by 2035.

While cost saving is a usually a priority aim when upgrading commercial buildings, other employer priorities will include improving air quality through better ventilation systems, and especially following the upheavals of Covid, measures to better cope with the post-Covid changing working model and a more comfortable working environment.

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