Property industry develops sustainability toolkit for acquisitions
A coalition of the UK's leading commercial property owners has teamed up to launch an industry toolkit which delivers practical guidance on sustainability criteria within the acquisition process.
The Better Buildings Partnership (BBP) toolkit has received industry support from major firms including The Crown Estate, Grosvenor and Aviva Investors. The toolkit enables investment and acquisition teams to better manage ‘investment critical’ sustainability issues such as climate change and energy security during the due diligence stage.
“It is absolutely critical that sustainability risks and opportunities are reflected in owners’ investment decisions,” said BBP programme director Sarah Ratcliffe.
“The responsibility for this, however, should not be the preserve of the ‘sustainability experts’ but simply part of business as usual. This toolkit supports this by enabling investment teams to understand the issues and take the lead in embedding them within their own internal processes.”
Key areas that the toolkit will aim to tackle include flooding and the soon-to-be introduced Minimum Energy Efficiency Standards (MEES), which requires private, non-domestic properties to reach an Energy Performance Certificate (EPC) of at least 'E' before granting a tenancy to new or existing tenants.
The toolkit includes a sustainability investment checklist which sets out the information that should be requested and reviewed, from the initial pre-bid stage through to transaction. It also contains a 100-day review section which outlines the key questions that should be considered post-transaction to ensure a smooth transition into property management.
One of the businesses to have endorsed the toolkit, Aberdeen Asset Management, has said that the toolkit will help the group engage with its increasingly sustainability-focused investors.
“The ‘sustainability profile’ of new properties can not only significantly influence an owner’s ability to achieve its sustainability objectives, but can also have important implications for capital investment programmes, leasing and service charge arrangements,” Aberdeen Asset Management’s head of UK property transactions Robert Cass said.
“This toolkit, developed by the industry, for the industry, is of huge value in helping owners approach this subject.”
Many sections of the property sector are driving improvements in the performance of building stocks through energy efficiency upgrades and low-carbon commitments. It was last week revealed that members of the BBP - representing in excess of £180bn assets under management - had improved the energy efficiency of their built environment portfolio by 25% since 2011, amassing £16m in savings as a result.
BBP member Canary Wharf Group (CWG) has managed to reduce emissions by 14.4% across its estate despite increasing its portfolio in the last year, the British property firm’s latest CSR report revealed earlier this month. Meanwhile, fellow BPP affiliate Land Securities recently announced the approval of its science-based target to reduce emissions by 80% by 2050.