Orchard Street targets net-zero across £4bn portfolio of buildings
Commercial property investment manager Orchard Street, which manages retail units, offices and industrial facilities worth more than £4bn, has outlined plans to reach net-zero ahead of the UK government's 2050 deadline.
The plans were made public through the firm’s latest 2020 Responsible Investment Report. According to the report, Orchard Street will be able to publish a transition strategy later this year, detailing how five of its highest-emitting buildings can become net-zero by 2030. Learnings from these buildings can then be applied across the broader portfolio.
Occupiers’ emissions represent more than 90% of Orchard Street’s total annual carbon footprint. With this in mind, its net-zero strategy focuses more on its managed buildings than its direct operations.
To ensure that decarbonisation work starts across the broader portfolio as soon as possible, the business is targeting a 25% reduction in occupier carbon intensity by 2025. Occupiers will be supported to improve energy efficiency through retrofitting, digital technologies and behaviour change schemes. Targets will be reviewed and could be updated in 2022.
Orchard Street will also apply stricter carbon requirements to sites it develops in the future. 2020 saw the business secure planning permission for a carbon-neutral industrial site in Surrey and an industrial redevelopment site in West London which has a BREEAM ‘Excellent’ rating and Energy Performance Certificate (EPC) grade of A+.
The Responsible Investment Report additionally outlines the firm’s plans to report in line with the with TCFD’s (Task Force on Climate-Related Financial Disclosures’) recommendations. Orchard Street claims it is already following most TCFD recommendations but is looking to enhance disclosure with scenario analysis – the process of assessing likely climate risk costs in a range of warming scenarios – from this financial year.
“As a non-listed firm, we are not obligated to make disclosures at this level, however we fully believe it is the right thing to do to highlight our serious approach to ESG,” Orchard Street managing partner Philip Gadsden said. “As we deliver on our commitments in 2021 and launch both a net-zero carbon 2030 transition strategy and a new corporate Responsible Investment Strategy aligned to the UN Sustainable Development Goals, our commitment to upholding the highest standards of transparency and accountability whilst meeting the needs of our people and communities will align us with best practice and is the right long-term positioning for our firm.”
The TCFD surpassed 1,000 supporters for the first time last year. As of February 2020, corporations with a combined market cap of $12trn and investors with $138.8trn of assets under management collectively had made commitments. Pledges to support the TCFD recommendations had increased by 50% between 2018 and 2019, and even more rapid growth is expected year-on-year for 2020.
But adoption has not been without its challenges. The TCFD has recorded a mixed picture in terms of the quality and quantity of information disclosed, with notable discrepancies between sectors. While organisations in the energy, materials and built environment sectors have greatly improved the quality of reporting in recent years, the average quality increase since 2017 is just 6%. All sectors seem to find scenario analysis one of the most challenging aspects.
This gap between talk and action will need to be closed quickly – not only for the sake of businesses looking to avoid climate risk in the mid-to-long-term but because of changing legislation. From 2023, all publicly listed UK companies with a premium listing will be required to “comply or explain” with the TCFD’s requirements. Rules will then be tightened and extended further in 2025, subject to consultation.
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