There is a need to understand what is driving and shaping the greening of real estate worldwide. In some instances, countries are creating government policies and regulations to make new and existing buildings more sustainable. In others, global and national organizations are taking the initiative to develop standards for sustainable building design and construction.
Here, Hammerson’s head of sustainability, Paul Edwards, discusses some of the advances in sustainability practices in the Europe.
What are some of the leading edge sustainable strategies or initiatives that have been adopted in Europe in recent years?
The U.K. has a very complicated system, Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, which is meant to provide a carbon cost to business and, thus, push companies to reduce emissions. Unfortunately, it is so complicated that it does nothing to promote change. Its complexity prevents companies from creating a business case. However, a simple scheme of landfill tax whereby a gradual increase in tax on waste to landfill of £8 per tonne has prompted companies to change their waste management initiatives because there is a clear business case – failure to recycle will increase costs dramatically over a period of time.
In France, the government has insisted companies turn off all external lighting at night. It is hoped this will move to shop lighting within shopping centres – a simple but effective solution.
The key element missing in most countries is a simple but robust labelling system for energy efficiency and, thereafter water, waste, and so on.
In Australia, a system known as NABERS (National Australian Built Environment Rating System), formerly the Australian Building Greenhouse Rating (ABGR), has been extremely effective in driving the property industry to reduce emissions. This works because it is linked to two key drivers: value and reputation. If a building is a five-star (best performing) building, then it will use less energy and, therefore, cost less to run and eventually have greater value. A big bank with a global reputation will not want to be seen in a one-star building, nor will it want the bills, so a landlord’s ability to let (rent) a one-star building becomes harder. This, in effect, creates obsolescence. A longer to let (rent) building has less value.
The U.K. has not quite got this yet and is delaying the rollout of mandatory labelling because, government says, it will cost the industry too much. So, the property industry, led by the Better Buildings Partnership, is creating its own system that is aligned to the government system used in the public sector. Basically, the industry is going to voluntarily label buildings because it believes this is the only initiative that will drive the change that is needed.
What role has government policy played in the U.K. and/or the Eurozone in creating a strong commercial real estate market adoption of a green agenda?
Government has a key role to play through demonstration, leadership and cutting through red tape and complexity. It also must be consistent and reliable.
Too many companies were affected in several Eurozone countries by the speed of change to the Feed-In Tariffs (FIT). In the U.K and France, among other places, government brought in FIT to promote solar solutions by paying a higher rate for solar power. It set out a plan for implementation with a timetable. Then, within months, it completely changed its mind and dropped the tariff by 70 per cent, which stopped projects overnight and, more importantly, removed all confidence in any government scheme.
Finance has always been an issue for long payback solutions, so the U.K. government is bringing in the Green Deal, which is meant to provide funding for energy-efficient solutions. Unfortunately, the funding interest rate is too high and, as a result, it will prevent a large uptake. If the government was serious, it would offer a better rate to encourage companies to participate.
How far ahead (of North America and Asia) are commercial real estate organizations in Europe in adopting sustainable practices?
The North American market appears to be behind in some areas and ahead in others. It is clear North American companies are behind on reporting but catching up fast. A common language across the industry is so important. In the U.K., the Green Property Alliance started this with the Common Metrics paper, which was adopted by several other organizations. In Europe, the EPRA’s (European Public Real Estate Association) best practice sustainability recommendations are now seen as a market leader. New initiatives such as the Global Real Estate Sustainability Benchmark (GRESB) are starting to raise the awareness of investors, which, in turn, helps to push down to the property companies.
Which European countries are at the forefront of addressing the need to make new and existing buildings more sustainable?
The Netherlands, Denmark, Sweden, Germany and the U.K. are the market leaders. The first three countries just simply get on with it as part of business as usual whereas with Germany it is legislated. The U.K. is somewhere in between but not moving fast enough
Paul Edwards is head of sustainability at Hammerson, where he is responsible for the company’s sustainability strategy and activities throughout the group. Paul also sits on the boards of the Better Building Partnership, National Skills Academies and London Sustainability Exchange. He can be reached at Paul.Edwards@hammerson.com.
