-
One month on: Key takeaways from our charity property conference with Withersworldwide.
Following a warm welcome from Jeremy Wakeham, CEO of Withersworldwide’s business division, we began several interesting panel discussions.
The first looked at the green agenda, where our Managing Partner Rob West featured as a panel speaker.
Currently, only a limited number of charities are required to report their environmental impact, however, as ESG regulations tighten across sectors, discussion centred around the data-driven and practical steps charities can take to get ahead of the curve.
A key takeaway from this discussion was that for charities with operational or investment properties, collecting and getting clued up on data about their carbon footprint is key to empowering them to make green choices.
Additionally, the panel discussed how climate risk is now increasingly becoming a financial risk which charities and endowments cannot afford to ignore. As Rob West put it, “you cannot manage what you cannot measure”. This reminder rang especially true as the panellists agreed that mandatory reporting is likely to be enforced across the sector in the near future.
Aside from environmental responsibility, conversation also tackled the ‘S’ in ESG. As socially focused organisations with people at their core, social impact remains paramount to a charity’s work in the built environment. The panel emphasised that a harmonious relationship between a charity’s property and the people it serves remains key to its success.
The second panel of the afternoon looked at the opportunities within property investment for charities. Chaired by Clearbell’s Senior Partner Manish Chande, the discussions provided ample ground to explore, given the financial, identity and behaviour challenges that charities face in the real estate sector.
A key point for consideration was the ethical responsibilities that charities face in property and our panellists agreed that charities should ensure the investments they make align with the purpose of the charity and interests of their beneficiaries.
This panel covered a broad range of topics, from investment in real estate, to government legislation, inflation and the communications challenges surrounding charity funding. Amongst a plethora of opinions and viewpoints, all agreed that endowments and charities can and will play a central role in the property sector going forward.
As an experienced advisor, with a background in overseeing numerous outsourced portfolios from charities and endowments, Manish steered important discussion about the issues that can arise from these collaborations. In particular, the panel explored how these functions work to improve time and resource efficiency, while also evaluating the nuanced approach that this type of investment necessitates.
While all contended with the issues of tax rules and complex ethical considerations that arise in charity investment when compared with traditional investments, the panellists agreed that there is no one-size-fits-all approach. Each panellist’s attitude was moulded by their asset base, risk appetite and their charity’s unique priorities and circumstances.
Finally, we rounded out the day with a chat about flexible working and the future of the office. This session examined the changes to office culture in recent years, specifically how this has impacted the charity sector. By bringing together the expertise of property investors and managers, and figures from the charity sector, this conversation put charity work into the context of office property trends, pushing for more charities to undertake strategic reviews of their operational real estate.
Manish Chande, Senior Partner at Clearbell said: “It was a privilege to take part in a day of engaging discussion, centred around charity investment and endowments in the built environment. With insight from the team at Withersworldwide and other expert industry voices, we were able to cut to the core of how we can best deliver charity development in a way that both champions sustainability whilst still ensuring strong returns.”
-
Our reflections on the annual Clearbell Investor Day.
But January is always a month we look forward to, as it’s the time that we host our Clearbell Investor Day — one of the most exciting days of our company’s calendar.
Now in our sixteenth year, our Investor Day brings together those from across our investor community, as well as our trusted partners and other key relationships, as we look back at what we’ve achieved in the previous twelve months.
This year, we made significant headway against our sustainability goals, working on a mixture of 14 light and deep retrofits across UK properties under our management. This includes six office retrofits, five industrial and retail retrofits, and a further three retrofits on properties within our operational joint ventures. In addition, we have increased our rent roll with twenty new leases and successfully exited our mixed-use Amber portfolio, among many other achievements.
Through our patient and considered approach to investment, we have been able to actively move ahead with projects like these, as well as capitalising on other opportunities in the market despite challenging economic headwinds. It’s something we as a team, are very proud of and remain committed to.
So, what’s next?
For me though, it’s the looking ahead that is often more important and this day allows us to reenergise and refocus as we head into a new year full of new opportunities.
As a business we have made significant progress, but we are constantly looking at ways that we can drive forward positive change while also making strong returns for our investors. This was never more evident than through our ‘Responsible’ session of the day where we focused on the changes that need to be made if we are to continue providing sustainable and social value, alongside capital returns.
The two things are by no means mutually exclusive, they’re just a little harder to get right. Fortunately, we’re not scared of taking the road less trodden and we have big plans for the year ahead, which will be delivered by our proactive asset management team.
And I’m also particularly excited to see our development into some more nascent sectors. At a trip to our lab-enabled office asset, 85 Gray’s Inn Road, we heard from Emma Goodford, head of UK life sciences and innovation at Knight Frank, that while Boston, Massachusetts, has 32 million sq ft of lab space, London only has 8 million – so there’s clearly scope for progress in that sector, and we’ve already made good headway.
We also headed to Tradestars, our co-warehousing community in Hackney Wick that launched late last year and is proving to be a successful concept. We will develop the platform further with additional sites, including Islington which will open in H2 2024.
At the same time, we’ll continue to explore areas like single-family rental, affordable student accommodation and multi-let logistics. For all these strategies we have identified the opportunity to exploit cyclical and secular tailwinds into drive the next phase of successful aggregation.
Overall, though, I am pleased to see that there is still as much enthusiasm and appetite for growth and change in the sector — and particularly across our client base – as there has been since we launched Clearbell sixteen years ago. I have no doubt that 2024 will be our best year to date.
-
From community to retrofit: key takeaways from the UK ESG Real Estate Agenda.
Over 300 attendees gathered at the annual event that never fails to inspire, spark conversation and facilitate innovation.
Personally, I had so many valuable conversations and took a lot away from the panel sessions, so I have summarised some of my key takeaways below for anyone who wasn’t able to attend:
Capital and carbon now equally important to investors.
My colleague Alice Murray, head of asset management and sustainability, joined a panel session focused on transforming buildings through upgrades and repurposing.
We all know that the most sustainable building is the one that already exists, and with 80% of buildings in the UK today expected to still exist in 2050. this panel explored how we can redevelop those which are no longer fit for purpose with an ESG focus.
One of the most interesting takeaways from this session was the increasing proportion of investors who have changed their analysis criteria over the last two years to focus on capital and carbon returns, rather than just capital returns.
If developers and investors weren’t paying attention to ESG before, they certainly should be now!
Social value needs to be given the same prioritisation as net zero.
When we talk about ESG, most people understandably focus on the ‘E’. Of course, the environmental aspect of ESG is crucial and arguably the most challenging to drive forward at scale but getting the ‘S’ right is also integral to supporting environmental goals.
Communities that are struggling with poor quality homes and a lack of access to vital services disproportionately suffer from deprivation-linked illnesses and struggle to access long-term employment opportunities. This understandably has a huge impact on creating thriving communities, but also stifles environmental progress with focus from the issue detracted.
Creating happy and healthy communities is not only the right thing to do for the people that live there but is also intrinsically linked to supporting the country’s environmental goals.
This was also touched upon in a panel around EV infrastructure and the need to consider access to charging points – we can’t expect people to work towards the UK’s sustainability goals if we do not equip them with the right tools to do so.
Clarity and transparency in reporting is crucial to maintaining asset value.
What became apparent from the panel I sat on, focused on investment strategies and trends within the context of ESG, was that everyone agrees there isn’t the standardisation needed across the industry to ensure assets are being assessed correctly.
Over the years numerous measurement tools have been brought into place from EPCs and BREEAM to NABERS, but as it stands there is no widely agreed metric that the whole industry is using to measure ESG factors.
However, much we may have liked to, my fellow panelists and I do not have all the answers as to how we get to a point of standardisation across the sector. The crucial takeaway is that there is the desire from those across the industry to get there though.
And this was indicative of the mood of the whole day – everyone is keen for change to play their part and to share their ideas, but without government intervention and standardisation across the industry our ambitious aims for net zero are unlikely to be met.
However, it is this passion and desire for change that has left me feeling optimistic about our future, albeit we have a lot of work to do yet!
-
How we achieved the Planet Mark certification.
Fund managers work hard to ensure that their assets are performing against sustainability criteria, but this can come at the expense of their wider sustainability responsibilities. In striving for improvements in their assets, they often overlook the emissions produced in the day-to-day running of their own offices.
At Clearbell, we’ve been implementing big changes in the way we approach asset management to have a greater impact across our portfolios from a sustainability perspective. However, in doing this, we were adamant that we would not fall into the trap of ignoring emissions at any level of our operations, including our own office emissions.
In July 2023, we engaged with Planet Mark — which was launched in 2013 and backed by the Eden Project – after identifying them as an ideal partner to work with in our firm’s sustainability drive.
Planet Mark’s Business Certification has a three-step structure: measure, engage and communicate. An applicant will:
- Submit comprehensive data (relating to Clearbell’s office and activities)
- Receive carbon emission reports as well as a personalised action plan on how to improve these figures
- Be invited to join Planet Mark’s community platform to engage with a wide forum of other businesses committed to their net zero journey
The Certification requires significant investment into data collection, submission, and liaison with Planet Mark. Planet Mark struck us as having a robust method for better understanding and improving our own carbon footprint, so we set to work.
The process
The data we gathered included our office’s electricity, water and paper use, as well as our business travel, procurement processes and homeworking information. Planet Mark’s anti greenwashing assurance meant that our submission was subject to extensive checks.
This stage came with plenty of challenges, but it also allowed us to reflect on our responsibilities as a fund manager. Our London office is a rented space, so we had to overcome difficulties to access information on the office’s energy and water use. This is not a unique problem either, many companies struggle to take the first steps towards net zero as they do not have any accurate data to draw on as a starting point. This has pushed us even harder to ensure that tenants of the buildings we manage can more easily obtain the figures that they need to assess their carbon footprint.
Social value measurement
Beyond the environmental element of our ESG commitment, we also chose to look at our team’s social value contribution. This audit broke down what we have provided the community close to our office through the channels of our people, community and volunteering initiatives, donations, and in our procurement chain.
The assessment both recognises our recent community outreach projects and provides a benchmark for future initiatives. It also helps us to scrutinise our supply chain, a great way to ensure that we work with like-minded companies.
Next steps
This certification is only the beginning of our relationship with Planet Mark. Following the initial report, our whole team will attend an “energiser workshop”, a session to help us better understand our results. The workshop will provide the basis of a comprehensive action plan to reduce our carbon footprint and increase our social value contribution. From there, it will be a full team effort to implement the changes and stay focussed on achieving our targets.
To help with this, we have also developed Clearbell’s own environmental management system aimed to provide colleagues with the tools and skills they need to embed sustainability in the day-to-day management of assets and in the office, as well as enhancing awareness of the firm’s ESG commitments and engagement with its stakeholders and investors.
Planet Mark’s certification serves as a reminder of continued commitment to net zero. As part of the accreditation, we’ve promised that after our second year we will reduce our office emissions by at least 2.5% each year.
Now, more than ever, we understand that sustainability is a journey rather than a destination, and that it is not an individual pursuit – it’s impossible to reach net zero without collaboration.
-
Scotland’s green revolution: paving the way to carbon neutrality.
As part of this broader effort, the Scottish government has set ambitious targets for achieving carbon neutrality, aligning with global commitments to combat climate change. This includes plans to reach net zero by 2045, with interim targets of 75% by 2030 and 90% by 2040. Indeed, the EU has already set itself a legally binding target of achieving net-zero greenhouse gas emissions by 2050. This is very much welcome news and should set a standard amongst other nations across the UK and worldwide.To achieve net zero, nation-states and the businesses and communities within them must work in unison towards this common goal. It requires collaboration from the very start. It also means a bottom-up approach, encompassing buildings, transportation, and renewable energy sources, as well as industrial activities.
As the world grapples with the challenges posed by climate change, the importance of sustainable building practices cannot be overstated. According to the World Green Building Council (WorldGBC), buildings are currently responsible for 39% of global energy related carbon emissions: 28% from operational emissions, from energy needed to heat, cool and power them, and the remaining 11% from materials and construction. Amongst the various methodologies and frameworks aimed at reducing environmental impact, Building Research Establishment Environmental Assessment Method, otherwise known as BREEAM, stands out as a leading certification system for new builds and deep retrofits alike. This is because BREEAM focuses on assessing and improving the sustainability performance of buildings, contributing significantly to the pursuit of carbon neutrality. In the area of net zero carbon, BREEAM helps organisations minimise carbon emissions at the asset level – something that is fundamental to our overall business strategy.
With Scotland taking the lead on progress towards a greener environment, we saw an opportunity to help accelerate this global shift and turn words into action. Sustainable office accommodation is sparse in Glasgow, despite it being the biggest city in Scotland and the fourth-most populous city in the United Kingdom.
In this context, we acquired 150 St Vincent Street in Glasgow in December 2021, located in heart of the city’s Central Business District. The development will see the building, currently 70,000 sq ft, extend to 150,000 sq ft over basement, ground and 9 upper storeys. Indeed, upon acquisition, we committed to making it Glasgow’s first carbon neutral office covering the entire lifecycle of the building. We are also committed to creating Glasgow’s first BREAAM Outstanding office and the first to achieve a NABERS rating – for which we are targeting 5-star. NABERS is an Australian system that, unlike EPCs, measures your efficiency across all consumptions, which will help us to accurately measure, understand and communicate the environmental performance of the building whilst identifying areas for cost savings and future improvements.
Additionally, the building has been designed with wellness at its heart – the basement offers a gym/yoga studio, cycle storage for 200 cycles together with changing, shower and drying facilities. The existing building modelling results in 4 floors benefitting from dedicated south-facing terraces. The arrival experience to the building will be transformed with pocket parks which will welcome the tenants on both St Vincent Street and Wellington Street, whilst the new reception offers additional occupier breakout space. We are also planning to provide an auditorium that will allow for town hall meetings and help provide a community feel. We are working with a specialist adviser on this holistic approach, which allows us to create a space that not only promotes wellbeing but also reduces its ecological footprint, reflecting our commitment to a healthier and more sustainable future.
Achieving operational carbon neutrality for a building is best accomplished by prioritising effective reduction of its carbon emissions, with offsetting considered as a last resort. Through precise planning, upcoming undertakings, cutting-edge technologies, removing the gas in the building and introducing smart apps to help reduce energy use, 150 St Vincent Street has minimised its energy consumption and maximised efficiency.
Despite this strong progress, it is only the start and much more needs to be done, as there is only 105,000 sq ft of available Grade A space in Glasgow itself. A full modernisation programme in the city is underway and we are at the forefront of it.
St Vincent Street aims to serve as the benchmark for the broader movement towards sustainable construction in Glasgow and Scotland as a whole. It showcases the economic and environmental benefits that can be achieved by prioritising energy efficiency and innovative design. The success so far of this project is setting a new standard for future developments in Glasgow, encouraging the industry to embrace sustainable practices and contribute to Scotland’s overall carbon neutrality goals.
Scotland is crying out for Grade A stock that meets all the BREAAM and carbon-neutral requirements that the Scottish government is requiring from 2030. The cynics will claim that it is simply too costly to pursue on such a large scale. For those who claim that they cannot afford to work towards carbon neutrality through frameworks like BREAAM certification, they are gravely mistaken. With Scotland working towards a low-carbon economy in the near future, they simply cannot afford not to do it.
It’s all about focusing on the long game and developers and investors alike must ensure that they are not left behind.
By Rob West, Managing Partner & Chairman of ESG Committee, Clearbell
-
Social responsibility — a growing business priority. It always has been at Clearbell.
As a business with various assets dotted across the UK, we fundamentally understand the importance of ensuring that our tenants feel part of the community, whilst also ensuring locals have a chance to engage with our assets in as many ways as possible. Equally, we know that occupiers increasingly want buildings that not only reflect their values, but also encourage social activity.
Across Clearbell’s property portfolios, we are seeking to support local communities in a variety of different ways. Below are just a few examples that demonstrate this support throughout 2022.
The Garden at The Riverwalk
Located in Durham, The Riverwalk is a riverside retail and leisure destination in Durham city centre. “The Garden”, which was constructed in the summer in the centre of The Riverwalk, was created to encourage an environmentally focused hub for families to enjoy. Designed with several planters, including bee-friendly plants, the garden was used to host children’s face painting, live music from local musicians, an interactive animal story to inspire children to learn about wildlife and the natural world, a planting workshop and a local eco-friendly outdoor theatre group who performed a live show centred around climate change.
Local charities, social enterprises and retailers were also invited to use the space for community engagement and events. Our charity partner, St Cuthbert’s Hospice, hosted three separate fundraising events – all of which focused on community building and providing lettings for businesses who want to be a part of the community rather than change it.
Belgrade Plaza
Located in Coventry, this mixed-use site has embedded its cultural importance over the years, solidified by Coventry being the City of Culture in 2021.
Belgrade Plaza commits to events throughout the year including Easter, summer and Christmas initiatives focused on families and children. The Plaza has also attracted visits from the likes of Amazon’s “Treasure Truck” – a unique way to bring customers exciting deals directly to their neighbourhood with in-person pickups from quirky vehicles in various cities – who were keen to be part of this family community.
Additionally, Belgrade Plaza is also a popular filming location and has been central to many of the UK City of Culture announcements and several theatre shows, including Jack and the Beanstalk and Big Girls Don’t Cry.
Southampton student accommodation
Close to the port city of Southampton, our student accommodation works to ensure that students feel community within the university and in the wider city.
In Southampton, our charity initiatives continue to grow. Throughout the year, we’ve hosted events in-house to support residents, as well as promoting important awareness days. In May this year, the Hampshire Fire & Rescue Service use one of the vacant buildings for their fire drills and training. In September, we raised awareness for “Organic September”, “Youth Mental Health Day” and “World Suicide Prevention Day” – as well as “National Read a Book Day”, for which a small book swap library was introduced to encourage residents to take and share books. October saw promotions for Black History Awareness month and Breast Cancer Awareness.
St Vincent Street
At our Glasgow property on St Vincent Street – which we acquired in late 2021 – we have been welcoming the local community through a scheme called “Life with Art” to use the venue free of charge for an arts project over the last year. Our proposed redevelopment of this office building is still at the planning stage, so we wanted to demonstrate our commitment to using vacant space for the benefit of local people.
The Sloane Club
Originally acquired in October 2017 and located in central London, Sloane Club is home to nearly 3,000 members and boasts of a range of different facilities, including lounges, casual and formal dining.
Here, the Sloane Club has worked with the Department for Work and Pensions (DWP) to provide job opportunities in the local community and create spaces for people seeking relevant advice. In June 2022, the club hosted the DWP Disability Confident Jobs Fair – a space to help claimants with diverse disabilities and health conditions across London and Essex. Separately, at the end of 2022, the club started working with Saira Hospitality Training School to provide work experience and opportunities to new hospitality graduates.
In Conclusion…
In conclusion, we understand the importance of our social responsibility and working with the communities of which our assets are a part. Yet there is a wider learning here: by creating a strong social strategy that puts the people first, businesses can enhance the value of their assets whilst ensuring it serves a purpose for the community that it serves.
-
Switching gears: fundraising post-pandemic.
A recurring discussion amongst my peers and from past reflections over the course of my career is that capital raising has drastically changed over the years. Due to the private nature and limited visibility of funds, it’s not as clear cut as it may seem. However, I can give a quick snapshot of the current situation from my recent conversations and experience:
- Investor confidence rebounds: The majority of recent investor surveys, alongside anecdotal feedback from my peers, indicate that investors are beginning to put their capital to work again. In the latest Lazard Investor Sentiment snapshot, c.80% of investors responded to say they are “business as usual”. The research found that the most active investors are sovereign wealth funds and fund of funds, with the least active being wealth managers – this chimes with what I have heard at conferences as well. Geographically, US and Asian investors have been more active than investors from other regions.
- On-sites are back on! Recently, it appears that few investors are willing to enter an eight or nine year relationship without having met the manager in person. Saying that, the mega cap managers have been benefiting from inflows throughout the pandemic, as these are arguably easier to due diligence from afar and using references. In the last few months, since travel restrictions have eased, we’ve had a lot more investors fly in and request site tours – and expect that this will only continue.
- Investors are returning to niche managers: I was at a conference recently and one investor said to me, “if you want beta, invest in a global manager, if you want alpha, invest in a boutique”. While it may not be quite this black-and-white, recent research by the University of Cambridge demonstrates that country-specific managers outperform pan-European managers by c.200 basis points.
- US investors are achieving excellent returns in private markets domestically. The benefits of investing in home markets have been a common theme in investor discussions, particularly those based in the US. Whilst I appreciate the logic of investing in one’s home markets – with no FX risks and more local expertise – there is still a role for global diversification. In fact, this can only have increased in importance given today’s geopolitical conflicts and the risk of black swan events.
- New regulations impacting Australian superannuation funds. The introduction of the new regulation in Australia: “Your Future, Your Super” has led to a lot of conversation recently. The regulation pits all unlisted property funds against a domestic benchmark. Given the pushback on this from both home consultants and those in the industry, the regulation may change, but this is the current situation. However, larger Australian superannuation funds are still investing directly in the UK.
- Offices are back in vogue. While the pandemic has changed the way we think about our physical working environment, interest and appetite from investors in office assets has remained buoyant. London offices were the favourite city/sector combination in INREV’s Investor Intentions survey this January. While we all know how popular industrial and residential remain, it was also noteworthy to hear of investor interest in selected retail again.
- Consultants are looking at country-specific managers. I have been very pleased to hear that consultants are looking more keenly at the UK again given the interest from their underlying client base. There may have been some hesitance over the last few years given the headwinds from Brexit, and consultants are cognizant of the opportunity cost for their underlying clients that can invest globally. At the same time, it is difficult to ignore one of the most liquid and mature real estate markets in the world and the growing murmurings that UK real assets will likely outperform their continental peers over the next 5 years.
Lisa Barry-Lyons, Senior Business Development Manager
-
Clearbell AGM 2022: Responsible Investor Panel Key Takeaways
We have seen big strides forward with regards to raising the bar for ESG over the course of 2021, and not least due to the announcements and declarations made at COP 26 in Glasgow and the recent UN statement highlighting the critical window of time to avoid the worst of global warming.
The international community is now intensely focussed on net zero carbon and there is nowhere to hide if you are a property developer or investor.
At the same time, the pandemic has brought focus to social issues and inequalities that, along with environmental drivers, will shape Government policy in the future.
At our AGM in January, I hosted a panel event where we discussed how the property industry – and more specifically real estate investors – can play their part in this crucial global responsibility. I was joined by Dom, Adam and Alice from our team, as well as Gilbert Lennox-King from Construction Carbon.
The conversation covered a range of areas from carbon finance and tenant wellbeing to responsibility for the carbon emissions of the built environment.
Here are our key takeaways:
Embodied carbon is the new frontier for property sustainability.
Embodied carbon, which is carbon that is integrated into the construction and improvements across the whole lifecycle of the building, is increasingly an issue for investors. There is currently a lack of regulation to support improvements in this area. The EPC model provides a questionable correlation to actual energy consumption and does not measure embodied carbon at all. It would be much better to advocate for a system that incorporates embodied carbon and is based on actual energy consumption and emissions – and which incentivises landlords and tenants to get it right.
Whole life carbon should be a priority.
It is important to distinguish between net zero carbon in construction and in operation. We should be striving to achieve both, which is known as whole life net carbon zero. This is what we are aiming to do with St Vincent Street in Glasgow – while it’s an ambitious pledge, we want to help tackle obsolescence and use the existing structure to avoid additional emissions.
ESG finance will increasingly be a consideration.
In recent years, we have seen the rise of carbon performance-based development finance, where a keener margin is offered for a greener development. This is likely to become widespread in the medium term as lenders want to show they are backing sustainable projects. That financial incentive is important – and will help to drive progress on ESG in the wider industry.
Helping improve tenant wellbeing is imperative.
A significant proportion of the workforce was forced to work-from-home for the better part of two years during the pandemic, and these new working patterns have proved to be sticky. Companies need ways to entice their employees back into the office, but also ensure their safety and wellbeing all whilst working towards reducing their carbon footprint. And landlords have a role to play in providing facilities and amenities that enable tenants to share ideas, to learn, collaborate, network, and succeed. Good working environments help with career development as there is a responsibility to future proof and develop the skills of the younger generations, as well as improve the mental health of employees by offering variety and stimulation. Such premium space is valued more highly, and occupiers will pay a premium for better quality.
Bringing everything together, there is clearly more that the whole industry can do to become more responsible and sustainable. At Clearbell, we are intent on doing things properly and ensure that the assets within our control align with the ESG requirements we set and our stakeholders demand. Real estate has a key role to play in carbon reduction and our net zero carbon targets will propel our assets onto the path to meet that aim as well as improving wellbeing of our tenants. It is an area that is constantly evolving and likely to shape our industry for years to come.
And as we like to say – it’s not just good for the planet, it’s good business too.
-
The greenest buildings already exist
The COP26 summit in Glasgow has helped to focus the minds of governments, businesses and individuals on tackling the climate crisis. The conference has given rise to pledges to reduce carbon emissions at an international, governmental and corporate level, including from property companies.
Over the past decade, the property industry has rightly started to prioritise reducing its carbon footprint and improving its sustainability credentials. There is now a well-established framework of measurement that has been built up around it, including BREEAM certificates and EPCs, with net zero targets being the ultimate aim.
However, perhaps the certification system is becoming counterproductive. The way real estate measures environmental impact has led to a situation where new developments are more highly prized than improvements to existing stock. It is now the case that complete redevelopment wins out, overlooking the current built environment – and the embodied carbon and energy savings involved with refurbishing existing building.
This is a serious oversight. It is leading to unnecessary carbon emissions when the default option seems to be to knock down and start again. Without a framework of ESG ratings and a planning system that takes a more nuanced approach, investors will not be incentivised to repurpose existing stock.
The greenest building is surely that which already exists – and more can be done to help rebalance the industry’s approach to carbon emissions.
It is clear that refurbishment rather than redevelopment cuts back on carbon emissions associated with new constructions, including new materials and transport. It is expensive to recycle materials from a building that has been demolished, which disincentivises developers to do so. These materials therefore end up in landfill, with virgin materials entailing a new carbon footprint delivered to site. The refurbishment route therefore helps to save both time and costs, particularly at a time when the supply chain is experiencing significant disruption.
Alongside these benefits, there is also a significant amount of work that can be done to improve the carbon footprint of a building. For example, installing solar panels, introducing better insulation, and refurbishing or replacing a building’s M&E can all add up to a significantly reduced carbon output.
There are also assets that can’t be knocked down, particularly those that are Listed. Investors and developers should therefore be rewarded for improving the credentials of these older buildings and be able to achieve as high an environmental rating as a new build taking into account the age of the property.
Alongside these practical steps, the planning and certification systems both urgently need reform. Steps have already been made with regard to change of use in the planning system, but more can be done to facilitate this. Reform that allows change of use from offices to residential, offices to laboratories and retail to offices beyond the current Permitted Development rules would help developers transition existing structures to a different use and minimise emissions in the process.
The current system of sustainability rewards also needs to change, to take into account the embodied carbon. There is currently no metric that allows a like-for-like comparison with uprated carbon, which is a further disincentive to refurbishment.
Without a reappraisal of sustainability in real estate, the industry risks falling behind on its net zero targets. This should start with recognition of the importance of embodied carbon in the existing built environment, with a system that reflects the nuances of the market.
Dominic Moore, ESG Director and Siân Stephens, Sustainability Senior Associate, at Clearbell Capital LLP
-
Kicking off National Inclusion Week at Clearbell
As National Inclusion Week begins, we have been reflecting on this year’s theme of unity. While the pandemic may have separated us physically, we have been determined to stay together to connect, collaborate and share. Over the past year, we’ve been finding ways to promote inclusion and unity within our organisation and beyond.
Last year, our Diversity and Inclusion Committee launched the Clearbell Culture Club, which meets regularly to discuss a wide range of topics based on books, documentaries, podcasts and films which explore different aspects of diversity and inclusion. In the last 12 months, we’ve come together six times as a team to discuss among other things the pioneering role of Ruth Bader Ginsburg in championing women’s rights and the life of the travel writer Jan Morris who chronicled her gender journey. The Club acts as a safe and non-judgemental forum for us to have honest and open conversations about diversity and inclusion and helping everyone at Clearbell to engage in continual learning and development.
And outside of Clearbell we are also aware of our role in promoting diversity and inclusion within our industry. We are on the editorial board of The Academy of Real Assets, which aims to widen access to and increase diversity in the real estate industry. As part of our work with them, we took part in a Q&A session with students from 44 state schools with a high proportion of free school meals, to give them an insight into the career opportunities in property. Asset Manager Camilla Powell-Tuck spoke in-depth about her career, work at Clearbell and the importance of ESG and sustainability in the industry. The Academy’s aim is to guide students who are interested in a career in property and support a wider, more diverse group of young people become the next leaders in our industry.
We have also been working with Inspire! – a London based charity working to improve young people’s access to the world of work, raise achievement levels and enhance their future career prospects in the Borough of Hackney. We challenged the students at Highbury Grove to the Clearbell Architect Project, which was all about designing an office space fit for 2021. There were some fantastic ideas, including an office that focused mainly on being environmentally friendly, one with a room for quiet time and relaxation and one with a games room and unlimited snacks and drinks! Our hope is that we will be able to use this type of project going forward and work with schools across the country situated near our assets, as a way of helping to open the doors of the property sector to young people as they look ahead to planning their future careers.
Despite the pandemic, we have remained united as a team and with external partners, and we are committed to continuing our journey to foster a more inclusive culture at Clearbell and in our industry.