Clearbell AGM 2022: Responsible Investor Panel Key Takeaways

7.03.2022

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.