Reducing energy demand from human activity is a key environmental issue at a global level. This is especially the case for real estate, since buildings account for close to 40% of global energy demand. Our stakeholders also identified energy use as a high material topic in our materiality assessment.
As a responsible real estate investor, we believe that we should pay extra attention to the environmental impact of our assets. Retail real estate is characterised by high energy consumption. This means that our key areas of focus when improving assets are to reduce energy consumption, generate renewable energy on-site and minimize emissions and pollution from the operation of our assets.
We use the BREEAM In-Use methodology to determine which actions to undertake and to measure and monitor our progress. The intent is to set achievable and realistic targets without jeopardising the financial and commercial objectives at asset level. By doing so, we demonstrate our ambition to continuously improve the environmental performance of our portfolio.
Since 2015, the business plan of each individual asset we manage includes include a specific section on sustainability with corresponding actions. The rolling annual Asset Business Plan preparation and review cycle allows asset managers to identify and communicate which buildings will undergo improvements. Combined with the annual, rolling process of certification, it allows us to track year-on-year improvements and clarifies to our investors when these improvements will be achieved, in line with our medium-term target of certifying at least 50% of our Assets under Management (by value) at BREEAM In-Use ‘Very Good’ or better by 2022. At the end of 2018, 34% of our AuM met this target, up from 27% at the end of 2017.
The adoption of this methodology marks an important step towards using BREEAM In-Use as a portfolio management tool, helping us to maintain our holistic approach to sustainability and guide us in making environmental improvements to our assets (figure 3.1). We improved the BREEAM In-Use rating of 47 assets in 2018, however we did not manage to maintain the rating of 5 other assets on the same level. In 2019, we plan to improve 22 assets.
Our tenants play an important role in improving the environmental performance of our assets. Whereas Redevco has control over the shell of the building, tenants often have control and ownership over services such as heating, cooling and lighting. We therefore focus on successful collaboration with our tenants during the planning and execution of our improvement projects. Early engagement has proven to not only lead to better environmental outcomes, but also better tenant relationships. In line with our sustainability ambitions and materiality analysis, focus areas for which active collaboration is sought are:
1. Energy use and Emissions: metering, managing and reducing energy consumption and emissions.
2. Health and Well-being: providing a safe and healthy work environment and shopping experience.
3. Resources: reducing resource use (such as water and materials) and waste generation.
Through tenant engagement and the implementation of green leases, the overall environmental impact of our assets is minimised. Under our green lease, our tenants are requested to exchange data that allows us to monitor the overall energy, carbon and water usage of a significant portion of our assets under management. We encourage tenants to be proactive in seeking our recommendations on improving their space, which in turn assists in future-proofing the assets.