25 Apr 2018
Policy area: Sustainability
Published in Estates Gazette this week, our Chief Executive Melanie Leech discusses the property industry's role in shaping a greener future for the UK
Close to 48 years ago, on 22 April 1970, millions of people took to the streets to protest the negative impacts of 150 years of industrial development.
Earth Day is now a global event each year, and it is claimed that more than 1 billion people in 192 countries now take part in the largest civic-focused day of action in the world.
This year Earth Day fell on 22 April. Whilst Earth Day Network, the organization that leads Earth Day worldwide, has chosen as the theme for 2018 to end plastic pollution, a subject not necessarily central to the property industry, nevertheless Earth Day serves as an opportunity to reflect on the commitments the property sector has made to the environment; to celebrate the progress we’ve made, but also to challenge ourselves on what more can be done. It’s time for us to consider our responsibility, not only to create buildings for today but to ensure our cities are sustainable for generations to come. Sustainability is now a widely used and discussed term, but what does it mean to our industry and our stakeholders today? And, who is driving this agenda?
Let us be clear about the opportunity. The built environment represents one of the most cost-effective opportunities for tackling climate change and driving low carbon growth. The Green Finance Taskforce has made it clear however that there is a risk that the growing wave of interest in green investments will largely pass this sector by and that investment in transforming our building stock will only come with clear leadership and smart regulation from government.
Regulation clearly has a role to play. The recent implementation of Minimum Energy Efficiency Standards (MEES), whereby no new or renewed tenancy can be actioned unless the premises meets high standards of energy efficiency, is important and will have significant impact. And, stimulating consumer demand will be fundamental to driving investment and building a genuine market for low energy retrofit.
Investors can apply a good deal of pressure in the push toward a more sustainable green environment. Many achieve this by constructing a responsible property investment strategy that spans their portfolio, which focuses on improving environmental efficiency. The benefits of this are multiple: the portfolio remains ahead of policy change, operational costs are reduced, and properties owned by the investor are less likely to suffer a value decrease due to obsolescence. Finally, an energy efficient asset is more appealing to tenants.
Lenders also have a key role to play: initiatives such as Lloyds’ £1bn commitment for commercial real estate green lending and, as a by-product, a tool to benchmark sustainability performance are hugely important.
Developers too are well placed to act. New developments must clearly conform to regulatory standards, but there are significant incentives and opportunities to exceed them, guarding against future policy changes and obsolescence and – increasingly – creating commercial difference and advantage. Developers have an advantage insofar as they are able to incorporate new technologies and materials into the process, rather than being forced to consider retro-fit into challenging buildings, to ensure the energy efficiency of new builds at a different order of magnitude from buildings constructed thirty, twenty, or even ten years ago.
The BPF is always concerned with the future, whether that be through our network for the leaders of tomorrow (BPF Futures), our championing of what’s required for business confidence, or our push for a stable legislative environment in which the property industry can continue to thrive. The Paris Climate Agreement commits participating countries to limiting global warming to well below 2 degrees C this century – and with the UK’s buildings contributing 30% of our greenhouse gas emissions, our industry must rise to the challenge. The future of our industry, and of everyone who engages with it, depends upon it.