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Effects of the British Property Federation’s new Net Zero Pledge

Author: Tim Greenhalgh, SaveMoneyCutCarbon

Published: 08 Jul 2022

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In this article, we hear from Tim Greenhalgh, from SaveMoneyCutCarbon.

The British Property Federation has just formally launched its Net Zero Pledge and it signals a deeper commitment to addressing climate change while being mindful of the inevitable increase in costs of business.

BPF membership covers all major parts of the UK’s real estate sector, including property owners and developers, estate agents, funding providers and consultancies. The federation is urging its members to sign up to the pledge as soon as practicable.

This means that a company will need to commit to reaching net zero by 2050 and to support long-term targets with “verifiable plans”, and the BPF is insisting that signatories join the UN’s Race to Zero initiative by June next year.

The Race to Zero campaign, launched in 2020, has frameworks to ensure that supporters are taking ambitious and science-based approaches to mitigate climate impacts and it recently toughened up the criteria for new members.

Sizeable carbon footprint

Government data points out that the UK's built environment is responsible for 25% of the UK's greenhouse gas emissions and the BPF acknowledges that the sector has a sizeable carbon footprint with a significant environmental impact.

As the voice of the UK real estate sector, the federation recognises its responsibility in promoting higher environmental standards and members have a critical role to play in the transition to net zero, helping to deliver the government’s emissions targets.

However, the Environmental Audit Committee (EAC) warned in May that to date there has been a lack of government impetus or policy levers to assess and reduce emissions in the built environment sector.

The UK’s Sixth Carbon Budget requires carbon emissions to be reduced by 78% by 2035, compared to 1990 levels and at COP26 the government committed the UK to achieving a 68% reduction in the UK’s carbon emissions by 2030 – just 96 months away.

As the EAC noted, “with climate deadlines looming, urgent action is needed.”

Building stock challenges

BPF and its members will face significant challenges in their efforts to decarbonise the UK’s building stock. It’s a given that the majority of current building stock will still be in use in 30 years’ time when the net zero deadline is reached.

So, there is increasing pressure on policymakers and businesses to expand retrofitting and improve energy efficiency across the board.

In the drive to net zero, new Building Regulations and accompanying technical upgrades to assessment methodology came into force in June, with a radically different way of measuring the energy performance of many buildings.

The updated regulations – Part L on thermal performance, Part F on ventilation, and a new Part O on overheating – as well as new SAP measurement methods, apply to new homes and non-domestic buildings. Parts L and F also apply to existing dwellings undergoing significant extension or transformation work.

The new regulations are a more accurate way to measure energy efficiency, favouring non-fossil fuel-dependent heating methods and building materials that conserve energy. This means that commercial buildings consuming significant amounts of gas, could see worse EPC bands and ratings, while those whose main fuel source is electricity could see their ratings improve.

At the same time, there is some reassurance for owners, investors and other stakeholders that energy efficient investments will increase property values. A BEIS study shows that properties with an EPC rating of C and above transact at a premium of up to 5% higher than comparable band D-rated properties. That same study showed those properties benefitted from a price appreciation of 5.6% per square metre relative to comparable D rated properties.

ESG values

And businesses are increasingly looking for more energy efficient premises as part of their drive to show awareness of climate impacts and how this connects with Environmental, Social and Governance (ESG) values.

BPF members signing up to the net zero pledge will be paying close attention to any new government initiatives. The EAC has recommended, for example, that ministers introduce a mandatory requirement for whole-life carbon assessments for buildings. This requirement should be fully incorporated in building regulations and the planning system.

The assessments would calculate the emissions from the construction, maintenance and demolition of a building, and from the energy used in its day-to-day operation. 

The EAC goes further, urging that the government should develop carbon targets for buildings to align with the UK’s net zero goals, with a clear timeframe for introducing whole-life carbon assessments, and ratcheting targets, by the end of 2022 at the latest, and they should be introduced not later than December 2023.

What’s more, the EAC underlines that retrofit and reuse of buildings, keeping carbon locked in, should be prioritised over new construction, in contrast to lax guidelines currently promoting demolition and new construction.

BPF members, and the wider sector interests, will also be mindful of the recent decision by the Levelling-Up, Housing and Communities Secretary of State to pause the demolition and retrofit of Marks & Spencer on Oxford Street on environmental grounds.

Knowledge and insight

The BPF net zero pledge aims to ensure that climate mitigation approaches are “ambitious and joined-up”. Companies signing the pledge will also commit to collaborating across the sector, to “share research, knowledge and insight on an open-source basis” and to “support each other to accelerate the transition to net-zero”.

In collaboration, BPF members will benefit from an internal net-zero network with an online knowledge hub providing resources and discussion forums.

The BPF is keen for larger firms to support SMEs with development and delivery of climate plans. It envisages that large firms with advanced carbon reduction plans already in place would mentor SMEs in the preliminary stages of their net zero journey.

As BPF chief executive Melanie Leech says: “Our membership is broad and diverse, with members at different stages of their journey to net-zero. The Net Zero Pledge aims to bring members together to support each other and share resources in order effectively to tackle carbon emissions before or by 2050 at the very latest.”

Sea level threat

BPF members will have a sharper focus on climate in the wake of the stark assessment that global heating will trigger a rise in sea levels that will make thousands of coastal properties in England unsalvageable within 30 years.

The estimate of nearly 200,000 homes and businesses at risk of abandonment – because the costs to protect them would be too high – is by researchers at the Tyndall Centre, University of East Anglia and published in the peer-review journal Oceans and Coastal Management. The value of the homes at risk is in the tens of billions of pounds.

The data is based on predictions of sea levels rising by 35cm up to 2050, with further rises likely in the following two decades, allied to increasing foreshore erosion leading to higher waves.

The research paper calls for investment in adaptation infrastructure and concerted collaboration between governments, local authorities, communities and the property sector to plan responses ahead of time. This collaboration could be embedded in updates to local authority plans. Postponing “hard choices” is likely to increase costs and social impacts.

Sir James Bevan, the head of the Environment Agency, has also said that many homes would be impossible or uneconomic to save, and whole communities would have to move inland, which he called “the hardest of all inconvenient truths”.

SaveMoneyCutCarbon is committed to improving energy efficiency and water use in the nation’s building stock and its free carbon mentor calls provide advice on emissions reduction for companies of all sizes.

*The views expressed are the author's and not ICAEW's.
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