Aberdeen Standard Investments plans to overhaul the way its property portfolio operates in an effort to achieve net-zero-carbon buildings by 2050.
Speaking at a climate change event at the fund manager’s offices in London, sustainability head Dan Grandage said: “If you look at real estate and the amount of energy it consumes and the raw materials it uses, you can see [the sector] is a major part of the problem. We, as a responsible landlord, have to tackle that. You can’t just say you can build nice, new energy-efficient buildings. That is part of the solution, but most of the buildings here today will still be here by 2050.”
Currently, the built environment is responsible for almost 40% of energy consumption in the European Union. But several of the world’s biggest cities, including London, have agreed to make all buildings carbon-neutral by 2050 as part of the 2015 Paris Climate Agreement.
To achieve this, Grandage said landlords need to co-operate more closely with their tenants. “We have to engage with occupiers in a way that isn’t done currently; the relationship between the landlord and tenant can be adversarial. We need to work together or we have no chance of hitting the EU target.”
Currently, landlords are responsible for roughly 20% of the energy in a building, in the hallways and communal spaces, while occupiers are responsible for 80%, according to Grandage. But he said this balance needs to change. “We are looking at models where we can procure all the energy and peg that to rent so we have more control and can work with occupiers to reduce energy inefficiency.
“It’s a challenge. Our investors are asking us for carbon data and they want information about the whole building. This can be hard to give them as often occupiers aren’t able or willing to give it to us. We will have to think differently about the models we put in place.”
Grandage added that ASI is considering rolling out more solar panels across its portfolio and selling the energy back to the occupier below typical market rates.
“We have been installing solar panels on our buildings for a number of years. We fund the installation and the occupier gets lower costs, while we get an additional income stream. We get a good return on our investment, roughly 6-8% per building. We are rolling this out on all of our existing stock in the UK and across Europe as standard.”
He said that currently Aberdeen produced 1.94GwH of solar energy, roughly 2% of its global energy use, and that the firm was looking to “increase that substantially”. He said: “We won’t install it on every asset as it won’t always make sense financially, or there won’t be enough space or daylight.”
Grandage added that the firm is also looking at how to protect its buildings from rising temperatures. “We need to think about how properties are affected not just today but into the future. Is it going to be viable? It’s not just about flooding, it is also about increased summer temperatures. A typical building in the UK and Europe is not set up to deal with higher temperatures. Most systems are not able to provide good standards. We need to tackle that issue as well.”
Earlier this week asset manager DWS said it aims to halve carbon emissions from its European office portfolio by 2030. Clemens Schäfer, head of real estate in Europe at DWS, said: “By setting a goal to reduce carbon in our portfolio, we can measure, manage and track progress on this commitment. Not only will this process help us to enhance the efficiency of office properties, but we expect these targets to impact positively on the return for our investors, by reducing operating costs, and providing more attractive, quality buildings to tenants and investors alike.”
Both ASI and DWS are among the property owners to have signed up to commitments drawn up by the Better Buildings Partnership, pledging to publish their pathways to achieve net zero properties.