ESG – Environmental, Social and Governance – has become something of a mantra in the financial world where investment funds have diverted their investors’ attention to investments that best demonstrate the ESG credentials of constituent companies.
From private and public companies, to governments, educational and healthcare institutions, all are under increasing pressure to demonstrate their commitment to progressively improving their ESG credentials in their property portfolios.
Whether you are an owner, occupier, investor or developer, these issues cannot be ignored, they are becoming increasingly important, not only are they driven by the need to demonstrate social responsibility, but they are important elements in achieving your environmental, energy, human resources and business objectives.
Investors and other stakeholders, as well as regulators and the general public expect organizations to reflect and move towards greater ESG compliance. At a time when evidence of climate change increasingly underscores the importance of meeting strict social and environmental standards, homeowners risk being left behind if they don’t start planning now.
With soaring city buildings, ever-expanding urban centers and hotter summers, the rate at which the world’s energy is used will continue to increase exponentially – just watch forecasts of increased use of tolerant air, particularly in Asia but also in Europe.
Most of the existing commercial and residential buildings in established urban areas were built long before anyone considered the importance of energy efficiency, with construction methods, glazing and insulation levels proving totally inadequate, despite recent dramatic increases in energy costs.
UK buildings are responsible for over 40% of UK energy consumption. Nearly 70% of the energy consumed in commercial buildings is used for heating, lighting, air conditioning and hot water. The potential economic and environmental savings are enormous.
Property owners and operators should now plan and work to improve energy efficiency by applying a range of solutions that can help achieve socially desirable goals and will be of great benefit in the long term.
Formulate a plan
Owners and operators as well as building occupants need to work towards a long-term strategy with clearly defined and understood goals, targets set to achieve the goals along the way. A survey, whether carried out internally or by external consultants, should identify measures that will be costly on hire and provide quick solutions, followed by a hierarchy of priorities that become increasingly costly.
Work planning will require working around occupant needs, tackling improvements by moving work in progress or waiting for buildings to become vacant.
The focus on energy efficiency is a good starting point. Reducing energy consumption through a more efficient heating and ventilation system, better insulation and better glazing, and using self-generated energy methods to supplement consumption total building energy will be a great success.
The government is moving towards net zero
Commercial owners and occupiers will face an energy efficiency drive in the near future, with the government proposing two next “compliance windows”, the first of which will be from 2025 to 2027. From April 1, 2025, all non-minimum energy efficiency standards (MEES) rental properties will need to have a valid EPC, and if it has expired, a new one will need to be obtained.
Owners of commercial buildings, including many institutional buildings such as those used for educational purposes, student accommodation, hospitals and other institutional facilities, will be required to achieve a minimum Energy Performance Certificate (EPC) rating of at least C, if not B, by April 1, 2030. , as well as the obligation to comply with stricter inspections of heating and air conditioning systems.
Further stringent measures are expected in the future regarding the reduction of carbon emissions, where industry-wide standards and requirements will be introduced to measure and report carbon emissions.
Charging stations for electric vehicles
Particularly in the case of institutional operators such as hospitals, educational institutions and large employers, there will be an increasing need to provide electric vehicle (EV) change points at scale. It is predicted that there will be millions of electric vehicles on the roads by 2030 when manufacturers no longer offer internal combustion engine cars for sale.
The Department for Transport has announced that £500million of funding will be made available to start rolling out a nationwide electric car charging network. The aim is to increase the number of public electric vehicle (EV) charging stations in the UK tenfold over the next eight years, to make the network more accessible to drivers.
The money will be allocated through the Local Electric Vehicle Infrastructure (LEVI), providing local authorities with funding to improve local facilities, as well as a £950m fast-charging fund to increase to 6,000 the number of fast charging points for electric vehicles on the UK motorway. network by 2035.
While cost reduction is usually a top objective when retrofitting commercial buildings, other priorities for employers will include improving air quality through better ventilation systems, and particularly following upheavals in Covid, measures to better cope with the evolution of the post-Covid working model and a more comfortable working environment.