Buildings use 40% of the world’s energy and emit 40% of the world’s carbon emissions. As a result, the property industry finds itself under increasing pressure from government, sustainability groups and the public to lower their impact on the environment. But just how seriously is it being taken?
Property Week, in association with E.ON, has produced Energising Boardroom Thinking, a white paper that shines a light on the property industry’s priorities and concerns when it comes to energy efficiency and sustainability.
The results are based on a survey taken by developers, investors, agents, consultants, asset managers and occupiers between 7 and 25 January 2019 and supplemented with in-depth interviews with industry experts.
The findings provide a snapshot of the percentage of annual turnover property businesses spend on energy; the importance of energy efficiency and sustainability to board members; the drivers behind companies’ energy management strategies and whether these are expected to be different in five years’ time; legislation and regulation compliance; energy efficiency challenges; and many other insights.
What the findings show is that while many in real estate are fully engaged with trying to reduce carbon emissions, others are not.
The overwhelming majority of respondents (82%) believe that having an energy efficiency strategy in place is an immediate or short-term concern. However, 18% do not view an energy efficiency strategy as a short-term concern and, surprisingly, 4% say it is of no concern at all.
For the companies that are making strides to reduce their energy consumption, it is lowering running costs that is the key driver. Long gone are the days when a property company might decide to value-engineer out a building’s light switches because the switches were more expensive than the energy itself. Due to wholesale power prices, which increased by more than 30% in 2018, energy bills are rising, putting ever-increasing pressure on companies to take control of their usage and mitigate the impact of higher costs on their bottom line.
It isn’t, however, the only driver. A desire to develop, own and occupy greener buildings and customer pressure to be more green also play a part, with many of the survey’s respondents citing it as a key consideration. They also expect this to become more important in five years’ time.
This reflects a growing awareness of the importance of energy efficiency in the UK and around the world. This has been driven by media coverage of the Paris Agreement, Sir David Attenborough’s speech at COP24 (the UN-sponsored climate talks in Katowice, Poland, in December 2018), news of extreme weather events and, most recently, UK schoolchildren’s strike for action on climate change.
Greater awareness is causing sustainability to be pushed further up the agenda and it appears that property companies and their occupiers recognise that. Just as consumers are more concerned with provenance and may choose whether or not to buy a product based on its sustainability credentials, so too are many owners of and investors in property concerned with how the energy efficiency of their buildings, or lack of, will affect their attractiveness to occupiers and future buyers.
Brand reputation plays a part in this. Indeed, one of the experts interviewed for the white paper believes that property companies need to realise that if they do nothing to improve their green credentials they will “potentially become a pariah in their marketplace”.
What this white paper highlights is that there is some way to go before property companies are all on the same page when it comes to energy efficiency. But what is clear is that those that do take sustainability seriously are the ones that are likely to reap the rewards – financial and otherwise – in the future.
Read more about the findings, in this, one of the few white papers – and the latest – that explores the UK property industry’s approach to energy, what can to done to lower its impact on the environment and how implementing energy efficiency measures can save companies money in the process.
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