The news that the Department for Communities and Local Government intends to publish around 723,000 non-domestic EPC ratings may sound inconsequential.
But as a result it may be possible for analysts to work out the energy performance of an organisation’s property portfolio. This presents companies with opportunities as well as risks.
The new source of data will see the addresses of individual buildings published. This transparency could have an effect on reputation, perceived investment and financial performance.
In terms of reputation, companies with a high proportion of poorly performing F and G rated properties could be left embarrassed if this contradicts their ‘green’ claims. Perhaps worse, knowledge about a portfolio’s poor energy performance could negatively impact on the share price of publicly listed companies. (Under the impending minimum energy efficiency standards proposed under the Energy Act 2011, properties with an F and G rating will become unlettable in 2018.)
However, publication of this data should be viewed as a positive step that will benefit those with a proactive approach to sustainability. It will also provide an incentive for companies to improve, as any benefit to the energy performance of their properties will be recognised by stakeholders.
There are several actions portfolio owners can take. First, it is important to verify the extent of the problem - identifying properties with an E, F or G rating. It may also mean reverifying the accuracy of the EPC rating as variations in assessments can lead to rating levels being wrongly awarded.
At this point, companies can decide on which assets they need to focus on for improvements. Many can be upgraded at relatively low cost by integrating energy efficiency improvements into scheduled maintenance and refurbishment works before 2018. However, some owners may decide instead to dispose of poorly rated properties. This presents an opportunity for investors as some will actively look to acquire poorly performing assets with the view to upgrading them.
So, although publishing the EPC data has risks, the benefits far outweigh them. And proactive companies that recognise the impact of the Energy Act on the commercial rental market are in a good place to reap the rewards.
Mat Lown is sustainability partner at Tuffin Ferraby Taylor