As momentum builds towards COP26, developers are making impressive-sounding commitments with their net zero pathways and strategies. Simon Wyatt analyses what they have signed up to, what they have achieved – and what it all means for the environment
We have seen a significant amount of movement and discussion around the net zero agenda in recent months. Developers and property owners are waking up to the challenge ahead and making commitments to ensure their projects lead the way towards achieving net zero carbon on construction and in operation.
Central to this discussion around the progress the big developers have made are the two main net zero commitments affecting the UK construction industry – the Better Buildings Partnership’s (BBP) climate change commitment and the World Green Building Council’s (WGBC) net zero carbon buildings commitment. Together these commitments set the minimum standard for developers who are serious about achieving net zero carbon.
Acknowledging the transformation required across the real estate sector to deliver net zero buildings by 2050, the BBP’s climate change commitment is one of the most ambitious that developers can adopt. Signatories are required to publish their net zero carbon pathways and delivery plans, disclose the energy performance of their assets and develop comprehensive climate resilience strategies.
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Meanwhile, the WGBC’s net zero carbon buildings commitment challenges organisations to commit to net zero carbon for all buildings under their control by 2030, spearheading a global shift towards “aggressive energy efficiency” and a change from fossil fuel to renewables.
Together, these commitments leave little space for developers to hide. The stringent requirements of each necessitate that signatories make public commitments to achieving net zero carbon, detailing how and when they plan to achieve it, and hold themselves accountable to the promises they have made.
Although both commitments started off slowly, we are seeing the first response from the industry with the publication of the members’ current footprints and proposed pathways.
It is good to see that most developers recognise it is not sufficient to just be “carbon neutral” by removing or offsetting their footprint, but are instead looking to set targets which require them to make absolute reductions in line with the latest climate science before looking to removals. Lendlease has even gone a step further, making an ambitious target to be “absolute zero carbon” by 2040, eliminating all emissions without the use of removals.
It is good to see that most developers are looking to set targets which require them to make absolute reductions in line with the latest climate science
When considering how far developers have been willing to go with their commitments, the key questions are: What level of reductions are they committing to? What do they cover? And to what level are they “following” the science?
The most robust are aligned to the Paris agreement using the science-based targets (SBTs) methodology and targeting a 1.5oC trajectory, with a few still at the higher 2.0oC trajectory. Achieving the former will mean we need to reduce emissions by around 60%. It is a huge challenge, but one that is critical if we are to have a hope of slowing down the rate of climate change.
Land Securities has amazingly already achieved its SBT, becoming the first commercial property company to have its carbon reduction target approved by the Science Based Targets initiative (SBTi), back in 2016. However, not all developers have gone through the same rigour of having their targets officially reviewed and endorsed by independent third parties such as SBTi, which is a partnership between global charity CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature.
The next issue is looking at what scopes the commitments cover. A few developers are still only looking at their scope 1 (direct fossil-fuel use) and scope 2 (indirect energy use, such as grid electricity) emissions, which are directly in their control and easier to measure. However, the majority have now started to recognise the importance of including all their scope 3 (indirect emissions), even where these are more difficult to track and measure.
The key scope 3 emissions for the industry are the embodied carbon emissions associated with building the assets, as well as those associated with their tenant energy use. Only by working with their occupiers and supply chains can developers hope to make any meaningful reductions in these areas. To address this, developers such as Grosvenor have published extensive supply chain charters to first work with and then hold their supply chain to account.
It is interesting that most have purely focused on the performance of assets, while only a few of the leaders have included their whole business operations. While it is true that real estate portfolios account for the majority of emissions, operations such as business travel, staff commuting, purchased goods and services can still make up a significant proportion – and these need to be considered as well.
To help with this, the UK Green Building Council (UKGBC) has published Scope 3 Reporting in Commercial Real Estate, which sets out what emission streams organisations should consider as part of their reporting framework, based on the greenhouse gas protocol.
Another area of divergence for developers is around the use of biogas in their portfolios. While biogases are a low carbon source, they are not zero carbon and are typically added directly to the national gas network, meaning that you are still predominately burning fossil fuels on site.
Similarly, the methodology of green electricity purchase varies, with some developers looking for large-scale green power purchase agreements, while others have simply gone for green tariffs which are questionable in terms of whether they are truly green or not.
The UKGBC’s recently published Renewable Energy Procurement and Carbon Offsetting Guidance for Net Zero Carbon Buildings gives guidance on how to procure good-quality green electricity, which results in new installed renewable energy capacity that otherwise would not have been possible.
Finally, it has been interesting to see the range of offsetting strategies developers are employing, with the inclusion of some large-scale insetting on their wider estates; including the Crown Estate, which has identified opportunities for carbon sequestration and restoring nature by encouraging biodiversity in its marine and rural estates to address both the climate and ecological emergencies.
A number have set internal carbon shadow prices at level in line with the government’s Green Book carbon price (£70 per tonne of carbon dioxide) to drive internal carbon markets and the transition to net zero carbon, while others have simply used internationally recognised offsets which are very cheap (£5-£20 per tonne of carbon dioxide).
While there are certainly still those who lag behind, overall the progress of developers in the UK has been good. The next step will be to see some real concerted action towards achieving these commitments.
Simon Wyatt is sustainability partner at Cundall