BlackRock Alternative Investors and NatWest Group have co-authored a paper, Net Zero: A Collaborative Way Forward, that considers how the journey to net zero will impact the real estate sector and why it’s crucial for the industry to act now.

With more than 40% of global greenhouse emissions caused by the built environment, 2022 and beyond will be a time for special focus on real estate’s environmental performance.

Alison Rose, CEO, NatWest Group, says: “The journey to net zero requires a coming together of stakeholders across industries including real estate, and NatWest Group is proud to be partnering with BlackRock to further this important conversation.”

Research cited in the report

• According to the World Business Council for Sustainable Development, the built environment contributes more than 40% of global greenhouse gas emissions. Most of these are due to the energy required to heat, cool, light and run properties.

• The International Energy Agency says by 2030 all new buildings need to be net zero carbon-ready. Further to that, by 2040, 50% of existing buildings will need to be retrofitted to be net zero carbon, and by 2050 that will rise to 85%. Delays in action now will pose difficulties for meeting the 2050 target. 

• Landlords must realise the benefits of moving to net zero now. These include the ability to attract and retain tenants, more attractive financing, and mitigating asset depreciation. 

• Different industry players – government, lenders, landlords, occupiers, asset managers, developers and consultants – need to collaborate.

• The biggest transitional risk in Europe is regulation. The UK government’s Net Zero Strategy, announced in October 2021, increases the minimum energy performance certificate (EPC) requirement for the letting of commercial property to B, from the current minimum of E, by 2030. 

Stephen Cohen, Head of Europe, Middle East and Africa at BlackRock, says: “Real estate plays a critical role in the journey to net zero carbon. Like other sectors, industry collaboration is essential to maximise the impact of our actions.”

This can be done, the report suggests, by addressing challenges such as data sharing, agreement on works, maintenance, upgrades and retrofitting.

Advanced data monitoring

On average, landlord energy supplies within a typical UK office relate to less than 30% of the total floor area, highlighting the need for whole-building measurements.

Tenant-controlled energy consumption tends to far exceed that of landlord-controlled consumption, and so needs to be measured. Both active tenant engagement and the automation of metering are key to delivering good data.

Reducing and offsetting emissions

Landlords and asset managers have key roles to play – for example, by scaling up the sourcing of renewable energy across portfolios and financing the installation of on-site renewables, such as rooftop solar.

There is also a role to play in scrutinising every procurement decision, to ensure capital expenditure is used efficiently to reduce energy wastage, improve energy performance and eliminate operational greenhouse gas emissions.

To download the full report, click the link below.