Why the gloves need to come off in the fight to deliver on sustainability

The built environment, the buildings we live, work and play in are often singled out as one of the biggest contributors to climate change. They produce a high volume of CO2 emissions and are largely energy intensive. The responsibility for fixing this is usually laid at the feet of the developers and owners of those properties, but if real action is to be taken on implementing sustainability measures that will really make a difference, responsibility needs to be shared between building owner and building occupier. To discuss why and how occupiers and landlords need to collaborate on climate change, EG gathered Louise Ellison, head of sustainability at Hammerson, Sarah Ratcliffe, chief executive of the Better Buildings Partnership, Chris Bennett, founder and managing director of Evora Global and Henry Majed, partnerships director at the Innovation Gateway. For Ellison the need for collaboration is clear. “It is the occupied spaces within our portfolios where the vast majority of the emissions and impacts come from,” she says. “Around 60-65% of the carbon emissions from Hammerson’s portfolio come from the tenanted spaces within it. So if we don’t tackle tenant side emissions and what’s going on in those spaces, then we’re not really tackling the problem.” Evora’s Bennett says that landlords generally recognise that more than half of a building’s emissions are coming from the tenanted space and know that if they are unable to engage with occupiers in a meaningful way it will be “incredibly difficult” to reach the target of being net zero. “We’ve done occupier engagement and it works where the occupier is interested, but even when you have big organisations, where the head offices are showing real interest it doesn’t always filter down to the local locations and you then get possibly very little engagement. And that is quite often a challenge,” he says. But the challenge is not insurmountable. Dialogue, understanding and true collaboration should be able to get landlords and tenants aligned. Real estate as a function is quite often not elevated to board level within occupiers and therefore real estate and the occupation of real estate is not seen as the window through which one can actually deliver quite a lot of the sustainability ambitions of the occupier – Sarah Ratcliffe, Better Buildings Partnership For the BBP’s Ratcliffe, it is about transparency and honesty around the challenges and opportunities that come with adopting a sustainable approach. “It’s about having an open book approach to the discussion around the challenges of implementing technology, of getting things in a lease and working together to resolve those,” she says. “Owners and occupiers need to think beyond how value is expressed in rental value or how we delineate service charge agreements and more about shared incentives, shared outcomes and shared benefits.” Creating a win-win scenario Turning the conversation into one about shared benefits rather than a confrontation deal negotiation about how much each part can get out of each other resonated among the experts as key to real engagement. “Traditionally, it has always been a transactional relationship, mostly hammered out between lawyers,” says Ellison. “And, while environmental clauses in leases are incredibly useful and they start a conversation and set a tone for a relationship, they are also used as a negotiating point, which is really unhelpful. “We’re having conversations all the time with tenants who have big sustainability strategies. But you come to start negotiating some fairly straightforward leases, lease terms about being nice to each other and sharing some data and they just get struck out. And it’s really unhelpful. Where we have managed to get some more effective change is when you get outside of that discussion and you start engaging with the sustainability teams within the businesses.” See Sarah Ratcliffe comment: Collaborating for climate change: transforming the owner occupier dynamic is key Majed agrees that the “them and us” discussions which are still so prevalent in real estate, despite the new-found focus on customer service, need to stop. “It doesn’t need to be them and us,” he says. “There is an opportunity to create shared value.” And Majed says there is appetite for that among occupiers, particularly those he represents through the Innovation Gateway. “There’s a great appetite and willingness and it’s already underway where very diverse industries are sharing experience and data from best practice within the Innovation Gateway to source the innovations that they need to actually have an impact,” he says. “And I’m optimistic that through initiatives like the Gateway and BBP there’s an opportunity to democratise these good ideas, get those out there and get them at scale.” But to deliver that scale, BBP’s Ratcliffe says that real estate as a function needs to move higher up the agenda for occupiers. She believes too many occupiers don’t see or understand the importance of their real estate in the fight against climate change. “One of the challenges that we often identify in terms of the owner-occupier relationship is the fact that real estate as a function is quite often not elevated to board level within occupiers, and therefore real estate and the occupation of real estate is not seen as the window through which one can actually deliver quite a lot of the sustainability ambitions of the occupier.” She says real estate needs to be elevated within the occupier community to a strategic level where it becomes a physical representation of the occupier’s brand and its engagement with  customers. BBP’s occupier forum To do that BBP is launching an occupier forum where building users and landlords can get together to talk about sustainability issues and ambitions outside of the transactional environment. “It is increasingly recognised that this is not something that any individual, any business, any government can do on their own. If we are going to address the nature and the scale of change that’s needed, we need to do it collaboratively,” says Ratcliffe. “We need to put competition aside. We need to collaborate. And then there will be the opportunity to distinguish. But right now, we need to work together as an industry to crack this one.” “We see this as a willingness to take a leadership position together,” adds Majed, who will be bringing occupiers within the Innovation Gateway into the forum. “This isn’t about me getting there first. This is about this being the only chance we have to do this together, to find the solutions, to share everything we know, and to share the mistakes that we pick up along the way. “We only need these first leaders to show that pathway and make it easier for everyone else to follow.” To listen to the discussion in full, head to the EG Property Podcast channel on any of your favourite podcast players including Apple Podcasts, Spotify and Podbean. To send feedback, e-mail samantha.mcclary@egi.co.uk or tweet @samanthamcclary or @estatesgazette