Data, sustainability and the green glass slipper

Despite concerns that sustainability’s importance would fall over the past few years with huge disruption from Covid, changing working practices, the cost of living increases and an energy crisis, if anything it has strengthened and shifted to the forefront of real estate decision-making. Coupled with this, we have also seen an elevation in the public’s understanding, awareness and interrogation of corporate rhetoric on the topic. Greenwashed statements are now being publicly exposed and non-Science Based Targets initiative commitments more quickly dismissed (SBTi is even having its methodology probed). The time for real action is here. Whereas usually real estate plays a supporting role in globally transformative trends like this, with sustainability the story is different. This green glass slipper may indeed fit and real estate could be the star of the ball after all. Leaders in the field We are seeing positive signs of leadership from the market already; the number of property firms committing to SBTi targets has risen 232% over the past 13 months and now totals 113. And, from a market standpoint, we are seeing sustainability having a material effect: A survey of JLL’s major US occupiers highlighted sustainability as its top required field of advice. A JLL survey found that 77% of businesses think employees will increasingly expect their workplace to have a positive impact on the environment and 75% to have a positive impact on society. Central London offices are seeing an average rental price increase of 4.2% per EPC step and an 11.6% premium where a BREEAM certification is present (JLL, 2022). The sustainable finance market grew to reach $1.6t (£1.3tn) globally in 2021. These impacts, alongside the broader narrative, are driving a redefinition of “prime” and, with the debate continuing on the definition of and quantum from “green premiums” and “brown discounts”, investors’ requirements are becoming more specific and sustainability driven. We now sometimes see some clients deselecting assets based on their sustainability credentials. CRREM (the Carbon Risk Real Estate Monitor), despite its known flaws, has become a standard decision criterion for major investments and, with its V2 now live, this and similar types of modelling are set to become more commonplace and influential. While currently these impacts are felt most on larger assets in primary markets and by industry-leading players, as regulations catch up and broader sentiment continues to move, this will permeate the whole sector. Introducing sustainability data The sustainability market trend is moving quickly – there is pressure to act decisively and act now; and the topic is so latitudinous but carries so much weight, consisting of everything from EPCs to dynamic HVAC system return on investment. And the industry is so lumpy, that the impact of decisions made today will be felt on assets for many years to come. So how do decision-makers ensure they consider the right sustainability metrics, position their assets appropriately, allocate investment resourcefully and target performance prudently? While this question is difficult to answer, the solution lies in marrying the strategic priority of the business with a combination of decision-makers’ considerable wealth of real estate knowledge and a clear understanding of sustainability data. At this point, a helpful graphic illustrating the complex tapestry of real estate sustainability data would be useful. Unfortunately, when researching this piece, no such image could be found. Instead, my illustration here demonstrates the overlaps of the sustainability and real estate data worlds and how intertwined the two really are. Hopefully, this will also serve as an aid for readers to navigate the topic of real estate sustainability data and identify where their roles intersect with it. Click to expand image The challenge Acknowledging that real estate has a leading role to play in the global sustainability agenda and that today sustainability is a powerful force behind real estate markets, the next step is to identify the relevant sustainability data points and combine them with real estate knowledge to properly inform decision-making. The challenge is to address what this means in practice. Data sets rarely match up – whether because of the complexity of data, the heterogeneity of buildings, the range in maturity and priorities of stakeholders, or the nuance of landlord and tenant relationships. It is not uncommon consequently to find yourself in one of the following situations: Analysing sensor-based occupancy data with incomplete badge swipe information; Measuring ROI on intelligent HVAC systems with limited transparency of energy consumption; Rolling out tech platforms without having a clear long-term view of occupiers’ requirements; or Trying to obtain a total picture of performance from multiple systems that will not speak to each other or that talk in different languages. The opportunity While these challenges are complicated, systems integration, data management, transparency and data completion are not new, are not insurmountable and are not exclusive to real estate. However, there are practical things that readers can focus on to help expedite their solution: Awareness and literacy – Real estate professionals can no longer delineate their roles from sustainability and should instead be thinking openly about how their field interacts with sustainability, seeking to understand what this means from a performance perspective and identifying opportunities to add value through integrating sustainability and the day job. Collaboration – With such a big topic ahead of us and an ever-increasing emphasis on action, it is clear the industry will only be able to be that star of the ball if stakeholders work together. We are already working to find win-wins to tackle energy data transparency between occupiers and landlords, and already working through combining the interests of nature, business and society in holistic strategic advice, but in order to deliver on the scale of change needed, this has to continue to develop. The scale of the broader challenge from a global socio-economic standpoint is huge, but through the intelligent application of integrated data, real estate decision-makers will be able to lead the charge in effecting real change and be at the cutting edge of decarbonising our built environment. Alister Langdon is UK head of integrated sustainability data at JLL Photo © Pixabay