The recent British Property Federation discussion ‘Can UK Real Estate rise to the Net Zero Challenge?’ struck an optimistic note.

While leaving no doubt about the scale of the challenge facing the real estate industry, the Panel acknowledged a number of positive trends. 

Despite ongoing regulatory challenges - in an area where there is large consensus that more regulation would be welcome - there is a definite growth in engagement. The Panel also highlighted an increasing recognition that real estate cannot rely on the grid to decarbonise and that retrofitting will play a key role. Moving beyond Scope 1 and Scope 2* emissions will also require investigation and co-operation along value chains.

Though it can take time for larger corporates to push science based targets down through their structures, this is definitely underway. 

A shift can also be felt with increasing appetite on both the landlord and tenant side for decarbonising measures, reflecting an appreciation of the value - financially and socially - that these changes can bring.

Increased co-operation between owners and occupiers is also essential to provide the whole building data needed to make informed decisions to reduce emissions. Grade A office developments are increasingly aligning with net zero targets, something that even five years ago the Panel acknowledge was not the case. 

Real estate is one of the more readily measured industries when it comes to emissions, and in that way potentially a forerunner in helping achieve net zero. 

There was discussion on the future for existing stock, which may - due to location, age and design - become a stranded asset. Again, there was some optimism coupled with an acknowledgement that realistic valuations will be key. 

Consideration was also given to alternative uses for buildings, especially at a time of housing crisis when conversions may well make use of existing stock. 

Overall, there seems to be a cultural shift to acknowledging the importance of ESG in its broadest sense - looking at social value and biodiversity as key parts of the net zero challenge. Strong, bold leadership is critical here. 

Given where the market is, it is not easy to value decarbonisation of real estate stock at this point, but over time the data will follow. There is clearly value there and the industry must have the confidence to seek it.  

Taking part in the British Property Federation discussion – ‘Can UK Real Estate rise to the Net Zero Challenge?’

• Katherine Sherwin - Director, BlackRock Alternatives & Chair of the British Property Federation’s Sustainability Committee
• Guy Grainger - Global Head of Sustainability Services and ESG, JLL & President of the British Property Federation
• Steve Makin - CEO Planet Mark

*For those that do not know the 3 scopes categorise emission as follows: 

Scope 1 - direct emissions controlled by an organisation for example emissions from running a fleet of delivery vehicles; Scope 2 – indirect emissions resulting from the type of energy producer, which the organisation engages; Scope 3 are those emissions indirectly produced by an organisations activities further down its supply chain, for example those emitted in production of plastics the organisation utilises.