NET ZERO CARBON PORTFOLIO

From commitments to actions

As a manager of more than 260 real estate assets throughout Europe, we have a responsibility to use an environmental approach to managing the properties and reduce carbon emissions. This is why we committed to making our entire portfolio of assets under our management Net Zero Carbon by 2040 with the launch of Mission 2040.

Mission 2040 is aligned with the World Green Building Council’s definition of Net Zero Carbon, meaning that buildings must be highly energy efficient and disconnected from fossil fuel use for heating or hot water, with the remaining energy needed to operate fully delivered by on-site and/or off-site renewable energy sources.

In order to achieve our goal, we follow four steps towards Net Zero Carbon, which have also been described and communicated in our visual roadmap.

“Our Mission 2040 is aligned with the World Green Building Council’s definition of Net Zero Carbon, meaning that buildings must be highly energy efficient and fully powered from on-site and/or off-site renewable energy sources.”

1. Measure and disclose energy consumption and emissions

The process of improving buildings starts with gaining insight into their energy consumption and emissions. For a few years now, we have been working hard to improve the completeness, accuracy and robustness of energy consumption data from our assets under management, both for common areas as well as tenant spaces. We want to ensure as accurate a baseline as possible. Despite this being a challenging exercise (not least with COVID-19 restrictions throughout 2020 and 2021), we are confident that we are nearly there and that we will be able to report on our scope 1, 2 and 3 emissions in next year’s report. In 2022, we aim to significantly improve our coverage of smart meters for all energy sources in our AuM.

2. Reduce energy demand

At every natural intervention moment in an asset’s lifecycle, we aim to take deliberate decisions to target a significant reduction in energy demand. We take a ‘fabric first’ approach: first maximising the performance of the components and materials that make up the building fabric and then working with tenants to reduce the operational energy demand. When redeveloping a building, we will also disconnect it from fossil fuel supplies where possible. 18 Septemberplein in Eindhoven, the Netherlands, is a good example of this type of redevelopment project.

3. Generate balance from renewables

On- and off-site renewable energy generation is an integral part of our approach to redeveloping buildings. As part of this, we launched Project Solar together with our shareholder COFRA Holding in 2020.
Through the installation of solar PV panels on the roofs of the buildings, Project Solar provides clean, on-site energy to the tenants of the retail park assets that we manage for COFRA in Belgium. You can read more about this project here.

4. Improve verification and rigour

We recognise that our approach towards Net Zero Carbon is also one of continuous improvement -taking learnings and best practices from previous initiatives and projects and apply those to current and future projects. This means evolving over time from an operational carbon focus to a whole life carbon approach. Therefore, we are starting to take upfront embodied carbon into consideration when developing and redeveloping assets. Embodied carbon are emissions related to the materials, transport, construction, maintenance and deconstruction of real estate assets.

The redevelopment of the shopping complex in the centre of Waterloo, Belgium, is a great example of this. The final building, which represents one third of the total complex, is currently under construction and is targeting carbon neutral in operation. The insulation values will be higher than the current standards and the building materials will be selected according to the ‘Cradle to CradleTM’ principle. Two stand-alone retail units for Medi-Market and Pizza Hut were built with a timber structure that can be completely dismantled and reused.

While steps 2 and 3 are clearly intended to drive down operational energy consumption and corresponding CO2 emissions, the built environment sector is recognising that embodied carbon is also a significant contributor to overall emissions and must be reduced too. We will work with our supply chain partners (architects, advisors and construction companies) in the years to come to take a deliberate approach to reducing the embodied carbon related to our redevelopment projects. As this is still relatively new for the real estate sector, we will need to learn how best to measure, record, reduce and report on embodied carbon emissions. Redevelopments in Berlin and Hamburg mark our next steps towards minimising embodied carbon, where the designs include the use of bio-based materials (in this case timber). We look forward to reporting on our progress in future editions of our Responsible Investment Report.

BREEAM In-Use: a pragmatic approach

BREEAM is a well-recognised, international standard that takes a holistic approach to measuring the environmental performance of real estate assets. For Mission 2040, we will be focusing on KPIs that reflect our ambition to drive down carbon emissions related to our assets under management. That said, we recognise and value the holistic approach of BREEAM In-Use to drive deliberate choices at asset level, so we have changed the way we use BREEAM. Over the past four years, we have been recertifying the vast majority of our portfolio on an annual basis, even when nothing has changed at asset level. Going forward, we will continue to certify newly acquired assets and will recertify existing assets following redevelopments that lead to significant changes in their performance. This will allow us to understand the environmental performance of newly acquired assets and identify improvement opportunities, and to verify that planned redevelopments have resulted in improved performance.

Ambition for BREEAM In-Use ‘Excellent’ redevelopment ratings

A redevelopment is the key moment in a building’s lifecycle to create the biggest impact on its performance. We have therefore raised the bar for significant redevelopments to target a BREEAM In-Use ‘Excellent’ rating. In 2021, we achieved this standard for the certification of Vredenburg in Utrecht, the Netherlands. The redevelopment returned this asset to its former glory at the same time as improving its environmental performance. As well as making improvements to glazing and the façade, we installed a green roof and solar PV panels on the roof. Energy efficient installations for the tenant will further reduce operational energy consumption.

Joep Wensveen

Project Manager Redevco NL

"Our team worked closely with the tenants, Decathlon and Zalencentrum Vredenburg, during this renovation to come to the most sustainable result possible."

Challenges in our Net Zero Carbon roadmap

Energy transition
The transition to a Net Zero Carbon portfolio is one of Redevco’s top priorities and we are aware that this transition will be characterised by uncertainties, changes and risks. We recognise that the entire built environment sector is still learning how to tackle the energy transition and other uncertainties such as the pace of the transition, government policies, technological developments and changing consumer
behaviour.

Collaboration with tenants

At Redevco, we understand that building and maintaining strong relationships with our tenants is key. Over the past two years, mostly due to COVID-19, it has been challenging to engage with our tenants on our energy efficiency and emissions reduction ambition. Their focus and attention has understandably been elsewhere to get through the difficult times. That said, we continue to focus on collaboration with our tenants during the planning and execution of our improvement projects. We are convinced that early engagement and regular communication does lead to better environmental outcomes as well as increased tenant engagement.

Collecting reliable and accurate data

Obtaining reliable and accurate data to understand where we stand today remains challenging. Over the years, we have been collecting energy consumption data from our tenants directly, a process that was laborious and time-consuming and added little value to our tenant relationship, because we simply did not have the tooling to report back. However, reliable and accurate energy and emissions data underpins Mission 2040 and our journey to becoming Net Zero Carbon. We have therefore committed to installing smart meters in all our properties, connected to local platforms as well as a pan-European platform. This will allow us to report and engage with our tenants on energy consumption and energy saving opportunities and will help us report on progress towards our Mission 2040 target.

We have made good progress installing smart meters over the past year and with the further roll-out this year, we expect to be in a position to provide robust data next reporting year. Interim analysis of 2020 and 2021 energy consumption data vs. our 2019 baseline has not been particularly insightful given the impact of COVID-19 restrictions on store closures, but we expect to be able to provide a more substantive view of our progress in future editions of this report.

Continue reading