22 Feb 2017
Our analysis shows that British Land’s carbon reduction target exceeds science-based targets – demonstrating the company’s leadership and support for global efforts to minimise the impacts of climate change.
Science-based targets seek to deliver on the commitment made by leaders from 195 countries at COP21 in Paris to limit global warming to a maximum increase of 2°C, ratified last year.
The methodology for these targets was still emerging in early 2015, when British Land set their target to cut carbon and energy intensity by 55% across their entire portfolio by 2020 compared to 2009 (index linked). British Land’s target covers common parts and shared services energy use for occupiers across British Land’s office and retail portfolios.
The Science Based Target Initiative released the Sectoral Decarbonisation Approach (SDA) methodology in May 2015. This splits the global economy into sectors; each attributed their portion of the world’s 1,000 gigatonne carbon budget for 2011-2050 and set a decarbonisation pathway.
British Land commissioned Verco to assess whether their carbon reduction target was in line with the science-based approach. The methodology is still open to interpretation, so we tested four scenarios.
On all scenarios, British Land’s portfolio is set to exceed science-based targets. What makes this even more impressive is that British Land’s target is consistent with their historic trend, as they’ve already cut carbon intensity by 40% since 2009. Indeed, it is only because of their historical progressive action that British Land can now match the SDA target line. Many of our clients are looking at making quite dramatic changes to achieve their targets whereas, for British Land, it’s a continuation of what they are already doing.
In addition, British Land is a member of RE100, committed to using 100% REGO (Renewable Energy Guarantees of Origin) backed electricity. Further information on this is available here.
We hope that more organisations follow the example of companies like British Land and target science-based decarbonisation. The methodology is still maturing and, as more organisations sign up, there will be better data and understanding to develop the approach.
There may be further game-changers too, as currently the SDA is based on limiting global warming to 2°C which is not ambitious enough. It needs to be based on a 1.5°C target, which would then be consistent with current UNFCCC guidance. This would make science-based targets much more demanding, as we’d go from a global carbon budget of around 1,000 gigatonnes to only 400 gigatonnes for 2011-2050. This would represent an entirely different challenge.
Even for sustainability leaders that could require radical business change. British Land would continue to be well positioned through the combination of an ambitious energy efficiency programme, a switch to REGO backed electricity and growing investment in renewables. We look forward to seeing their progress.
The first three scenarios tested looked at base build emissions (landlord-controlled):
1. How far can British Land get through energy efficiency alone?
2. How far can British Land get through energy efficiency, when open air sites are excluded?
3. What’s the impact of National Grid decarbonisation on top of energy efficiency?
We excluded open air sites (shopping parks) from scenario two onwards because they were skewing results positively. They tend to have lower emissions per m2 than offices and shopping centres, as landlords are typically only providing lighting to car parks for these buildings.
For the final scenario, we looked at whole building emissions (landlord-controlled and occupier-controlled). This is important to understand asset risks – if carbon prices go up, what are the risks associated with the portfolio? This scenario assumes the National Grid continues to meet its decarbonisation targets.
4. What’s the combined impact of energy efficiency and National Grid decarbonisation?
Nuances that need to be explored in the SDA methodology include:
- The scope of landlord and occupier control, to avoid double counting.
- Should some building types be below the average SDA curve, whilst others may be above it?
- Should real estate outperform the average SDA curve because some other subsectors such as health, education, food and lodging may be more carbon intensive?
- If property owners plan based on a significant decarbonisation of the Grid, e.g. through a switch to renewables, and this doesn’t happen, this third-party failure would impact on real estate performance.
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