Real Estate: Net Zero Carbon Roadmap - Legal And General

3y ago
52 Views
3 Downloads
4.99 MB
48 Pages
Last View : 21d ago
Last Download : 2m ago
Upload by : Kaydence Vann
Transcription

2020 Net zero carbon roadmapReal estate:Net zero carbonroadmapPreparing for a more resilient futureLGIM Real AssetsDecember 2020For retail and professional clients

2020 Net zero carbon roadmap2

2020 Net zero carbon roadmap“The goal of net-zero ispossible – and we arecommitted to achieving it.”Michelle ScrimgeourCEO, LGIM3

2020 Net zero carbon roadmapContentsForewordExecutive summary1. Introduction: climate challenge for the real estate sector2. Our commitment3. Our purpose and progress4. Scope of our commitment5. Investment case for net zero6. Our delivery strategy7. Climate risk and resilienceAppendixGlossary40506121416222630384244

2020 Net zero carbon roadmapForewordAs part of our commitment to achievenet zero carbon across our real estateplatform by 2050, I am pleased topresent the LGIM Real Assets RealEstate Net Zero Pathway report. Thisdocument lays out the net zero carbonstrategy for our real estate investments.Avoiding a climate catastrophe is our greatest globalpriority. The overall social, environmental andeconomic impacts are already being felt in manyparts of the world, leading to wide-ranging,destructive and irreversible changes to the earth’sclimate systems. It is a global challenge thatrequires a collective global effort by governments,policymakers, companies, investors and society. Asa global institutional investor, it is our responsibilityand fiduciary duty to protect and generate long-termvalue for our clients.With buildings contributing up to 40% of globalgreenhouse gas emissions, the built environmentsector has a pivotal role to play in our global effortsto decarbonise the whole building lifecycle and tomeet the UK’s commitment to the UN ParisAgreement. With an average lifespan of 30 to 40years, buildings must be decarbonised for theirwhole lifecycle. As new regulations come into force,the assets that do not meet the required levels ofenergy performance risk becoming stranded,becoming unattractive to occupiers, and losingvalue, all of which have the potential to adverselyaffect returns. As investors and real asset owners,we have a responsibility to future proof our real assetinvestments, and to ensure they are resilient and ableto adapt to both climate-related transition andphysical risks.Pathway to net zeroAs part of Legal & General Group and Legal &General Investment Management’s (LGIM)commitment to mitigate climate change and topromote a transition to a low carbon economy, wehave been aligning our business with a low carbonfuture for many years, putting sustainability at theheart of our investment strategy. In 2019, LGIM RealAssets scaled up our ambition to deliver buildingsthat are Paris-aligned, becoming a signatory to theBetter Buildings Partnership Climate ChangeCommitment and pledging to achieve net zerocarbon for our real estate platform by 2050 (orsooner).Achieving net zero carbon will require a huge andwell-coordinated team effort. Every building weconstruct, own and manage is supported by a uniquegroup of individuals and partners, both from withinour organisation and externally - from the design anddevelopment teams, to the managing agents andfacilities management integration teams who help toensure that buildings are fit for the future and meetour social and environmental standards. Ouroccupiers will also play a fundamental role ininfluencing the scale and pace of our transition.At Legal & General, our purpose is to improve thelives of our customers, build a better society for thelong term, and create value for our shareholders.This shapes how we work and helps us create ourvision of 'inclusive capitalism'. We believe that ournet zero carbon goals will not be met unless ourdecarbonisation efforts are intrinsically linked to thecreation of a more equitable society.Achieving our net zero goals is not going to be easy.But I believe that our industry can decarbonise andmove from being part of the problem to being part ofthe solution. Our net zero roadmap sets out ourpathway in building a more resilient and better future.Bill HughesHead of LGIM Real Assets5

2020 Net zero carbon roadmapExecutivesummaryLGIM Real Assets is a division of LGIM, one of Europe’s largestinstitutional asset managers and a major global investor. LGIMmanages 1.24tn in assets (as at 30 June 2020), working with arange of global clients, including pension schemes, sovereignwealth funds, fund distributors and retail investors. This year, LGIMcommitted to work in partnership with clients on decarbonisationgoals, consistent with an ambition to reach net zero emissions by2050 or sooner across all assets under management.Legal & General has been investing in commercial, alternative andresidential real estate in the UK since 1971. Today, LGIM RealAssets is responsible for 21.3bn AUM of real estate investment inthe UK, across 22 unlisted funds. This real estate portfolio isextensive, holding over 700 assets across the UK andencompassing over 76 million square feet of lettable real estate,spread over all major commercial property sectors. More than halfof our properties are independently managed and operated by ouroccupiers. Looking ahead, a much deeper level of engagement andcollaboration with our occupiers will be necessary in order toachieve our net zero objectives.As a long-term investor, we have a responsibility to protect ourclients’ capital through integrating ESG considerations into ourinvestment process. We believe this leads to better riskmanagement and will drive long-term value. Over the last ten years,we have successfully achieved our carbon emission reductiontargets across our real estate business. Becoming a signatory tothe Better Buildings Partnership Climate Change Commitmentserves to strengthen our commitment even further.We believe it is our fiduciary duty to help to mitigate the risk ofstranded assets and increase the value of our real estate portfoliosin the long term. It is our belief that sustainability and ESG alreadysits alongside location, occupier, building size and building qualityas a key factor in real estate value and performance, and itsimportance will only increase over time. This is about getting aheadof emerging policy responses to the climate crisis and futureproofing our assets to create better quality, better performing realestate assets.6

2020 Net zero carbon roadmapOur commitmentsNet zero carbonScience-based targetsBest practice standardsOur commitment is to achieve netzero carbon across our whole realestate portfolio by 2050 or sooner.This commitment goes beyond ourlandlord operations, covering wholebuilding emissions which includeour occupiers.Our science-based targets will helpsupport our trajectory to net zeroout to 2030. As illustrated in thegraphic below, we will reduce theoperational carbon and energyintensity of our landlord-controlledareas (scope 1 & 2 emissions) by60%. We will establish sciencebased targets for our wider scope 3emissions during 2021.To achieve net zero, we are firmlycommitted to the principles definedby the UK Green Building Councilframework. We will measure andreduce embodied carbon. We willuse the energy hierarchy to drivedown the demand of our properties,to energy intensity levels which are‘Paris proof’. We will increaserenewable energy supply and onlyconsider verified offsetting as thefinal step.Scope 3Occupant purchasedenergy, embodied carbon,landlord purchasedgoods & servicesScope 1Landlord purchased gas& fuelScope 3Scope1&2Net zerocarbon30 - 40%reductionCarbon emissionsScope 2Landlord purchasedelectricitySource: LGIM Real AssetsScience basedtargets60%reduction2020203020507

2020 Net zero carbon roadmapOur strategyTo achieve our commitments, we are focusing on the key elements across the whole carbon lifecycle.We have started on our pathway to net zero by buildingon our existing sustainable and responsible real estatemanagement policies and framework. Over the lastfew years, we have initiated and implemented a rangeof new components that form the building blocks ofour net zero strategy, as summarised overleaf. We havealso established a programme of pilot net zero auditsacross different asset types. The findings haveprovided valuable insights and confirmed the criticalimportance of using key intervention points in thebuilding lifecycle to allow implementation of materialimprovements in a practical and cost-effective way.These key intervention points will be prioritised andembedded into our existing asset sustainability plansat asset level and will utilise new tools and procedures.8We have initiated andimplemented a range ofnew components thatform the building blocksof our net zero strategy

2020 Net zero carbon roadmap Construction Key interventionpoints Target, measure andminimise embodiedcarbon from product andconstructionOffset at practicalcompletion usingrecognised frameworkand disclosureProgress to dateNew development Operational stage Operational Prioritise reduced energydemand, use ‘Paris Proof’energy intensity targetsAcquisitionOptimise on-siterenewablesLease eventOff-site renewables thatdemonstrate additionalityRefurbishmentOffset using recognisedframework and disclosureVoid periodEnd of life Measure and minimiseembodied carbon fromdemolition and disposal Disposal anddemolition New developmentOffset using recognisedframework and disclosureNew developments andrefurbishment - Briefs andguidanceAcquisitions - new NZC duediligence auditsNet zero roadmap audits pilots on new and existingassets, development ofnew net zero roadmapaudits, to assess transitionpath and initial costDelivering actions &solutions - working with oursupply chain on new assetsustainability plansestimatesPerformance analysis andreporting – new integrateddata platform, improvingdata quality and reportingat asset and fund levelOccupier engagementConstruction andrefurbishmentStrengthening our occupierengagement strategyClimate related risk andresilience – a newmethodology to assess thephysical risk profile ofclimate change scenariosat asset levelIndependent audit and verification processGiven the importance of forward-looking assessments ofclimate-related risk, as recommended by the Taskforceon Climate-related Financial Disclosure (TCFD), weembarked last year upon an initiative to assess thephysical risks of our portfolio, and in particular flood riskunder different climate scenarios over the next 30 yearsand beyond. We will use this work to inform our climaterisk and resilience strategy.Our commitment to net zero has instilled a sense ofdetermination and purpose in our race to a low carbonfuture. It has served to strengthen our responsibleinvesting principles and, more importantly, has providedan impetus that aligns everyone across our business incontributing to the fight against climate change.9

2020 Net zero carbon roadmapMilestones to net zeroThe following outlines our deliverystrategy and indicative milestones.These timelines will evolve as wemove forwards and we will aim toaccelerate progress whereverpossible. Initiatives already exist in anumber of these areas and we will beadapting them to meet our net zeroprogramme.10

2020 Net zero carbon roadmapScience based targetsScope 1&260% cut in energy &carbon intensityScope 3 - tbc in 2021NZC into all new build and refurbishmentbriefsImplement for all transactionsImplement roadmapsAsset and fund roadmaps establishedRemove fossil fuelsall areasRemoval of fossil fuels - landlord areasEstablish OccupierEngagement programmeRoll-out and developScope 3 Occupier datacollection programmeRoll-out programmeNet zero supply chainmeasurement and circulareconomy principlesCarbon offsettingshort termapproachDevelop & implement climate resilience strategyRoll-outOnsite renewables approachRenewablesoff-site options2021Establishsupply chainstrategyCarbon offsetting longer term approachRenewableson-sitefeasability2020Scope1, 2, 3Implement all projectsNZC in all transactions and major cap-exNew climate riskmodel roll-outNet zerocarbon20222025Off-site renewables approach adopted20302050Source: LGIM Real Assets11

2020 Net zero carbon roadmap1. Introduction:climate challenge forthe real estate sector"Net zero" refers to achieving an overall balance between emissions produced andemissions taken out of the atmosphere.12The challenge - climate emergencyThe role of the real estate sectorClimate change has presented the world with anunprecedented challenge that requirescoordinated and urgent action. The landmark2016 Paris Agreement seeks to restrict theincrease in the global average temperature “towell below 2 C above pre-industrial levels” and topursue efforts to limit the temperature increase to1.5 C above pre-industrial levels. In order toreduce the huge gap between current emissionlevels and the reductions necessary to achievethe Paris targets, we must act now. The changesneeded are extensive and necessary right acrosssociety and the global economy. In a globalresponse, governments, central banks, investors,companies and civil society have declared aclimate emergency. In the UK, the governmenthas committed to achieving net zero carbon by2050, which will require substantial changes in theway we produce and consume energy andmaterials. This means that we need to achievedrastic cuts in all carbon emissions over the nextdecade.The operation of buildings (from energy used toheat, cool and light buildings) is responsible for28% of all carbon emissions in the world. Theremaining 11% comes from the embodied carbonassociated with the materials and constructionprocess throughout the whole building lifecycle.Many believe that the window for action in orderto achieve net zero is rapidly closing. It is clearthat building owners and operators have a centraland urgent role to play in delivering the changesneeded to drive down emissions in this key sector.

2020 Net zero carbon roadmapWhole life ential7%24%51%18%Whole lifeembodied carbonemissionsWhole lifeoperationalcarbon emissionsCarbon emissions to practical completionCarbon emissions in useOperational emissions regulatedOperational emissions unregulatedSource: UK Green Building CouncilThe charts above show the whole life carbon emission breakdown fora number of different building types.It is clear that embodied carbon represents a significant proportion oftotal emissions.It is also important to note that whilst operational emissions aregradually emitted over the lifetime of the building, the majority ofembodied emissions are effectively created today on construction.13

2020 Net zero carbon roadmap2. Our commitmentOur commitment to decarbonisationAt Legal & General, we have made it our responsibility to tackle climate change and to prioritise efforts to combatthe deepening global crisis, which will have severe consequences for generations to come.“Our organisation has a strong andlong-term commitment tosustainability. Our journey to reducecarbon emissions in our real estatebusiness started in earnest ten yearsago. We are therefore proud to joinothers through the Better BuildingsPartnership and commit to achievingnet zero carbon.”Bill HughesHead of LGIM Real Assets14

2020 Net zero carbon roadmapAs a real asset owner and investor, we have been actively working tomanage and reduce our carbon emissions over the last ten years. By2018, we had achieved the target set in 2010 to cut our landlordoperational carbon emissions by 20%. This was two years ahead ofschedule and so during 2019, we put in place new science-based targetsas a basis for setting our targets to 2030.CommitmentOur science-based targets, which align with a 1.5oC globalwarming scenario, commit us to reducing the operationalcarbon and energy intensity of our landlord-controlled areas(scope 1 & 2 emissions) by 60% over the next 10 years. Wewill establish science-based targets for our scope 3emissions during 2021, which will support our trajectory tonet zero.CommitmentIn 2019, we declared our aim to achieve net zero carbonacross our whole real estate portfolio by 2050 or sooner.This commitment goes beyond our landlord operations,covering the whole building emissions including ouroccupiers.CommitmentTo achieve net zero, we are firmly committed to theprinciples defined by the UKGBC framework: we willmeasure and reduce embodied carbon; we will use theenergy hierarchy to drive down the demand of our propertiesto energy intensity levels which are ‘Paris proof’; and we willincrease renewable energy supply and only consider verifiedoffsetting as the final step.The full scope of our commitments is explained in the following sections.15

2020 Net zero carbon roadmap3. Our purpose and progressOur net zero strategy and approach are underpinned by our overarching purpose and guiding principles in responsiblereal estate investment management.LGIM Real Assets: Our purposeTo deliver long-term positive value to our stakeholders by committing to a responsible andsustainable approach to real asset investment managementOur guiding principlesResponsible investmentmust be integrated intoevery decision we makeThe benefits of ourinvestments should befelt broadly across thecommunities they serveWe work to advance thetransition to alow-carbon worldWe amplify our impact bypromoting our valuesthroughout ourstakeholder networkWhat this means for our real estate businessAs long term investors,we have a responsibilityto integrate ESGconsiderations into theinvestment andmanagement process ofour assetsThis leads to better riskmanagement and willdrive long term value, aswell as the potential tounlock opportunities16Our business is aboutimproving societaloutcomes andplace-based impactacross the assets thatwe manageAs an investor, builderand landlord, werecognise that the builtenvironment is asignificant contributor toclimate changeAs a global institutionalinvestor and leader in thereal estate industry, wehave a key role in drivingchange and creating realworld impactThis leads to betterhealth and well-being andbuilding a more inclusiveeconomy and societyWe are committed in ourefforts to advance thetransition to a low-carbonworld, taking action toachieve net zeroemissionsWe do this throughstrong collaboration andpartnerships withorganisations who arealigned with our corevalues

2020 Net zero carbon roadmapOur net zero approach through active portfolio managementOver the past 10 years, LGIM Real Assets hasestablished a strong sustainability and ESGframework, based on active portfoliomanagement. This framework sets out ourpolicies and strategy, sustainable assetmanagement plans, asset level targets, greenlease clauses (since 2011), sector sustainabilityguides, and monitoring and reporting systems.For new developments and capital works,ambitious sustainability targets and requirementssuch as BREEAM and Soft Landings have been inplace for many years.Electricity Intensity (kWh/m2 )(like-for-like platform average353025201510Real estate performance since 2010This approach has yielded positive outcomes,with average like-for-like electricity intensity (kWh/m2) having been reduced by over 20% since 2010baseline levels.However, the scale of the task over the next tenyears can be seen in the chart opposite, with afurther 60% cut in intensity required comparedwith 2018/19 performance.LGIM Real Assets holds an extensive real estateequity portfolio of over 700 assets across the UK.These assets encompass over 76 million squarefeet of lettable real estate, incorporatingthousands of buildings spread over all majorcommercial property sectors including offices,retail, warehousing and logistics, education,residential and leisure assets. This includes one ofthe UK's largest portfolio of industrial properties.Real estate assets by property typeLGIM Real Assets holds an extensive and diverseportfolio of assets. The portfolio breakdown byproperty type is shown in the chart rce: LGIM Real Assets4%1%4%4%20%1%15

Legal & General has been investing in commercial, alternative and residential real estate in the UK since 1971. Today, LGIM Real Assets is responsible for 21.3bn AUM of real estate investment in the UK, across 22 unlisted funds. This real estate portfolio is extensive, holding over 700 assets across the UK and

Related Documents:

a Net Zero Carbon Pathway, setting out how they plan to deliver “net zero carbon” real estate investments by 2050 at the latest, as well as publish progress towards this goal annually. There is currently much ambiguity surrounding the definition and scope of “net zero carbon” commitments. This is certainly true in the property

real estate investing 3 8 17 26 37 45 53 63 72 introduction by shelly roberson and david s. roberson, esq. the world of real estate investing educating yourself in real estate niches and strategies for real estate investment creating an effective business plan locating investment properties financing real estate investments real estate .

REAL ESTATE TERMINOLOGY A Course Companion for Studying for The Real Estate Exam, for Real Estate Home Study Courses, for Real Estate Continuing Education Courses, for Real Estate Statutory Courses, and for Any Form of College Real Estate Course. PAGE 1 A ABANDONMENT Failure

Invested 50bn in real estate equity and debt strategies1 since 2012. o MBD Real Estate Stats: 38bn in AUM across real estate . o Real Estate Private Equity: Core, Income and Value-Oriented, Opportunistic, Development o Real Estate Private Credit: Senior Credit, Mezzanine Loans, Non-Performing Loans Goldman Sachs MBD Real Estate Overview.

A profile of today's real estate investor Investors favor real estate for its growth potential. Today's real estate investor remains optimistic about their real estate investments. Investors hold on average 2.2 types of real estate investments, with the two most popular choices being direct purchase and owning real estate

Trust account handboo for real estate agents and real estate business agents. 2. Introduction. All real estate agents and real estate business agents who hold or receive money on behalf of others relating to a real estate transaction in Western Australia are required to open and maintain trust . accounts. T

The Net-Zero riteria are part of the STi’s Net-Zero Standard. The Net-Zero Standard, which entails both the Criteria and forthcoming Net-Zero Guidance, will be finalized by November 2021 in advance of the 2021 United Nations Climate Change Conference (COP26). Public consultation of the Net-Zero Guidance is scheduled to begin in July 2021.

List of Figures, Tables and Boxes Figures 2 Figure S1 Overview of the key nuances of net-zero target implementation approaches 5 Figure S2 Ten basic criteria for net-zero target transparency 14 Figure 1 Internet searches for net-zero emissions 15 Figure 2 Map of cities and regions pursuing net-zero emissions 16 Figure 3 Population of cities and regions with net-zero targets, by geographic region