No one appreciates the need to retrofit existing buildings to improve their environmental performance quite like a property manager. For US-based Cushman and Wakefield which manages thousands of properties spanning 60 countries, it’s core business.
Emissions from tenants occupying buildings that the company manages account for an almost incomprehensible 99 per cent of its Scope 3 emissions. Tenant electricity and gas use makes up the lion’s share of this. Finding ways to improve energy efficiency in the managed properties is therefore key.
Cushman and Wakefield signed up to the Science-Based Targets Initiative (SBTi) in 2021 and committed to three main targets – to reduce Scope 1 and Scope 2 targets by 50 per cent by 2030, engage 70 per cent of clients in decarbonisation strategies by 2023, and reach net zero emissions by 2050.
Slashing Scope 1 and 2 emissions is the easy part since they are within direct control of the business. Persuading tenants to reduce their emissions is another matter altogether.
“We have comfortable or uncomfortable tension depending on the client,” the company’s managing director of New Zealand, Paul Huggins, tells The Fifth Estate in an interview.
“It is a lot easier than it was two years ago. Now [emissions reduction] is becoming a mandatory initiative, everybody has to be acting on what they have to do to meet their objective.
Australian and New Zealand head of sustainability Gehan Palipana says that the firm would prefer to align itself with tenants that have the same decarbonisation strategies to increase the likelihood that they will share common goals but says they don’t exclude anyone and are “happy to take people on a journey” to lower their carbon footprint.
However, tenants are only part of the picture. The firm must also work with the owners of the buildings on sustainability strategies, because it is they who will ultimately pay for upgrades, although this can depend on the type of leases they enter into with tenants. Typically, changes to HVAC systems are the responsibility of the building owner.
The SBTi imperative has also brought opportunity for Cushman and Wakefield – it has given rise to sustainability services to help real estate owners transition their buildings for a zero emissions future.
In most cases, replacing an existing gas hot water system with an electric heat pump is the big-ticket item. Other popular interventions are installing EV chargers, putting up rooftop solar PV panels, improving power procurement, establishing recycling systems and monitoring indoor air quality.
In most cases, the solution is not just one item but a series of small changes, such as replacing taps, LED sensor lights, or installing air dryers to replace paper towels in bathrooms, Huggins says.
Landlords are good at investing in new property. They’re not so good at upgrading existing properties
But it’s not just the big companies who are getting their own way when it comes to sustainability. Cushman and Wakefield also works with medium sized tenants who may only occupy a couple of floors in a building it manages to lobby the building owner to bring about change.
“Landlords are good at investing in new property. They’re not so good at upgrading existing properties,” Huggins says.
New areas of focus include resource circularity, where products are kept away from landfill and recycled or reused in some way, and air quality, which has taken on renewed interest since COVID-19.
The same monitors that are used to measure indoor air quality can be used to detect the number of occupants in a building and modify the air temperature settings accordingly.
Simply monitoring and adjusting climate control settings based on building occupancy can reduce both costs and emissions by as much as 20 per cent annually, Huggins adds.
Besides office buildings, the firm also manages industrial properties and infrastructure assets such as airports and prisons. Palipana says the sustainability issues these assets encounter are common across the board.
As companies increasingly scramble towards aligning their decarbonisation goals with the SBTi, Cushman and Wakefield is anticipating a massive transition from existing “brown” unsustainable buildings to green buildings.
Huggins and Palipana say this transition will be at the centre of their owner and tenant relationships moving forward.
Scope 3 carbon emissions are slowly bubbling up in the minds of businesses. Best practice carbon accounting *eg Science Based Targets Initiative) are requiring reporting and action. For most Australian businesses, scope 3 emissions are more than ten times their scope 1&2 emissions. My recent work with A2EP for a report for RACE for 2030 CRC on the food industry highlighted this. It also showed how circular economy, energy productivity and ‘value chain thinking’ complement scope 3 thinking, while digitalisation and communication enable collaborative action. This will drive business productivity. For example, the cost of all the energy (and carbon emissions) from the supply chain is hidden in the overall price paid by a food retailer and passed on (with a profit margin and allowance for food waste) to the consumer. As carbon prices increase and pressure to cut emissions increases, the pressure for collaborative action across whole value chains will increase. At present most businesses are blind to this emerging issue……