Collaboration and shared experience as a pathway to a net zero future

Thought leadership plays a vital role in improving the way the property industry operates. Through research, intelligence and collaboration, our industry will be able to innovate and evolve to ultimately deliver more sustainable and responsible business practices. We are at a crucial turning point in history – the climate emergency and the race to net zero has been set against a turbulent post-pandemic backdrop, further compounded by a cost of living crisis that will a ect millions across the country.

We are proud to have supported CULS in hosting a series of thought-leading webinars aimed at sharing lessons learnt, challenging the norm and mobilising the sector as a whole to act and take responsibility for our impacts on the planet. These thought provoking discussions, summarised below, mirror the discussions we’ve been having with our clients with regards to the decarbonisation of the residential sector, the race to net zero, and the shift to a circular economy.

Marylis Ramos Director, Savills Earth

Decarbonising the residential sector

68 million tonnes of carbon was emitted from UK residential property in 2020, which represents around 20% of the UK emissions. It is estimated that to meet targets set by the Government, including a desire to get all homes to EPC level C by 2035, investment in energy performance improvements will need to increase sevenfold. Residential is arguably the problem child for the UK property sector when it comes to sustainability.

A lot of the focus is going to be on retrofitting existing stock. Challenges to this include the ability to push for change in a ordable housing sector given significant competing demands for capital amongst housing associations and other registered providers; the ability to secure investment from private individuals and funding that investment in an already regulated private rented sector; and the challenge of creating e ective policy levers in the owner occupied sector. Achieving net zero carbon in the timescales that we have will need to consider the impact on both energy bills for consumers as well as economic opportunities associated with the transition.

In terms of existing homes, the challenge is significant – 85% of all buildings are connected to the gas grid, 35% of the homes we have in the UK are pre-1945 homes and we need to make sure that we e ectively decarbonise all homes by 2050. The strategy for existing buildings is on the improvement of energy performance, ensuring that homes are warm, e cient and can support the transition to low carbon heat; the phase out of fossil fuel heating and higher carbon fuels; bring down costs of the transition and put enabling policies in place for this, e.g. green finance, investment incentives, subsidies and support, growth of supply chains for net zero technology; and investments in innovation, especially around hydrogen for heat.

The role of new build is to show us what the art of the possible is. The housebuilding industry is rising to this challenge – the Future Homes delivery plan by the Future Homes Hub is a transformative blueprint to 2050 that covers net zero carbon, water usage and a host of other design issues to make new homes being built today ‘net zero carbon ready’.

The race to net zero

We need to get to net zero emissions not just as a city or a country, but as a planet, if we’re going to limit the impacts of climate change. The UK Government’s ambition to be the first net zero aligned financial centre has led to a much welcomed mandate for financial institutions and publicly listed companies to publish their net zero transition plans by the end of 2023.

UK financial institutions are responsible for nearly double the country’s total annual carbon emissions from domestic consumption. The activities of the UK’s financial centre are significant and we really need to tackle that to bring it in line with our net zero aspirations. As of early 2022, only 20% of the FTSE 100 had a reasonable net zero transition plan and any form of resemblance to science based targets. A mandate for net zero means that we should finally be seeing all of these net zero commitments being accompanied by concrete monitorable plans.

The industry is rising to the challenge, collaborating and sharing global guidance on what net zero carbon means for real estate portfolios, and establishing knowledge sharing networks and working groups that form communications pathways and platforms for industry professionals to share learning experiences and benchmark their performance against their peers. These collaborations are crucial – a lack of joined-up thinking across the industry could be a real barrier to rapid decarbonisation.

Examples of these frameworks and guidance include the Science Based Targets Initiative, which facilitates the creation of a consistent cross sector definition for net zero, and the work by the International Sustainability Standards Board, which provides a global set of standards for the financial sectors. This will serve as the backbone for sustainability disclosure requirements (SDR) which will in turn enable people to have greater transparency and less greenwashing around sustainability.

Circular economy

It has been estimated that energy e ciency and moving to renewable energy can address 55% of global greenhouse gas (GHG) emissions. 80% of the buildings standing today will still be in use in 50 years. 11% of global greenhouse gas emissions are embodied within the built environment, and 50% of our natural resources are being used in buildings. We need to reduce raw material demand by refurbishing existing assets, and focus on decarbonising both our existing building stock as well as all new developments.

Commitments to circularity are being made, but roadmaps and metrics are so far not clear. Levels of awareness, understanding and ambition vary widely – and we’re all at the early stages of this journey and sharing knowledge will be crucial to this.

There is a clear business case for reducing operational waste footprints and reducing operational waste management costs. There is an opportunity for growth in material reuse platforms, product traceability, reusability and recoverability. Brown discounts are emerging in terms of existing assets that risk being ‘stranded’ in the future due to poor carbon performance – more and more developers are seeing these assets as opportunities to enhance value through retrofit and refurbishment activity.

Other real world opportunities for circular economy include the emergence of ‘products as a service,’ including lighting, flooring, finishes, furniture systems. Global issues around cost of living, raw material adaptability has driven up interest in material reuse, adaptability and supply chain resilience through local sourcing and the use of recycled and recovered materials, and organisations are embracing circularity to address business risks and create opportunities for the future.

Working together

Becoming agents of positive long-term change for our society means more collaboration, openness and transparency. We all share this challenge of securing our future and the future of our planet, our people, and our ideas and values. Savills is committed to investing in research and innovation and sharing tools and knowledge with the property industry so that we can all move towards a brighter future together and has established Savills Earth as a hub of expertise to fulfil that purpose. Climate change is one of the greatest threats facing humanity today, but it is also one of the greatest opportunities for creativity, innovation and collaboration, and we hope to continue working and sharing knowledge with industry partners to harness this energy and develop solutions together.