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VOL. 36 NO. 5 • DECEMBER 2021

NO TIME TO SQUANDER Investing in Climate Action

PA R T O F T H E

P A R T

O F

T H E

GHG REDUCTION TARGETS ESG ENDORSEMENT GREEN INVESTMENT POTENTIAL GRESB RESULTS 5G ROADMAPS MASS TIMBER CONSTRUCTION ZIBI COMMUNITY

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VOL. 36 NO.5

DECEMBER 2021

Editor-in-Chief

Barbara Carss barbc@mediaedge.ca

Publisher

Sean Foley seanf@mediaedge.ca

Contributors

Nick Axford, Eric Chisholm, Brittany Coughlin, Jonathan Gibson, Cheryl Mah, Rebecca Melnyk, Andrew Pride, Erin Ruddy

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TEL: (416) 512-8186 • FAX: (416) 512-8344 Published and printed six times yearly as follows: March, April/May, June, Aug/Sept, Oct/Nov, Dec by MediaEdge Communications Inc. 2001 Sheppard Avenue East, Suite 500 Toronto, Ontario M2J 4Z8 (416) 512-8186 Fax: (416) 512-8344 e-mail: circulation@mediaedge.ca Subscription Rates: Canada: 1 year, $60*; 2 years, $110* Single Copy Sales: Canada: $12* Outside Canada: US 1 year, $85 International $110 *Plus applicable taxes Reprints: Requests for permission to reprint any portion of this magazine should be sent to info@mediaedge.ca. Copyright 2021 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 0834-3357 Authors: Canadian Property Management Magazine accepts unsolicited query letters and article suggestions. Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Property Management makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada

editor’snote THE DAMAGE AND DISPLACEMENT from just one day’s rain in British Columbia brings home the scale of investment and effort that will be needed to respond to an increasingly volatile climate. Attempting to parse out Canada’s share of global emissions to delegate blame to others is an unproductive and divisive distraction. The threat is real and it is here. We need to focus on de-escalating it. That will cost money, alter lifestyles and unsettle some economic sectors — or, in other words, follow the wellestablished course of societal evolution. That’s probably why the early and big thinkers labelled it “transition risk”. If we’re lucky and work hard, we’ll make our way to an envisioned low-carbon economy. If not, we can go with the flow as the carbon-buttressed economy collapses around us. Either way, it appears we’re transitioning. Canadian Property Management and www.REMInetwork.com have long reported on rationales, means and outcomes of the pursuit of improved sustainability and smaller carbon footprints in the built environment. When the concept of green buildings was relatively new, that was largely about operational efficiency — paybacks on retrofits, long-term energy savings etc. — and all those things that are still critically important in commercial real estate, but, happily, now about as newsworthy as reporting that vegetables have more nutritive value than candy. The story shifted much more into real estate’s investment, leasing and valuation domains as demand for high-performance, healthy buildings steadily grew. More recently, regulatory and market pressure are emerging themes. It’s still about the benefits of being sustainable, but there is a lot more consternation about the drawbacks of risk-exposed, potentially obsolete assets. That’s excellent news for climate action. Science is the meek teacher in an unruly classroom. Money is the vice principal responsible for disciplinary measures. In this issue, we look at money’s advancing peevishness with businesses that are vulnerable to the physical and transition risks of climate upheaval. Some of the most forceful players in commercial real estate, including institutional investors, lenders and insurers are heeding and enabling that trend. Speaking during the recent online presentation of Canadian results for 2021 GRESB global benchmarking of environmental, social and governance (ESG) performance of commercial real estate portfolios and infrastructure, sustainability champions within the industry reflected on what they’re seeing. “Carbon net-zero target-setting is what everyone’s working on and thinking about,” observed Conan O’Connor, Vice President, Technology, with the energy management and analytics firm, Energy Profiles Limited. “It comes back to: what’s the market value of a net-zero asset going to be in 2030 or 2050 compared to a high-carbon asset?” Barbara Carss barbc@mediaedge.ca @BarbaraCarss

Canadian Property Management | December 2021 3

contents

Focus: Climate Action 6

Carbon Mindset: Emissions reduction melding with long-term value strategies in major Canadian portfolios.

Achieving 30% Reductions: Sustainable design professionals offer how-to advice.

12 Policy Paucity: Buildings’ impact and potential not registering with provincial governments. 16 Net Zero Buy-in: Global survey finds real estate players everywhere looking at ways to minimize their carbon footprints. 20 Mass Timber Momentum: Confluence of factors is pushing wood construction upwards. 24 2021 GRESB Results: Canadian portfolios well represented in the 5-star cohort. 28 Financial Drivers: Socially responsible investing and green finance deliver new possibilities for real estate. 32 Capital Example: Zibi community transforms prominent Ottawa brownfield site.

Articles: 34 Pondering 5G: Smarter buildings may necessitate some aesthetic trade-offs. 36 Pandemic Property Tax: Municipal financial pressures flow through to commercial ratepayers.

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ACUTE CARBON CONSEQUENCES Seldom Made Investment Decisions Key to Reducing GHG Emissions By Barbara Carss DAILY VIGILANCE is central to achieving operational energy savings, but rare decisions typically have the most acute carbon consequences in buildings. Sharing their thoughts and experiences during the online presentation of the Canadian GRESB results earlier this fall (see story, page 12), sustainability champions within the commercial real estate sector discussed a range of actions their companies or clients are pursuing to reduce greenhouse gas (GHG) emissions and align with Canada’s target for net-zero building performance by 2050. “When decisions are made about reducing or eliminating carbon, they are 20- and 25-year decisions for things like upgrading a boiler plant, or getting rid of a boiler plant or signing long-term green power purchase agreements,” observed Conan O’Connor, Vice President, Technology, with the energy management and analytics firm, Energy Profiles Limited. “They’re big decisions and they’re big 6 December 2021 | Canadian Property Management

investments of a different magnitude from the energy efficiency projects we’re accustomed to thinking about.” For commercial real estate owners/ managers that doesn’t necessarily mean a tactical shift, but, rather, a broadening of sustainability strategies. Arguably, a sector that’s already focused on long-term returns and opportunities to add value is well positioned to make the cognitive leap. The spectre of investors, lenders and insurers coming onside also bolsters the rationale for the major expenditures that will be required to realize a dramatic drop in emissions. “On the investor side, they’re pressuring real estate operators to do more. On the lender side, with Europe’s sustainable finance directive, lenders there are starting to screen owners on their carbon footprints and we think that’s soon going to come to North America. And, of course, the regulated entities — the REITs, the banks and the insurers — have TCFD (Task Force on Climate-related Financial Disclosures)

equivalence coming on the regulatory side,” tallied Michael Brooks, Chief Executive Officer of REALPAC. “So for our members, for real estate operators, a lot of focus is on net zero, or at least substantial emissions reductions, and how to get there.” Nevertheless, those tasked with leading the charge for some of Canada’s most progressive players, to date, acknowledge that it is a formidable undertaking from a managerial, financial, technological and cultural perspective. Across large and varied portfolios, they’ll need the analytical resources to identify where and when best to act, and they’ll need the cooperation of their tenants. TENANT INVOLVEMENT CRITICAL Outlining the parameters for mapping transitional climate-related risk in Choice Property REIT’s portfolio of more than 700 largely retail and warehouse/distribution properties, Ariel Feldman, the company’s Director, Sustainability and Environmental

targets Programs, touched on one of the longstanding barriers to energy upgrades — split incentives. The GHG lens brings a new dimension to the debate around owners’ investments in systems that they do not control and gives them a more obvious stake in the benefits. “Typically, REITs in North America haven’t really been focusing on the retail and industrial sectors [for sustainability measures] because there’s not a lot of control. We’re trying to reframe thinking about those types of assets because we know those assets are going to be subject to regulations going forward as we transition to a zero-carbon economy,” Feldman said. “We’re starting to think about things like: If you’re going to put a gas-fired rooftop unit on a retail sector tenant, what obligation do you have down the line to change that up to an electric heat pump? Because, how can you expect your tenants to go net-zero if they’re being given gas-fired equipment?” That complements other emerging considerations both related to an evolving landlord-tenant relationship and the need to look at capital replacements in a larger and coordinated context. Brooks noted that, for now, commercial real estate owners/ managers are mostly grappling with scopes one and two of the Greenhouse Gas Protocol, which account for: 1) direct emissions from owned or controlled sources such as natural gas-fired boilers; and 2) indirect emissions related to production of the electricity and/or district heating/ cooling that buildings consume. However, it’s expected that, as in Europe, scope three, which covers all other indirect emissions that occur in a company’s value chain, will increasingly draw scrutiny. That will place added emphasis on the flow of users and goods to and from properties. “Scope three is the bulk of our footprint and many of our peers’ footprints as well,” Feldman maintained. “Any net-zero commitment that doesn’t at least look at scope three is not really going to be as impactful.” Ringo Ng, Director, Climate and Energy, with Cadillac Fairview Corporation, agreed there is an important role for landlords as “stewards” or a “resource” in helping tenants transition away from higher carbon intensities. “One thing we’re trying to look at is how do we collaboratively work with key tenants across the nation in innovative ways, whether that be financing or other ways, to lower common emissions collectively and jointly,” he reported.

“There are ways of looking at lease structures and who pays, and how they pay, and when they pay, and how much they pay, and all that can be part of the discussion,” suggested Rob Simpson, Director of Sustainability with Ivanhoé Cambridge. “If you don’t get the tenants on board, most of this is, frankly, impossible. So there’s got to be a solution that’s found there.” DATA UNDERPINS ACTION Reflecting on some of the challenges of expanding beyond North America and simultaneously shifting portfolio weighting from office to industrial properties, Ailey Roberts, Vice President, Sustainable Investing, with BentallGreenOak, stressed the importance of having a full and comparable picture of assets. “It did almost feel like we were starting from scratch when we went into Europe and Asia. When you get the data, you can make a lot of informed decisions,” she recalled. “Certainly, Europe is light years ahead of where we’re at in what is required through legislation so we’re looking at wholebuilding data for our industrial assets in Europe.” Across the global portfolio, data is also key to priority setting. “The team is really

digging deep and focusing on finding those opportunities that are most material and are going to have the biggest impact,” Roberts said. That’s an approach that will increasingly be applied to capital budgeting. Asset managers are factoring carbon levies, other potential climate-triggered regulatory and due diligence imperatives, and what Brooks terms “avoided obsolescence” into the paybacks. “The traditional way of thinking of equipment replacement through an OpEx or CapEx lens that we’ve historically followed in the industry for years and years and years is changing because it’s no longer enough to simply replace a rooftop unit with another one that’s maybe slightly more efficient,” Simpson said. “It comes back to: what’s the market value of a net-zero asset going to be in 2030 or 2050 compared to a high-carbon asset?” O’Connor submitted. “In everyone’s portfolio somewhere today someone is making a decision that’s going to be a 20-year decision that’s going to have a big impact on carbon. We have to make sure we’re not missing those opportunities and we’re making the right decisions in those cases.” ❚❚

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RETROFIT

REACH Low-hanging Fruit off the Menu for Deep Emission Cuts

Events of 2021 clarify that Canadians can no longer regard climate change as the ominous future. Rather, it is a present threat. Every sector of the economy will be pressured to respond, and the built environment provides one of the largest and most logistically achievable avenues to curb ongoing damage from greenhouse gas emissions (GHGs) Using the criteria for the Canada Infrastructure Bank (CIB) commercial buildings retrofit program — which stipulates project proponents must achieve a 30% portfolio-wide reduction in GHG emissions and no less than a 25% reduction in any one building — as the reference objective, Canadian Property Management asked three sustainable design professionals for insight on the rationale for participating in the program and the practicalities of achieving the required target. The following are some of their observations – Editor.

8 December 2021 | Canadian Property Management

targets AN OPPORTUNITY TO SHELTER FROM RISK EXPOSURE Eric Chisholm, P.Eng., Co-founder, Principal, Purpose Building Inc.: We are used to talking about energy efficiency, but carbon reduction is a whole new world. With the former, we set middling targets like a 30% reduction, and met those over a decade through small incremental improvements like lighting upgrades saving 3% annually. With carbon, small incremental improvements will not get us to a net-zero future. You might reduce emissions by 75% in a single year through converting a gas boiler heating system to use heat pumps instead. This requires a large coordinated capital construction activity that can’t be spread across numerous budget years into bite-sized investments. Aging buildings in need of renewal are ideal candidates for Canada Infrastructure Bank’s offering, which will provide upfront capital for major projects that can’t be done in a piecemeal way. Emissions reduction during building operation comes down to four core fundamentals: efficiency; fuel switching; renewable power generation; and offsetting remaining emissions. We are getting increasingly creative in finding solutions to accomplish each of these, understanding what to prioritize and when. This is evident in the steady take-up of technologies like advanced ventilation heat recovery devices, mass timber construction and triple-pane windows. Vancouver accelerated early, partly because its mild climate makes more technology options available. Cities in colder climates — Winnipeg, Edmonton, Ottawa, Montreal — have challenges that others do not, but we’re seeing new solutions emerging every month. Things are moving fast. The net-zero future our planet needs cannot be reached without fuel-switching. Once a real estate asset switches to efficiently using low-carbon fuels, the asset becomes more desirable to investors with climate commitments, while also becoming sheltered from rising emissions pricing (e.g. carbon taxes). Some buildings might be able to achieve Canada Infrastructure Bank’s 30% emissions reduction target through a combination of measures other than fuel switching (particularly if they are high emitters to begin with), but those buildings

“With carbon, small incremental improvements will not get us to a net-zero future.”

will remain risk-exposed until fuel switching occurs. So, a deep carbon retrofit including fuel switching makes sense while Canada Infrastructure Bank and other programs offer low-cost capital. Some electric grids remain carbon intensive, but all of Canada’s grids are greening (except Ontario where nuclear plant closures are scheduled to be replaced by fossil fueled gas plants, resulting in a less green grid). Major capital projects in design today might not be completed until 2025 or later so, when planning for a low-carbon future, fuel switching makes sense everywhere, even if timelines for greener grids differ.

In the meantime, building-mounted solar is a smart choice for Alberta, Saskatchewan and Nova Scotia. This will have a significant impact on facility emissions while supporting the grid’s transition. CONSERVATION AND EFFICIENCY SHOULD ANCHOR UPGRADE AGENDA Brittany Coughlin, P.Eng., Principal, Energy & Sustainability Specialist, RDH Group: Owners can compare the greenhouse gas (GHG)

Canadian Property Management | December 2021 9

targets emissions for buildings across their portfolio and against data for similar building types to prioritize the highest emitters for upgrades. Typically, those will be buildings that use natural gas for heat and hot water. Generally speaking, there is a lot of room for reduction against national averages such as the BOMA BEST silver average carbon intensity of 1.8 kilograms of carbon dioxide equivalent per square foot (kgCO2e/ft2). For comparison, new office buildings in the city of Vancouver are required to achieve less than 0.3 kgCO2e/ft2 (3 kgCO2e/m2) modelled (as per the Green Buildings Policy for Rezoning). The challenges in existing buildings are obviously different, and there are differences between modelled and measured values, but this indicates the significant improvement that is possible compared to current average existing building performance. In areas with low-carbon electricity grids, electrification is often the most straightforward path to significant GHG reductions. However, it's important to remember that efficient electrification is critical. With higher carbon grids, a combination of electrification and conservation should be considered. Conservation and efficiency should also play a key role. That includes: passive design measures to reduce the need for heating/cooling such as high performance windows, insulation, air sealing, passive solar design, etc.; and efficient systems that use less energy to meet the building's needs. For example, heat pumps are much more efficient than electric baseboard heating.

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The economics of heat pump retrofits are starting to make good sense for many large office and retail buildings. Multifamily buildings have big opportunities for GHG reductions, but they come with some unique challenges, both in rental and condominium tenures. Condo retrofits often involve many decision-makers with varying perspectives, resources and levels of technical background, which can be cumbersome. In rental buildings, the economics can be off-putting for owners given the complications of passing through capital expenditures. In both building types, consideration also needs to be given to whether and how work can be completed with residents remaining in their homes. LOOK WITHIN BEFORE COUNTING ON A CLEAN GRID Andrew Pride, P.Eng., Principal, Andrew Pride Consulting: The best candidates for large GHG reductions are buildings where no energy or emissions-related upgrades have yet been made. It becomes increasingly difficult for significant GHG savings when an owner/manager has already reduced consumption or eliminated high carbon producing equipment. Ultimately, multi-residential buildings, built prior to the LEED rating system movement, have the best potential for GHG savings as historically these have mostly been natural gas heated with fairly low-cost, low-efficient equipment. Look for buildings in which natural gas consumption is a large portion of energy use. For example, multi-residential buildings consume a great deal of natural gas for both heating systems (about a third of energy use) and domestic hot water (about a quarter of the building’s energy use). Also, consider buildings located in jurisdictions where the electricity grid is projected to remain carbon intensive, such as Saskatchewan. Installing solar photovoltaic systems will offset a lot of electricity-related GHGs in regions where the grid is carbonintensive (Alberta, Saskatchewan, Nova Scotia) or where peak demand generation comes from natural gas sources (Ontario). Strategies to reduce summertime peak demand are particularly important in Ontario because peak emissions, from natural gas peaking plants being pressed into service, can be 10 times higher than the yearly average. Heat recovery on exhaust streams can provide a cost-effective GHG reduction in gas heating systems. Conducting an airtightness test and sealing the leaky building envelope can provide heating and cooling savings as well as improve comfort in buildings. That could also include reducing thermal bridges, replacing glazing and installing exterior solar shading. In multi-res rental, transferring hot water costs to tenants, by metering the hot water lines, will deliver meaningful GHG reductions. Fuel-switching is an easier way to achieve GHG savings, but it should be recognized that electricity grids are political and their source energy can change over the years. In Ontario, for instance, the grid GHG intensity in 2005 was around 35 megatonnes (Mt) CO 2 e; 10 years later it was just over 5 Mt before dropping to 3 Mt. Today, Ontario is forecasting a rise to 11 Mt by 2025. So, pragmatically speaking, building owners should focus on reducing their overall energy consumption and demand first, then start considering fuel switching alternatives. ❚❚

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POLICY OFF PACE WITH TARGETS Buildings Lack Presence on Climate Action Agendas BUILDINGS ARE a largely overlooked element of governments’ climate action strategies in Canada. Earlier this year, analysts from the Pembina Institute, working with the Sustainable Planning Research Group at Simon Fraser University, examined federal and provincial efforts to reduce greenhouse gas emissions (GHGs) as they relate to 11 key policy indicators, and concluded that British Columbia is alone in showing strong leadership to promote building retrofits and curb the carbon footprint of new construction. As reiterated in the research report, with lead authorship from Nichole Dusyk and Isabelle Turcotte, buildings account for about 12.5% of national emissions, positioning them as the third largest GHG contributor among seven economic sectors. Oil & gas and transport are firmly entrenched in the top two spots with respective outputs of 26.2% and 25.5% of national emissions. Heavy industry, agriculture, electricity and waste/ 12 December 2021 | Canadian Property Management

other each represent shares ranging from 10.5% to 7% of GHG emissions. Buildings are also one of four sectors that registered growth in GHG emissions in the 15 years from 2005 to 2019, with an 8% uptick in output. Oil & gas recorded a 20% jump and transport saw a 16% ramp-up during the same period, while emissions from agriculture increased 1%. WIDE GAP TO CLOSE Nationally, 730 million tonnes (730 megatonnes) of GHG emissions in 2019 equated to a mere 1% decrease from the 2005 level — far off the pace of achieving the 30% reduction initially pledged t h rough Ca nada’s Pa r is Agreement commitment. However, in 2021, the federal government adopted the more ambitious target for a 40 to 45% reduction relative to 2005. To accomplish that, a 296- to 333-megatonne (Mt) cut in annual emissions will be needed.

“This will require an unprecedented effort,” the Pembina report admonishes. “All levels of government have a role to play in reducing emissions and ensuring a safe climate.” Five provinces — Alberta, Ontario, Quebec, Saskatchewan and British Columbia — account for 90% of national emissions, with Alberta and Ontario together contributing 60%. When viewed from GDP and population contexts, Alberta and Saskatchewan record the highest emission intensity. GHG output climbed in Alberta (17%) and Saskatchewan (10%) during the years from 2005 to 2019, while dropping in Quebec (4%) and Ontario (21%). “The GHG per unit of GDP in these two provinces is more than double the Canadian average, and the per capita rate is more than three times higher. Ontario and Quebec have the lowest rate on a per unit of GDP basis,” the report states. From a policy perspective, the report’s findings are not entirely condemnatory. It

targets highlights “climate wins” in each of provinces during the 2005-2019 period, including: Quebec’s pioneering adoption of emissions cap and trade; Ontario’s elimination of coal-fired electricity generation; Saskatchewan’s investment in carbon capture technologies; and New Brunswick’s comprehensive climate plan, However, the authors stress that all provinces and the federal government have work to do. “The analysis shows that there have been important examples of climate leadership and success across the country. Yet, progress made — for example with economy-wide carbon pricing and the phase-out of coalfired electricity — has been offset by emissions increases elsewhere,” they advise. “Despite the fast-approaching 2030 target, 95% of emissions generated in Canada are not covered by either provincial or territorial 2030 targets or climate plans independently verified to deliver on the 2030 target. No jurisdiction has developed pathways to describe how net zero can be achieved.” TEN MEASURES OF LEADERSHIP The researchers devised a checklist of five policy initiatives signalling support for building retrofits and another five measures signalling support for lowcarbon new construction, then rated provincial leadership based on the number of initiatives that have been adopted. Four or more measures are deemed strong leadership; three qualifies as some leadership; and two or fewer is a sign of little or no commitment. Identified supportive policies for retrofitting existing buildings include: mandatory energy and carbon labelling, benchmarking and disclosure; legislation enabling retrofits through PACE (property assessed clean energy) or on-bill financing; performance requirements for space and water heating equipment; targets and plans for carbon reduction and/or retrofits for a minimum 3 to 4% of the community building stock annually; and a medium to high score for spending on incentives and programs as rated in Efficiency Canada’s 2020 Provincial Energy Efficiency Scorecard. B.C. demonstrates strong leadership, while the federal government and five other provinces — Manitoba, Ontario, Quebec, Nova Scotia and Prince Edward Island — show some leadership, with three of the measures in place. Leadership on the new construction front is tied to adoption of various codes including: adoption of the most recent 2017 edition of the National Energy Code for Buildings

PROVINCIAL ENERGY EFFICIENCY STALLS Provincial energy efficiency programs are generally less effective now than they were last decade. Recently released results from Efficiency Canada’s provincial energy efficiency scorecard show a downward trend in achieved incremental savings for the period from January 2020 to June 2021, which analysts with the national research and advocacy organization attribute largely to the dismantling of incentive programs in Ontario and Alberta. Incremental energy savings are a measure of new savings achieved from currently offered programs — a volume that peaked at 23 petajoules Canada-wide in 2017 and dropped to roughly 14.25 petajoules in 2020-21. Notably, Ontario’s contribution to national electricity savings slipped from 58% in 2017 to 18% in 2020, with savings in the commercial/industrial sectors dropping from 1,105 gigawatt-hours (GWh) to 313 GWh in the two timeframes. “Canada is coming out of the COP26 Climate Summit with the resolve to reach net-zero emissions,” observes James Gaede, Senior Research Associate with Efficiency Canada. “The data shows that provincial energy efficiency progress is stalling.” British Columbia retains top ranking among Canadian provinces for the third consecutive year for energy efficiency policies and outcomes. These are scored on 54 metrics pertaining to electricity, natural gas, codes and standards and transportation, and accounting for the residential, commercial and industrial sectors. Quebec, Nova Scotia and Ontario also hold on to the second, third and fourth positions, respectively, they earned last year. Efficiency Canada analysts emphasize that even British Columbia’s leading score of 55 out of 100 possible points leaves plenty of room for improvement. From there, the tallies range from 48 for Quebec down to 13 for tenth placed Newfoundland and Labrador. Ontario merited 39 points this year, while Alberta attained 21. Saskatchewan, with a score of 18, gained one point over last year’s results, while New Brunswick remained static with a score of 27. All other provinces registered a decline, with Manitoba making the most severe drop from 29 down to 21 points. The Provincial Energy Efficiency Scorecard can be found at www.scorecard.efficiencycanada.org/

(NECB) or its equivalent, and the most recent 2015 edition of the National Building Code or its equivalent; commitment to adopt the yetto-be-released 2020 NECB; commitment to adopt net-zero energy ready (NZER) requirements into the code by 2035; and commitment to integrate GHG intensity limits into the code by 2025. Again, B.C. emerges with strong leadership. The federal government and four provinces — Alberta, Saskatchewan, Ontario and Nova Scotia — meet three of five criteria. New Brunswick and Newfoundland and Labrador are the only two provinces with few or no measures for either new or existing buildings. Building policies in the three territories were not assessed, although the territorial governments are scrutinized in many of the other climate policy categories. GRID INFLUENCE Ontario’s building stock contributes the greatest volume of emissions, at nearly 40 Mt, and the largest share of any province’s total output at 24%. Alberta buildings produce the next largest volume, at more than 20 Mt, but that equates to just 8% of provincial emissions. Oil & gas accounts for the largest quotient of emissions in Alberta (51%) and Saskatchewan (27%). Transport is the number one source in seven other provinces, while Nova Scotia stands out uniquely with 41% of

provincial emissions attributable to electricity generation. Even without Nova Scotia’s outlier status, electricity generation embodies something of a national divide — spawning a double-digit portion of GHG emissions in five provinces and no more than 2% in the remainder. This also flows through to buildings and underscores that different strategies will be needed to curb emissions depending on the carbon intensity of the electricity grid. (See story, page 8) Notably, with nearly double Alberta’s population, Quebec buildings emit less than half the volume of GHGs. Ontario’s population is more than three times greater than Alberta’s, but GHG emissions from Ontario buildings are less than double the volume Alberta buildings emit. “Ontario should focus on its highest emitting sectors: industry; buildings; and transportation. Electrifying residential and commercial buildings and passenger transportation, alone, could lead to 14% GHG reductions from 2005 levels by 2030, potentially helping Ontario achieve its 2030 climate target,” the report advises. ❚❚ The complete text of All Hands on Deck, an assessment of provincial, territorial and federal readiness to deliver a safe climate can be found at www.pembina.org/pub/all-hands-on-deck. Canadian Property Management | December 2021 13

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REMEMBER YOUR SMOKE MANAGEMENT SYSTEM Many know the proverb "Where there's smoke, there's fire," but few may realize that smoke from the fire, is often more deadly than the flames. “More often than not, it's not the radiant heat energy or direct involvement in flames that kill people. Instead, it’s the smoke that overcomes them when they’re sleeping or trying to get out,” says Eric Esselink, Chief Executive Officer with LRI Engineering Inc. That’s not to say fire isn’t a significant threat, but that the impacts of smoke inhalation cannot be understated. Not only can smoke impede a person’s ability to breathe, but it may also contain toxic particles or vapours that affix themselves to the lungs and wreak havoc from within. It’s

for these reasons that property managers must make the health and efficiency of their smoke management systems an ongoing priority. DON’T TAKE YOUR SYSTEM FOR GRANTED Given everything on a property team’s plate, it’s understandable for smoke management systems to slip under the radar. Nevertheless, ineffective system design, commissioning, installation or documentation can leave building teams and occupants in dangerous situations if unaddressed. “Though property managers do have an obligation to test and maintain these systems, that’s not always what’s

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happening,” says Esselink. “Over my own career, I’ve seen a lot of smoke management systems that haven’t really been looked at since they were initially installed, or situations where regular maintenance is being missed.” It's also common for system testing to fall short. The initial design and installation of a smoke management system requires input from multiple professionals (e.g., fire safety, mechanical, electrical, architectural, etc.). And while each may verify their part of the puzzle, property managers often lack the documentation or training to test the system as a whole. “It’s not enough to have various trades signing off on their portion of the system; you need to have your system tested in an integrated fashion to prove that it works the way it's supposed to,” says Esselink. Often, he adds, lack of adequate testing is a result of the fact that the fire safety protocol wasn't developed in a holistic way from the beginning, if at all: "That's why, when property managers call their fire safety partner to come in and test their systems, they may check all the equipment, but they're doing it in a compartmentalized fashion. Those specialists are not reviewing how these things are supposed to work together, and they may not even understand how they're all integrated, because why would they unless there's some kind of document or protocol to go from?" ERROR IN THE CODE Building upgrades, ownership or management changes and technological retrofits may also put smoke management systems at risk. True, automation and artificial intelligence offer a wealth of advantages for property management, but giving these tools dominion over existing systems opens the doors for both human and technical errors. "It doesn't take much in the way of programming to get something wrong," warns Esselink. "For example, if an input/output correlation on a matrix is incorrect, all of a sudden the smoke management sequence doesn't work the way it should." Seemingly harmless decisions may also have negative impacts. In a bid to conserve energy, for example, property teams may program a piece of mechanical equipment to shut down after hours when they assume the office will be empty. The risk of doing this is that people may still be in the building, and that piece of equipment could be a critical part of the smoke management system that won't kick in if something occurs.

MAINTENANCE OVERSIGHT One of the most common reasons smoke management systems fail is they are not well maintained. This can be attributed to property stakeholders who aren’t aware of how the system is supposed to operate, or aren’t testing them in a full, integrated fashion during the mandatory testing. "It's important to remember the big picture," reminds Esselink. "That means making sure your fire safety system will start the fans, release your magnetic door hold-open devices, open and close the dampers, and perform any number of integrated functions when a fire occurs." Here again, it’s important to refer back to initial documentation or call upon fire safety engineers who can help test the system holistically and develop the protocols to help property managers tackle their life-saving maintenance responsibilities. “We realize that smoke management systems don’t always take priority, which is why we’re here to make sure it does what it’s supposed to,” adds Esselink. UNDER CONTROL There are many reasons why a smoke management system requires attention. Whether the reason is inadequate commissioning, testing, or maintenance, it’s important to identify and address those gaps. It’s not only a matter of upholding one’s legal liabilities, but ensuring a safer environment for all. Adds Esselink: “These systems are there for a reason: to save lives. That’s exactly what they’ll do, but only if they’re properly installed and maintained.” To learn more about LRI Engineering Inc., visit www.lrifire.com.

PIVOT AND PURSUE Plotting Global Progress to Net Zero

Organizations that own and occupy commercial real estate are increasingly keenly aware of the built environment’s contribution to global greenhouse gas emissions, and are increasingly prioritizing efforts to minimize their own carbon footprints and address climate risk. The following is an excerpt from JLL’s research and findings about those actions – Editor. THE COMMERCIAL REAL ESTATE industry has accelerated its focus on responsibility and social purpose. Occupiers, investors and city leaders each have a role to play in meeting demand for greener more sustainable spaces. This decade is a pivotal time to decarbonize the built environment and build spaces for a resilient future. However, translating good intentions into achievable targets will require partnership and transformative thinking. In early 2021, JLL sponsored a survey of 647 investors in, or occupiers of, commercial real estate in locations worldwide, including 146 in Canada and the United States, to derive a picture of commitments, expectations and achievements thus far in transitioning to low-carbon or net-zero operations. Responses to a series of a questions were scored on a scale of 0 to 100 to chart organizational progress and industry momentum. Nineteen percent of participants scored 16 December 2021 | Canadian Property Management

71 or higher, representing occupier and investor organizations with mature strategies for carbon emissions reductions, including a stated target and a roadmap for achieving it, along with supporting data and technological proficiency. From there, investors and occupiers diverged somewhat with more occupiers (57%) deemed to be “on the path” with scores of 41 to 70, while a larger share of investors (42%) were labelled “starting out” with scores of 40 or lower. Scoring also showed that bigger players are leading the way. For corporate occupiers, companies with more than 10,000 employees are ahead on the drive toward net zero — with 30% classified as leaders versus just 15% at the starting out stage. Similarly, investors with the largest real estate holdings tend to have made more progress. Upwards of 40% of surveyed companies with more than USD $10 billion in assets under management were slotted into the leading tier in pursuit of net zero

versus just 15% of companies with less than USD $3 billion in holdings. A primary goal of the survey was to understand the environmental commitments being made by occupiers and investors, including the barriers they face, the drivers of their actions, levels of investment, and specific measures being taken today and in the near future to meet net-zero targets. Although commitment and actions are at varying levels of maturity, the general momentum toward decarbonization is steady and improving. DEFINING THEMES Survey responses bring the following themes to light: This decade is being seen as the tipping point in decarbonizing real estate Investors and occupiers are making bold commitments at a fast pace, with most companies now setting ambitious net-zero goals for 2030 or even sooner.

targets More organizations now see this as a critical decade for real progress to be made. The pandemic has acted as a wake-up call for environmental and social responsibility, which will require real estate to make complex changes in what will be a critical shift for the industry. Companies are outpacing policymakers in their ambitions Leading occupiers and investors are taking their own initiatives and making changes primarily because they firmly believe it is the right thing to do for their stakeholders — employees, customers, investors, communities, the planet — rather than being regulated to do so. However, as part of greater collective responsibility a nd action on decarbonization, they want to see national and city governments take bolder steps to support them through appropriate incentives. Climate risk is now accepted as a financial risk The considerable no-cost and low-cost options available for decarbonization have game-changing potential for businesses through boosted efficiencies and the enhanced financial performance offered. At the same time, for investors, there is value in sustainability-focused strategies that create resilient real estate assets through green strategies, while, for occupiers, deepening commitments on sustainability will help drive more operationally efficient portfolios. The downside risks of inaction are now too strong and few companies believe that inaction is truly a viable option.

Retrofitting buildings is critical to meeting carbon reduction targets The weight of demand for sustainable real estate risks outstripping projected levels of supply. However, simply building a way out from under that pressure is not an option. Beyond the feasibility of the building program required, there are major concerns around the implications of embodied carbon in new construction. If the current supply of net-zero buildings is insufficient to meet projected demand, the retrofitting of existing stock is the dominant, critical solution to transitioning to a low-carbon economy. Data is the single biggest catalyst for green progress To achieve net-zero goals faster, companies now fully realize that enhanced technology and data capabilities, including smart buildings and energy monitoring, will be massive and essential enablers. At the same time, the requirement for stronger, more transparent reporting is considerable, highlighting that the digital gap in organizations’ resources will have to be significantly closed through both smarter, persuasive investment and initiatives such as greater collaboration on data sharing. ESG STEERAGE The survey results highlight that real estate investors globally are bringing an ESG (environmental, social, governance) mindset to the management of their holdings. A number of consistencies have emerged in the data for investors in North America, Europe and Asia Pacific. At least 60% in each region have either made climate commitments or expect to within the next 12 months; at least 80% in each region have a dedicated ESG leader or team; and at least 70% have or plan to have

(by 2025) a budget allocation to address energy and/or carbon reduction strategies. Some differences are seen in the drivers for action. North America appears to be more motivated by financial considerations and brand image, while Asia Pacific and Europe tend to bring a broader view to the table across financial, stakeholder, brand and regulatory considerations. Globally, there is consensus that sustainability is increasingly important to occupiers’ corporate strategies. There is support in all three regions for a strong partnership-led approach, including cities, investors and occupiers, and organizations in all three regions are equally likely to address carbon reduction in their corporate sustainability strategy. Occupiers are coordinating organization-wide action plans, but half still describe their organization’s approach as “developing”. In Europe, supporting employee health and well-being, reported by 53%, is considered to be the top driver of carbon emissions reductions, along with enhanced brand reputation (51%), while occupiers in North America (60%) and Asia Pacific (59%) are driven by the desire to meet society’s expectations. European occupiers are most likely to aspire to create places that are green, with occupiers in Asia Pacific most likely to prioritize location search for buildings that reduce carbon emissions. Technology is the top investment priority for occupiers, with North America leading the way in monitoring and benchmarking energy performance. ❚❚ The complete text of the JLL report, Decarbonizing the Built Environment, Ambitions, Commitments and Actions, can be found at www.jll.ca/en/trends-and-insights/ research/decarbonizing-the-built-environment.

WORLD GREEN BUILDING COUNCIL TACKLES EMBODIED CARBON The World Green Building Council (WorldGBC) has announced an update to the Net Zero Carbon Buildings Commitment, expanding its scope to recognize enhanced leadership action in tackling embodied carbon emissions from the building and construction sector. In addition, WorldGBC has published Advancing Net Zero Whole Life Carbon: Offsetting Residual Emissions from the Building and Construction Sector, providing guidance for how the sector should compensate for its total carbon impacts. “The update to the WorldGBC’s Net Zero Carbon Buildings Commitment elevates the ambition for the building and construction sector to go further and faster to decarbonize,” says Cristina Gamboa, Chief Executive Officer of WorldGBC. “It sets a target for compensating for emissions associated with buildings and construction, and the tangible social and environmental co-benefits of this approach creates a powerful catalyst towards achieving the Paris Agreement goals and the Sustainable Development Goals. Achieving our vision of sustainable buildings for everyone, everywhere means acting now to tackle upfront carbon, whilst planning with whole life carbon in mind.” In addition to the commitment requiring the signatories’ directly controlled building assets to account for all operational carbon emissions — released from the energy used to heat, light, cool and power them — by 2030, signatory businesses and organizations will also be required to: • Account for whole lifecycle impact of all new buildings and major renovations by mandating they are built to be highly efficient, powered by renewables, with maximum reductions in embodied carbon and compensation of all residual upfront emissions. • Track and report business activities that influence the indirect reduction of whole life carbon emissions. For more information about the Net Zero Buildings Commitment, see the website at www.worldgbc.org/thecommitment. Canadian Property Management | December 2021 17

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Modernizing payments for Canada’s commercial property industry Canadian property managers have a lot to gain from making payments faster, easier, and more transparent. In a post-pandemic economy, many Canadians are reducing their use of cash as a payment method and are relying instead on digital payments. In fact, a recent Interac survey revealed that two thirds of Canadians believe businesses that fail to adapt in order to allow digital payments will struggle. The demand for digital payment options from businesses will only increase and property managers will need to accommodate this shift in consumer behaviour. With every dollar counting more than ever before given the challenges faced by businesses during the pandemic, efficient ways of paying and managing finances in ways that improve cash flow is now paramount. Improvements to accounts payable, accounts receivable, and methods of payment cannot be overlooked in this recovery-focused environment. Pre-pandemic, day-to-day financial management

often involved processes that were paper-based, cheque-driven, and manual. These are typically slower and less efficient ways of working and require businesses to spend valuable resources processing and reconciling payments. The pandemic, alongside changing consumer preferences, has naturally reinforced the need for digitization and moved businesses to lessen their reliance on manual processes to boost overall operational efficiency. Eighty-three per cent of finance professionals surveyed by Interac affirm this notion, saying that applying digital transformation to their function is now a priority . These needs are fuelling demand for innovative business payment solutions, such as Interac e-Transfer® for Business. As an enhancement of the existing Interac e-Transfer service, new features were built to meet the needs of Canadian businesses through higher transaction limits, fast money transfers with instant confirmation and rich remittance data, allowing businesses to reconcile

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transactions with less paperwork. In other words, it can help streamline accounting processes and accelerate a paperless office strategy. For a property manager or landlord, this could mean being able to accept or request payments directly from tenants with immediate access to funds, paying contractors and invoices for work specific to the property with greater ease and retaining payment confirmations. Further, property managers and landlords could send a reminder for rent payment via request-to-pay capability and easily reimburse tenants for costs incurred on behalf of the property manager or for payment returns. Receiving payments instantly in this way can also be a game changer if a manager is largely reliant on cheques, eliminating any uncertainty around when one will arrive in the mail or whether it will clear. With Interac e-Transfer for Business, property managers can receive payment instantly, reducing the number

of cheques and cash they receive, eliminating the risk of late payments, and gain easy visibility into what the payments are for using structured data. Eight in 10 (80 per cent) business decision makers surveyed agree that moving from traditional payment options to digital ones will be essential to post-pandemic growth . Assessing how a business can revamp its payment processes and financial management to become more efficient and effective with tools like Interac e-Transfer for Business can help to equip the commercial property industry as it embarks upon growth and recovery plans. Those interested in using the solution are invited to learn more by visiting Interac.ca/business, In The Know and to discuss the offering with their financial institution. Interac and Interac e-Transfer are registered trademarks of Interac Corp..

(1)Interac commissioned Hill+Knowlton Strategies to conduct a national survey of adult Canadians. A total of 1,000 adult residents of Canada were surveyed online in April 2021. The sample was randomly drawn from a panel of potential survey respondents. An associated margin of error for a probability-based sample of this size would be ±2.5%, 19 times out of 20. (2)Interac commissioned Phase 5 Consulting to conduct an online survey of 152 financial decision-makers in Canadian midsized businesses with 100-499 employees. Participants were recruited via an online research panel. Fieldwork was conducted in English and French in May 2021. (3)Interac participated in RFi Group’s online commercial banking and payments syndicated survey of decision makers at 363 commercial enterprises with revenues between $10M and $100M. Fieldwork was conducted in English and French in June 2021. Note: Finance transformation describes any strategic initiative meant to create new opportunities for the finance function to add value to the business and align with overall company strategy.

materials

MASS TIMBER MOMENTUM Wood Construction Stands Tall By Cheryl Mah NORTH AMERICA IS experiencing a resurgence in the use of wood in construction, with particular interest in building taller with mass timber. “Obviously there’s a mass timber wave — some might even call it a tsunami — that’s rolling across, not just North America, but Europe as well, right now. But is this the flavour of the day or something that has staying power?” Paul Fast, Founder of the structural engineering firm, Fast + Epp, mused during an Architectural Institute of British Columbia (AIBC) seminar earlier this year. He highlighted some milestone wood projects over the past several decades, and discussed several factors that will influence mass timber use moving forward. Historically, most of the older buildings in Vancouver’s Gastown neighbourhood have wood components. Many old buildings feature timber trusses and timber decking on the roof. From there, Fast looked at the influence of engineered wood products such as glue laminated (glulam) wood, TJI (engineered floor and roof joist) and laminated veneer lumber. “When glulam hit, all of a sudden we could span longer distances…beams up to 60-100 feet long. It changed everything. It was revolutionary,” said Fast, citing the first Safeway stores in Vancouver as good examples of glulam use.

stresses that wood is a viable material for tall and large buildings, with both environmental and economic benefits, and encourages architects, engineers and designers to push the envelope of conventional thinking. “I think we can say with quiet pride here in B.C. that a lot of the interest in mass timber was generated not in small part to some of the work by B.C. architects,” Fast maintained. Since then, many tall wood buildings have been erected, including the Wood Innovations and Design Centre in Prince George, and Brock Commons Tallwood House at University of British Columbia. Fast also discussed some current projects, including parkades in Switzerland and Germany, which were constructed entirely with glulam post-andbeam framing and CLT floor panels. “So it’s not beyond the realm of possibility to construct parking structures with mass timber,” he noted. Walmart’s new home office campus (18 buildings), under development in Bentonville, Arkansas, will use 1.1 million cubic feet of CLT, demonstrating the company’s corporate commitment to green building design. Fast reported that the massive project also spurred Walmart to invest in B.C.-based Structurlam and the associated opening of a CLT plant in Arkansas to supply the material. There are nearly 600 projects in design using mass timber in the United States and he foresees there will be more.

B.C. INFLUENCE The widely publicized study, The Case for Tall Wood Buildings, by architect Michael Green and Eric Karsh of Equilibrium Consulting was another major step forward in popularizing mass timber construction. It

FIVE DRIVING FACTORS Looking to the future, Fast touched on five factors that will influence mass timber construction: manufacturing capacity; technological change; political culture; nature; and cost.

20 December 2021 | Canadian Property Management

“Manufacturing capacity is in good shape to meet demand that’s going to come in the next several years,” he said, adding that code changes will also have a positive impact. “We will see more code changes that will make it readily acceptable to use mass timber in taller, larger buildings.” Technological advancements for improving fire resistance for wood buildings could also be key. “Right now we have to rely on charring to achieve two-to-three-hour fire ratings for going tall with mass timber. If, in fact, we find other ways to treat the wood so we don’t have to increase the volume of wood that we use to achieve those types of fire ratings that will also improve prospects for mass timber use in the future,” Fast predicted. Carbon is the big question mark. Will there be mandated carbon levels by governments in the future? Positive advancement in carbon capture from concrete research could also have an impact on future prospects for mass timber. “In B.C., there’s a drive in process to see more implementation of mass timber. That’s a mandate of the current government. There’s an advisory board in place to advise them on that direction,” Fast advised. Thus far, he suggests B.C.’s Wood First Initiative has “had very little bite particularly in design-build projects — no enforcement of that mandate.” However, with the new mass timber advisory council, wood should be getting more serious consideration in every public building project. ❚❚ Cheryl Mah is based in Vancouver, where she is the Managing Editor of Design Quarterly and Construction Business.

‘UPGRADE THE EXISTING GLASS IN YOUR BUILDING’

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‘TIS THE SEASON TO PROTECT YOUR ROOF WINTER IS NEVER KIND TO ROOFING SYSTEMS. NO MATTER THE AGE, MATERIALS, OR QUALITY OF INITIAL CONSTRUCTION, FEW BUILDING TOPS MAKE IT OUT OF CANADA’S COLD SEASONS WITHOUT A SCRATCH. NEGLECTING THIS FACT CAN LEAVE PROPERTY MANAGERS VULNERABLE TO SAFETY ISSUES AND COSTLY REPAIRS, BUT THE GOOD NEWS IS THESE RISKS CAN BE OFFSET BY UPFRONT CARE AND MAINTENANCE. “The winter is going to beat up your roof, and there's no way to avoid that,” says Tyler Mills, Service Manager with Flynn Group of Companies. “What you can do is catch and prevent roof deficiencies before things turn ugly.” Mills says not a year goes by without Flynn hearing at least a few stories about building roofs that collapse with little warning because nothing was done to protect them against winter conditions, and they were taken for granted. “That has a way of making front page news, not to mention opening property managers up to expensive repairs and injury liabilities,” he adds. Safeguarding a roof over the winter begins with recognizing the risks. They include: Snow and ice loading: Canadian winters can leave roofs buried under heavy snow and ice. When left to pile up, this extra weight can significantly strain a roofing system and cause catastrophic component failures. “As a property manager or building owner, it's critical to understand what loads your roof can tolerate, especially now that we’re experiencing more extreme weather,” says Mills. “The design

of a building in the eighties may not be appropriate for what's happening around us now, so you can’t take that resiliency for granted.” Fortunately, roof snow removal is relatively straightforward, and a service offered by many roofing specialists. Freeze/thaw cycles: Some Canadian regions are susceptible to frequent freeze-thaw cycles. For example, at his home in Kelowna, BC, Mills says conditions can swing rapidly between cold and warm up to 30 times over an average winter. This results in large volumes of snow that accumulate, melt, and freeze numerous times over a roof and trigger any number of problems. “All that expanding and contracting is hard on your roofing components. Also, you’re not always getting proper drainage because you have ice or snow all over the roof blocking the drains.” He explains. “If that water freezes back into ice, it’s a lot heavier than snow and it becomes a problem.” Safety hazards: Rooftop gardens and social spaces are nice amenities for building occupants. Still, adding ice and snow to the environment introduces opportunities for injuries and roofing system damage.

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“The winter is going to beat up your roof, and there's no way to avoid that. What you can do is catch and prevent roof deﬁciencies before things turn ugly.”

Unkind repair conditions: Winter is not an ideal time to be making repairs to a roof. Property teams that leave roofing upgrades and repairs to the colder months may face steeper prices and more logistical challenges, not to mention higher safety risks for anyone who takes the job. Here again, it’s wise to trust roofing professionals who are trained for adverse job conditions. Getting ahead of winter Canada’s cold seasons take their toll on roofs. Side-stepping the risks associated with excess snow and extreme temperatures requires seasonal inspections and preventive maintenance. “It’s a best practice to conduct a roof inspection and required maintenance at least once a year, but that’s not being done in a lot of cases,” says Mills. “Property teams are very busy, so roof maintenance can sometimes slip under their radar. Also, there’s a tendency to believe that a new roof can be left alone for several years with no maintenance, but the winter is hard on every roof, no matter how long they’ve been up there.”

True, it can be diﬀicult for owners of new (or relatively new) roofs to justify spending more money on a maintenance program. Also true, however, is that regular maintenance goes a long way towards protecting one’s investment, and most warranty programs require inspections at least twice a year. In short: it pays to take winter seriously. That means taking stock of the roof 's condition and acting quickly to required upgrades or repairs. Here again, it is beneficial to partner with a roofing specialist who knows what to look for and can deliver a custom preventive maintenance program that will stand up to Canadian winters. “No two maintenance programs are going to be alike,” adds Mills. “You need a qualiﬁed person up there who knows what they’re doing and can tell you exactly what kind of repairs are needed. They’ll also have the specialized tools and processes to get the work done.”

Conne ct wi t h Fl y nn G roup of Com pa ni e s to d ay. Visit www.FlynnCompanies.com or call 1-877-856-8566.

STAR PERFORMANCE GRESB Validates Commercial Real Estate’s ESG Credentials

INTENSIFYING SCRUTINY of com m e r c i a l r e a l e s t a t e’s E S G (environmental, social, governance) credentials can be seen in the 58% increase in Canadian uptake of the GRESB assessment and benchmark since 2019. This year, 41 private and listed portfolios undertook the rigorous reporting exercise — which tracks ESG intent, implementation and outcomes in 14 different categories and through more than 60 indicators — collectively pushing Canada’s score above the 73-point global average and once again surpassing the average collective score of their peers in the United States. That’s particularly notable given the influx of 15 newcomers since prepandemic days. Dan Winters, GRESB Head for the Americas, who summarized the 2021 results during an online presentation earlier this fall, emphasized that scores typically improve as participants gain familiarity with the program, use it to identify where work is needed and build on what they’ve learned. 24 December 2021 | Canadian Property Management

“It is a framework for best practices. Organizations often start in the teens [for scores]. What’s bad is if they stay in the teens. What’s good is if those scores climb to the 30s and then the 50s and then the 60s,” he said. “All of the leaders in the 5-star range started off below 60, without a doubt.” Heartening for GRESB administrators, the average score has recovered from last year’s downward dip following a realignment of the scoring system to place greater emphasis on performance outcomes such as energy-use and water-use intensity. Further adjustments are promised to respond to emerging priorities and/or harness data collection advancements to delve deeper and reach farther. For example, following a three-year pilot module, metrics related to climate change resilience have been refined and integrated into the assessment “The benchmark will continue to evolve,” Winters advised. “It’s not moving the goal posts as much as it’s making progress and having the leaders pull the market along with them.”

CANADIAN PRESENCE This year, scores ranged from a high of 99.6 (out of 100) to a low of 8.8 across 1,520 participating entities. The top 20% — denoted with a 5-star rating — achieved an average score of 90.65. At the 1-star level, the average score was 47.9, while the bottom quintile’s top score was 61.8. Canadian participants account for less than 3% of the entire GRESB database, but make up nearly 5% of the 5-star cohort for 2021. That includes BentallGreenOak, Dream Unlimited Corp., GWL Realty Advisors and QuadReal Property Group each earning 5-star status for two separate property funds, along with single 5-star results for Cadillac Fairview Corporation, Crown Realty Partners, Ivanhoé Cambridge, KingSett Capital, LaSalle Investment Management, Menkes and RioCan REIT. Six Canadian entities placed in the 4-star level, which posted an average score of 82.9. That includes two of Manulife Investment Management’s property funds, as well as Alber ta Investment Management Corporation (AIMCo), Allied Properties

metrics REIT, First Capital REIT and Triovest Realty Advisors. Winters additionally revealed that three more Canadian entities were within one point of cracking the 4-star quintile, meaning that they achieved scores no lower than 78.4. Globally, GRESB, which reorganized into a benefit corporation (B-corp) last year, now boasts more than 140 subscribing institutional investor members with full access to the data, and has registered a 25% gain in reporting entities in each of the last two years. As of 2021, the GRESB database covers more than 117,000 assets spread across 66 countries and collectively valued at USD $5.7 trillion. CONFLUENCE OF FORCES Michael Brooks, Chief Executive Officer of REALPAC, GRESB’s partner in Canada, links the circular momentum of GRESB’s investor and reporting bases to a confluence of financial, social and regulatory forces, environmental cataclysms and emerging priorities for equity, diversity and well-being within corporate culture. Beyond the already discernible synergies between sustainable performance and robust returns, institutional investors increasingly have commitments to achieve GHG-reduction targets and/or align with the UN sustainable development goals, and they require standardized, verifiable evidence to support that. Lenders are increasingly focused on physical and transitional climate risks and, in the European Union, they’re grappling with the Sustainable Finance Disclosure Regulation (SFDR). It’s believed to underlie much of the recent new GRESB participation in that region — where 784 real estate entities now bring 45,236 assets collectively valued at USD $1.35 trillion to the database — and Brooks predicts similar regulatory directives will be invoked in North America. “ESG and sustainability drivers continue to grow, converge and accelerate faster than ever,” he observed. “With so much going on, it’s so important to have a p r og r a m l i ke GR E SB whe r e commercial real estate owners and participants can work on all of their ESG activities in a structured framework, and see their progress annually and see how they compare to their peers. It’s a good competition and it’s a benchmark.” ❚❚ For more information, see the website at www.gresb.com.

GRESB KPI ANCHORS AMBITIOUS TARGET Ivanhoé Cambridge has embraced innovative financing to advance its quest for a carbonneutral commercial real estate portfolio by 2040. Under the conditions of a CAD $8.5-billion agreement announced this fall, the real estate subsidiary of Caisse de dépôt et placement du Québec (CDPQ) has converted its loan program with 11 North American and European banks to a new structure, which indexes financing costs to “extra-financial” ESG (environmental, social, governance) performance to be measured with three key performance indicators (KPIs). “We are convinced that sustainable investments are profitable over the long term and we are committed to combining our environmental performance with the continuous improvement of our financing terms,” says Stéphane Villemain, Vice President, Corporate Social Responsibility, with Ivanhoé Cambridge. The three KPIs include: low-carbon investments; the portfolio’s carbon intensity; and the company’s score in the GRESB assessment and global benchmark for ESG performance of commercial real estate portfolios. Slippage in any of those elements will flow through to financing considerations. Speaking in conjunction with the online presentation of the 2021 Canadian GRESB results earlier this fall, Rob Simpson, Director of Sustainability at Ivanhoé Cambridge, acknowledged it’s an uncharted path, but one that provides more consistent financing for GHG-reducing initiatives than most commercial real estate operators have enjoyed to now. Similarly, he framed GRESB’s ongoing adjustment of program parameters as both a challenge and a prompt. “There’s a risk in tying some of your financial metrics to something that’s going to increasingly get more difficult, but the converse of that is, what we’re doing needs bold thinking and it needs sort of fundamental transformational change to address these things,” Simpson maintained. “As GRESB evolves away from management and policy-driven outcomes to performance-driven outcomes, we’re going to see more emphasis put on how operational assets actually perform — whether it’s through carbon emissions, energy, climate change preparedness — and all those key things that are fundamental to where we need to go.” In the interim to 2040, Ivanhoé Cambridge has pledged to reduce the carbon intensity of its portfolio by 35% relative to 2017 levels by 2025, and to ensure all new development projects will be net zero from 2025 onward. It has also set a demanding bar for maintaining its GRESB score. This year the company earned a 5-star ranking, with a score of 91 out of 100, for its Canadian portfolio, and a 4-star ranking, with a score of 86, for its global portfolio. Simpson affirmed that he and his team are excited about the goals and are relishing the opportunities ahead. “The financing piece obviously is a critical component. It’s hopefully a game-changer in how we think about some of these things,” he noted. “We’ve tried to map it out as well as we can, and really think through the variables, but there’s also an understanding that some of this is unknown. There’s a leap of faith here. But it’s great. It’s really motivating to have these massive sorts of initiatives to be working on.”

MONTREAL AT CENTRE OF SUSTAINABILITY DISCLOSURE Montreal will serve as one of two host cities for the newly forged International Sustainability Standards Board (ISSB). The initiative, announced this fall at the UN Climate Change Conference in Glasgow, Scotland, is aligned with International Financial Reporting Standards (IFRS), and will develop global disclosure standards to provide investors and other players in capital markets with a consistent gauge of companies’ exposure to sustainability-related risks and opportunities. The new ISSB will be jointly based in Montreal and Frankfurt, Germany, and similarly represents a consolidation of two leading investor-focused sustainability disclosure organizations: the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF). “This will provide people around the world with access to reliable information and strengthen accountability for companies and investors, in order to ensure an efficient global transition to a net-zero economy,” says Chrystia Freeland, Canada’s Deputy Prime Minister and Minister of Finance. “We are thrilled Canada will host one of the central offices for the ISSB and grateful to be recognized for our country’s diverse and strong talent, financial sector expertise and climate leadership.” More than 140 jurisdictions globally mandate IFRS adherence for financial reporting.

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DECARBONIZING BUILDINGS THROUGH INNOVATION Executive Mat Service's grounded approach to Scope 3 emissions

anada’s race to reduce carbon emissions is gaining speed. And while the focus of the Federal Government’s strategies has largely centered on fuel-combustion vehicles and environmental systems, there is a renewed focus on reducing a company’s supply chain carbon footprint (aka “Scope 3). "Fresh off the 2021 United Nations Climate Change Conference, the Canadian government is taking a closer interest in reducing Scope 3 emissions, and a lot of that has to do with finding ways to decarbonize buildings," says Jeff Grabinsky, Vice President of Executive Mat Service (EMS). EMS has made Scope 3 emission reductions its mission since the mat manufacturing and cleaning company opened its Calgary shop in 1996. Over the years since, it has pioneered several mat production and washing technologies that help property stakeholders eliminate CO2 emissions from their environment. These innovations have helped property owners and managers make good on their ESG (environmental, social, and governance) mandates, and create healthier environments and bottom lines. "Sustainability is absolutely part of our DNA, and it's something we champion through all of our products, services, and client interactions," adds Grabinsky. "It's not just a bulletpoint we put on our website for the sake of getting business; it's the reason we started doing business in the first place." ENTER: THE ONE BILLION POUND C02 CHALLENGE It’s one thing to cite sustainability in a mission statement; it’s another to follow through. For its part, EMS has championed a host of eco-forward initiatives that are giving multi-family, facility, and commercial property owners the tools to reduce their environmental footprint.

Among these initiatives is the Billion Pound CO 2 Challenge (aka, the "Billion Pound Challenge"), an initiative that helps the property management community "identify and track meaningful reductions in carbon intensity across the supply chain" to eliminate 1,000,000,000 pounds of C02 emissions annually. Launched in 2019, the program gives green-tech creators a platform through which they can verify that their technologies are effective in reducing Scope 3 emissions. After, project owners that use these vetted technologies can have their CO2 reductions tracked via the Billion Pound Challenge online ledger, earning both industry recognition and additional incentives. “Kim and I felt there was a gap in the Scope 3 objective in terms of validating green technologies and having a way to make those claims concrete in the field,” says Grabinsky, who played a large role in launching the initiative alongside EMS founder, Kim Caron. EMS has had several technologies vetted through the platform. They include: • EMS’s decarbonized floor matting service. • The CDF mat washing machine process, a patented technology created by Kim Caron which uses 95 per cent less water than industry standards. • Eco Growth, a technology that can be used to collect a client’s food and paper waste and convert it into biomass brisket. "Each of these innovations has been instrumental in helping our clients reduce their Scope 3 emissions and, in so doing, get their name up on the Billion Pound Challenge ledger,” adds Grabinsky.

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Description

Annual Project

1 Billion Reduction CO2 Remaining

City Building