COP26: Why it’s good for landlords and occupiers to talk

All eyes have been on Glasgow this month, as the 26th United Nations Climate Change Conference (COP26) has taken place.
November 9, 2021
All eyes have been on Glasgow this month, as the 26th United Nations Climate Change Conference (COP26) has taken place.

The conference has cast an important spotlight on climate change and the impact we have on our planet, which has been met with both angst, excitement, controversy and, in some cases, indifference.

What we do know, as a collective, is that something has to change, and it needs to change now if we are to protect the planet for future generations.

How the built environment impacts climate change

The built environment has a significant role to play in the destructive effects that climate change is having on our planet.

Buildings and their construction accounts for some 36% of global energy use, and 39% of energy-related carbon emissions a year, according to the United Nations Environment Program.

These emissions are made up of a combination of two things:

  • ‘Operational’ carbon emissions which come from lighting, air-conditioning and heating and are embodied from the carbon emitted in the production and delivery of construction materials
  • The construction process itself, which accounts for approximately 25% of a building’s lifecycle emissions.
What is the UK doing about it?

The UK government recognises the need to prioritise energy efficiency and sustainable solutions in the development and maintenance of the built environment.

To limit the impact of the built environment on global warming and the catastrophic effects of climate change on our planet, the government has set an ambitious target enshrined in law, to reduce UK emissions by 78% by 2035 and net-zero by 2050.

It is already unlawful for businesses to lease a building with an EPC rating of ‘F’ or ‘G’ rating. From April 2023, the Government is also introducing a minimum EPC rating of ‘D’ and is consulting on a minimum EPC standard of ‘A’ or ‘B’ by 2030, which will affect the majority of real estate assets in the UK.

With this in mind, banks and financial institutions are already driving the agenda, with lending criteria on property assets already being linked with EPC rating and green leases .


Act now to reduce your carbon emissions

Landlords can help their tenants to reduce their carbon emissions by investing in the upgrading of their premises, as well as monitoring of energy usage through smart meters and making informed choices on energy supplier, as well as focusing on more environmentally sourced energy provision.

But when is the best time to do this? Many landlords and occupiers are waiting for their next lease event to entertain the idea. But this need not be necessary.

Both occupiers of rented premises, as well as the landlords letting them, can act now to improve the energy efficiency of their commercial premises – whether by upgrading the air-conditioning or boiler, installing LED lighting, or adding solar PV or EV charging points.

By having a conversation earlier rather than later, this could have mutual benefits for both sides.

Why now is the time to talk

The minimum EPC standard of D for 2023 is on the horizon, so talking to your landlord or tenant now, will help you to prepare and budget for any necessary changes.

Occupiers who focus on reducing their carbon emissions through improving their building’s efficiency, can create a more environmentally friendly building, save on energy bills and improve their ESG agenda, not to mention their chances of talent acquisition and retention.

Meanwhile, for landlords, acting now to improve energy efficiency can reduce their impact on the climate, allowing them to future proof their investments and potentially reduce lending costs.

Collaboration is key

Occupiers, landlords and developers have a fantastic opportunity to work together to reduce energy usage, increase energy efficiency and mitigate the impact of real estate decisions on the environment, ahead of UK emission target deadlines.

Rather than wait for your existing lease to expire, act now to begin the so that you can plan, budget for and implement changes ahead of time.

For more information about the energy efficiency obligations of your business’ real estate, whether you are an occupier, landlord or investor / developer, get in touch.

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