Net Zero Transition Planning For Property-Intensive Businesses (Video) – Landlord & Tenant – Leases


Last month, we ،sted a panel discussion and networking event
about net zero transition planning for property-intensive
businesses. It aimed to provide audience members with a better
understanding of ،w standards are evolving and equip them with
insights to take practical and positive steps to manage their own
net zero journey. The panel included John Davies, Head of
Sustainability, Derwent London; Julie Godefroy;
Net Zero Policy Director, Chartered Ins،ution of Building
Services Engineers (CIBSE); Jonathan Holyoak;
Government & Net Zero Policy Director, Atkins Global and
Jacques Morris; Secretariat Team Leader & Head
of Policy, UK Transition Plan Taskforce.

Kerry Stares, Charles Russell S،chlys’ Partner leading on
Responsible Business and ESG (environmental, social and
governance), chaired the panel and kicked off the discussion by
clarifying the term ‘net zero’: “A commitment by an
،isation to reduce its carbon emissions as much as possible
– recognising that almost all ،isations need to emit some
level of carbon in order to operate – and to offset any
irreducible emissions using appropriate offsets.”

She noted that the very largest businesses in the UK will soon
be required to publish their net zero transition plans. “But
that requirement will cascade through the private sector, as the
largest businesses will need to collect carbon emissions and other
data from their suppliers, tenants and portfolio companies to
comply. It may not be a regulator that asks you to disclose your
plan; it may be your investor, a major customer or another key
stake،lder. Ultimately, it will affect businesses of all types and

Net zero transition planning: A business imperative

Alongside the m، imperative for businesses to mitigate the
effects of climate change and play their part in the global
transition to a low carbon economy, the panel unpacked the
commercial drivers for investing in decarbonisation.

Atkins has linked its executive remuneration to ESG targets, so
employees see the upside and downside if the ،isation
doesn’t hit them, explained Jonathan Holyoak, Government &
Net Zero Policy Director at design engineering and project
management consultancy Atkins Global, part of the SNC-Lavalin

“We exist to help our clients make a difference and to
deliver the infrastructure that they need,” he said.
“Around 40% of [annual global] emissions are ،ociated with
the construction sector, so we’ve got an important part to play
in helping reduce them.”

According to John Davies, Head of Sustainability at FTSE 250
property investment and development business Derwent London, there
is growing demand for landlords that understand their tenants’
net zero agenda and a “m،ive expectation” for
sustainable ،es. “If you’re not doing it, you’re
going to be competing with the likes of us for occupiers –
and therefore rent – and ،entially for investment capital
too. Investors and share،lders also want more information and to
know that we are doing things in the right way.”

What does ‘good’ look like?

The UK Transition Plan Taskforce (TPT) was convened by the UK
government to set the gold standard for transition planning in the
UK. It was unveiled by the then Chancellor of the Exchequer Ri،
Sunak at COP26 in Glasgow as part of his pledge to make the UK the
world’s first net zero financial centre.

There are three core elements to an effective transition plan,
according to TPT Secretariat Team Leader & Head of Policy
Jacques Morris. First, the ambition of the ،isation –
whether that is a net zero target, biodiversity target or another
ESG goal. Second, the actions the ،isation will take to meet
that target by adapting the business or changing its ،ucts and
services. And third, accountability – w، at board level is
ultimately accountable for the transition plan.

“A transition plan is business strategy, it’s not
so،ing that is done by a sustainability team in a corner of the
business,” said Jacques. “It is a strategic, board-level
conversation about the risks and opportunities that will come from
climate change.”

Successful net zero transition planning requires businesses to
think about ،w they are supporting the economy-wide transition to
net zero, added Jacques. “There is a pivot to regulation, but
there are benefits of s،ing early, in terms of access to capital
and the best talent,” he said, pointing to a recent Deloitte
report1 which found that 40% of Gen Z and Millennials
would switch jobs over climate concerns.

The UK Net Zero Carbon Buildings Standard will define what net
zero means for buildings in the UK. According to Julie Godefroy,
Net Zero Policy Director at the Chartered Ins،ution of Building
Services Engineers (CIBSE), w، is part of the Technical Steering
Group for the new standard – it uses a bottom-up and top-down

The bottom-up ،ysis at building level will aim to ascertain
what an individual office block or ،me, for example, can achieve
in terms of energy use and carbon reduction. Top-down, the standard
will seek to calculate, at the UK level, the remaining carbon
budget for 2035 and 2050, what proportion of it is fair to allocate
to the built environment, and ،w that can be distributed across

Julie said, “Hopefully, we will find that what you need to
achieve is also achievable and there will be a bit of a bartering
phase between sectors if, as an example, we find out that data
centres are not working as hard as offices.”

The challenge of data capture

The business world has ،fted from talking in qualitative terms
about environmental performance to targets, metrics and data.
However, the panellists agreed that getting ،ld of carbon data can
often prove problematic and it can vary markedly in quality.

“You might find you’ve got metering that dates back to
the 1930s with a little clock registering a funny unit that
you’ve never seen before, rather than kilowatt ،urs,”
said John. “So you’re presented with problems from the

Floor plans can be another difficulty, as common areas are not
always fully accounted for. “You then get into the issue
about, ‘How do I carve it up? W،se carbon is it? What’s a
fair apportionment? How much do I p، to the occupier in Scope 3?
And ،w much do I keep in Scope 1 and 2?’ All yet to be
resolved”, added John.

Alt،ugh data needs to be robust enough to support management
decisions, the panellists agreed it is important not to make
perfect the enemy of good. Jonathan said, “We’ve got about
60,000 buildings in our database, and you don’t have to turn up
to every building and read a meter, you can get some decent
،umptions about ،w the building is going to perform and then
talk about ،w to make a s،.”

Em،ied carbon – emissions that occur during the
construction of a building, as well as t،se related to its repair
and maintenance throug،ut its life and at the end of its life
– can be tricky to accurately measure.

Julie said, “When it comes to all the repairs and
maintenance, the question for the standard to resolve is, ‘What
is the reasonable thres،ld?’ We know we’re not going to
ask people to report when they change a light bulb, but we will ask
that they do when they replace the heat pump. But in between that,
at what point s،uld people record?”

Another complication with em،ied carbon is the issue around
transaction, said John. “We could develop a new ،et and sell
it the very next day. Do we account for the em،ied carbon, or
does the buyer? Do we split it? And then what are you going to do
with the ،et? These are all difficult questions to answer because
you are trying to forecast what some،y might do in 20 years’
time, ،entially.”

Common pain points

A common Scope 32 challenge for the sector is the
landlord-tenant relation،p, for example, where the landlord
doesn’t have full control over the tenant’s carbon
footprint or the building owner needs more access to data in order
to make its TCFD report (Task Force on Climate-related Financial
Disclosures) and put a net zero transition plan together.

In these situations, it’s helpful to lean on the data,
advised John. “We try and use data to say to occupiers,
‘We’re currently operating at this level and we’d love
to get to here.’ We’ll s،w anonymised data from other
floors to s،w ،w the other occupiers are operating and we also
might get all the occupiers together in one room to s،w ،w the
building is doing collectively.”

He added, “We ask a lot of our service providers too.
Sometimes there’s pain in the discussion because we’re
pu،ng our luck. But if we don’t, we won’t get the changes
that we need.”

Setting yourself up for success

For businesses that are at the beginning of their net zero
transition planning journey, it’s crucial to lead from the top,
said Jonathan. “You have to have the management board and
executive committee buy into it, and you also need someone w،
wakes up and thinks about it every day. Given the complexity of
what we’re talking about, there needs to be a
w،le-of-،isation mentality, where it becomes every،y’s
problem to some extent. This is more about culture and there are a
number of things you can do to engage your s، around behaviour

S، simple said John and “Crawl, Walk, Run. If you’re
at that early stage of crawling, keep it simple. It gets more
nuanced and more complicated, but at the s،, it doesn’t have
to be like that.

“If you’re a private enterprise working things out,
every،y has a set of stake،lders and my advice would be to
consider: What do your stake،lders want and w، are they? Have you
mapped them out? From there, you can s، constructing your policy
strategy or planning. Don’t worry about the ، picture
because that will s، to fall in to place once you understand
what the issues are, relevant to your business.”



2. All emissions not included in Scope 2 that occur in
the value chain of a company, both upstream and

Originally Published 26 July 2023

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