Progress in ESG upgrades still slow despite tighter regulation

Progress in upgrading buildings to make them sustainable is still too slow despite tighter regulations, experts agreed at Real Asset Media’s How to Maximise Your ESG Impact briefing, which took place recently at Provada in Amsterdam.

Anne de Jong, CEO, Merin

“The Netherlands has intervened decisively to make a C label a requirement and there is a strong business case to do so,” said Rutger Schnuur, chief investment officer, ParkBee. “Yet 50% of buildings are still not certified.”

In the The Energy Agreement for Sustainable Growth, concluded by the Dutch government with employers, trade unions, environmental organisations and others, a compulsory energy label was introduced. From 1 January 2023 office buildings are required to have at least an energy label C or higher. If an office building does not comply with this requirement it can no longer be used as an office.

“We focus on A, so I cannot comprehend why people don’t even attempt to reach C,” said Anne de Jong, CEO, Merin. “But it’s only a matter of time. In five years it will just be impossible to lease an unsustainable building.”

If the stick of regulations does not do the trick, the carrots of peer pressure and tenant demand might work.

“I hope and think more people will realise there are good commercial reasons for implementing ESG,” said de Jong. “Young people, who are the occupiers of tomorrow, will demand it. We’re already seeing progress because now everyone, even smaller companies, ask about ESG issues before they sign the deal, while ten years ago they really didn’t want to know.”

Tenant engagement is key in order to keep buildings sustainable.

Joost Leendertse, Founder & CEO, VerusSol

“We believe in working together with partners and occupiers and having constant communication,” said de Jong. “To achieve energy use reduction, you have to start with the low-hanging fruit, like using the stairs instead of the lift, and work  your way up from there”.

Office buildings may be first in line, but the logistics sector is also fast adapting to the changing landscape.

“There is regulatory pressure and listed companies are paying more attention, but also tenants are getting more advanced and involved,” said Joost Leendertse, founder and CEO, VerusSol. “We’re making logistics buildings energy neutral, what is produced gets used but in the sector in general there is increasing use of heat pumps and solar panels and electric cars.”

Over 300 companies in 29 countries have now joined Amazon’s Climate Pledge, a commitment to meet the Paris agreement early and to measure and report greenhouse gas emissions on a regular basis.

“The UK is a few steps ahead of Europe, as the McDonald’s initiative shows,” said Leendertse. In an industry first, the fast food chain has just opened its first Net Zero Carbon restaurant in the UK, with net zero emissions in construction and every day operation.