Progress on the decarbonisation of real estate portfolios is being held back by a lack of understanding and collaboration between property owners and occupiers, according to a new report, published yesterday, from the Urban Land Institute C Change programme.
Presenting the occupier’s perspective, the Occupiers and Owners: Faster and Further on the Pathway to Decarbonisation Together report reveals there are often “missed connections” between both parties where a lack of understanding on broader decarbonisation goals or an absence of common language is holding back progress.
“At the heart of progress on this topic is that owners and occupiers build a trusted long-term partnership that considers each other’s objectives, which requires each side to be open about their perspectives and the wider concerns faced by each stakeholder,” said Lisette van Doorn, CEO, ULI Europe. “The feedback we received from occupiers has been very encouraging in this respect, recognising the need for a more open and transparent partnership.”
With many occupiers often more focused on emissions from other aspects of their businesses, such as manufacturing or supply chains, the contribution that buildings make to the aggregate 37% global emissions from real estate can be underestimated.
If better alignment between owners and occupiers is not prioritised, it has the potential to increase total emissions from the built environment over the medium to long-term as real estate decisions are often medium to long-term commitments.
The report states that a fundamental questioning of many current working practices and structures is required, as is a deeper understanding from both sides on how decarbonisation is being approached by each party.
“At the start of the C Change programme two years ago, the issue of collaboration between occupiers and landlords in decarbonising buildings was identified as one of the key bottlenecks to progress,” said van Doorn. “This report provides an important roadmap to improve this situation, outlining many of the critical barriers and hindrances, and contributing important recommendations to improve the situation and accelerate progress.”
The new research is based on interviews with heads of real estate for multi-national organisations responsible for large occupational real estate portfolios and represents a wide range of industry sectors including banking and finance, education, engineering, law, logistics and distribution, media, manufacturing, retail, and technology.
Going forward, the report argues for more standardised practices including in the approach to due diligence for occupiers seeking space, and for ESG considerations to be included as standard in heads of terms with minimum requirements considered as “non-negotiable”, recognising that such changes will require education and industry wide commitment.