Understanding the buildings in our portfolios is first step to sustainability

Collecting data and engaging with occupiers and other stakeholders will facilitate better-informed green investment strategies, says Eleanor Jukes.

Sustainability progress across diverse, cross-sector, real estate portfolios can only be achieved by taking a granular, asset-by-asset, approach. This is widely accepted.

The £1.7bn Schroders Capital UK Real Estate Fund manages a diverse portfolio of assets with differing ages, sizes, EPC accreditations, and often listed status. It has been able to secure green building certifications across 99% of its office assets via proactive and consistent asset management.

By taking the time to dig into each of our buildings, and to understand their individual issues, our asset managers are able to recommend tailor-made investment and retrofit strategies that support sustainability performance and better align our buildings with investors’ ambitions and tenant requirements.

Like many managers, we’ve noted that both investors and occupiers want to see proof of sustainability progress before engaging with an asset, and therefore we’re keen to target key accreditations as part of our investment decision-making process.

While this has long been the case in the prime office market, stakeholders in retail and industrial assets have increasingly high sustainability standards. For instance, at the Hartlebury Trading Estate in Worcestershire, a large industrial park, we are delivering Fitwel accreditation, while a new mixed-use unit, Hartlebury 45, has been designed to achieve net zero carbon in operation.

Unreliable data collection

However, like all financial strategies, these decisions need accurate and consistent sustainability data. In the past, the process of tracking this sustainability data relied upon the manual inputting of raw data, which was time-consuming and often inaccurate. Asset managers had an incomplete, and often unreliable, data set to work from.

To address this, we’re using a multi-layered strategy to increase our data awareness across the portfolio, by rolling out bespoke proptech solutions across our assets and increasing our occupier engagement platforms. Working with Deepki, a French-based proptech firm, all of the Fund’s property assets have been placed into Deepki Ready: a centralised, collaborative ESG platform which provides asset and property managers with regular oversight of utilities and other sustainability data.

Designed to reduce human error on the ground, data input is automated as much as possible – allowing us to compare and assess asset-level sustainability performance, while providing portfolio-level analytics to help shape sustainability strategies. At a unit level, users can now see evidence of data anomalies identified and can monitor progress substantially and more frequently. From a reporting perspective, this data feeds into more accurate investor and accreditation reports.

The Fund has participated in GRESB (Global Real Estate Sustainability Benchmark) since 2012 and in the 2023 assessment achieved a 4-star rating, supported by a 100% score for the Management aspect and 98% for its EPC coverage. It is also 100% compliant with the UK’s MEES (Minimum Energy Efficiency Standards) legislation.

Occupier-engagement app

We’re also in the process of rolling out a mobile occupier-engagement app, S:Connect, across the portfolio. Enabled by CBRE, the app provides occupiers with immediate access to building amenity status, information on onsite events, and news on building repairs. It also provides an opportunity for occupiers to report any issues to management, and provide us with their latest feedback.

Good data collection and insight, however, cannot be conducted remotely or through technology alone. We’re increasingly engaging with occupiers, and other relevant stakeholders, to receive feedback and deliver meaningful changes borne out of a two-way dialogue with occupiers, FM teams, and contractors. This is part of a more collaborative approach to managing a portfolio of diverse assets and even more wide-ranging occupier needs and aspirations. n

Eleanor Jukes is deputy fund manager at Schroders Capital