10 February 2021
The Paris Agreement, the international treaty on climate change signed by 196 parties in December 2015, does not lack ambition with its goal ‘to work together towards a sustainable built environment with zero CO2 emissions by 2050.’ The question is: how do we put it into practice? Bouwinvest has committed to ensuring that its property portfolio meets the objectives of the Paris Climate Agreement by 2045 through its endorsement of the ‘Paris Proof’ approach of the Dutch Green Building Council (DGBC). The company has now set out its strategic vision in a position paper which explains the need to move towards a sustainable environment, what this entails and, most importantly, how to get there.
Bouwinvest is one of 30 market players in the Netherlands who have joined the DGBC’s Paris Proof Commitment and are now making an effort to significantly reduce the energy consumption of their buildings and consequently their CO2 emissions. Micha Reusen, Head of Sustainability and Innovation at Bouwinvest, and Bas Jochims, Director of Dutch Office & Hotel Investments, explain how the DGBC’s campaign has inspired the company to outline its own strategic vision for a sustainable real estate portfolio and draw up a plan on how it aims to make all its assets Paris Proof.
Sustainability was already high on Bouwinvest’s agenda before we joined the ‘Paris Proof’ Commitment and adopted the Dutch Green Building Council’s approach. What is the added value of endorsing the DGBC’s programme?
Reusen: “We committed to the principles outlined in the Paris Agreement some time ago. After reviewing our portfolio, our stakeholders and the social contribution we wanted to make, we agreed on 2045 as our deadline for making our portfolio carbon neutral - five years earlier than the target set out in the Paris Agreement. This happens to be in line with DGBC's own ambition to realise the Paris climate goals more quickly. An important advantage of adopting DGBC's methodology is that it is based on actual energy consumption, not the theoretical consumption levels dictated by official energy labels. DGBC is also developing standards for Paris Proof buildings, which will give us a clear goal to work towards by 2045.
Another advantage of our 2045 deadline is that we can create our own timetable, thereby reducing the risk of having to comply with interim measures or regulations that the government may impose further down the line. By making the statement publicly, we are showing how important this goal is for us and how seriously we are taking it.”
Jochims: “The expertise of the Dutch Green Building Council and the Paris Proof community is helping us to connect our long-term goals with short-term actions. As investors, it is important for us to make the right investment decision at the right time and our plan to draw up so-called roadmaps has been very helpful in that regard. These roadmaps provide guidelines, for example on how we can use existing maintenance schedules that fall under our regular budget to achieve sustainability goals and help us in discussions with our tenants.’
Our tenants are important partners and need to understand the benefit of making our properties more sustainable. Does our vision for a Paris Proof portfolio help?
Jochims: “I think so. We are able to show in detail what investments are needed to make our buildings Paris Proof, for example, what we have to do to reduce the energy consumption in our offices to less than 50 kWh per m² per year, and this helps them to see the bigger picture. However, a large part of the energy savings that these measures generate do not automatically benefit the party that finances them. We need to discuss that. We are experimenting with new ways of realising our energy-reduction goals. For example, we are working on a pilot for an all-in rent for office space, including all service charges and energy costs. The advantage for tenants is that they are not unexpectedly confronted with extra costs, for example for higher energy consumption, and for us it opens up more opportunities to green our portfolio while solving the split-incentive dilemma.”
Reusen: “The DGBC’s Paris Proof methodology is proving its value here, too. We measure and monitor the energy consumption of our buildings and individual tenants. This data on consumption, combined with roadmaps for greening our portfolio, provide the input for a discussion about where we can make improvements. After all, our tenants play an important role working with us to make our buildings more sustainable. In addition, our commitment enables us to explain to project developers what kind of properties we require and which sustainability criteria they should meet in terms of performance.
The roadmaps can be used at a higher level as well, for example, to explore the future heating and energy requirements of a specific neighbourhood with the local municipal authorities. This year Dutch municipalities are required to deliver a strategic vision for the transition of heat generation from natural gas to carbon neutral energy sources and our data can help support their choices and planning schedules. The great thing about all of this is that we are meeting new partners to work with. In Delft, for example, we are buying new homes that will receive surplus heat from a hospital.
Can you provide an example of a project that meets the Paris Proof goals?
Jochims: “The way in which we turned the WTC in Rotterdam into a sustainable building with the highest possible energy rating is an excellent example of how we are able to translate our ambitions into a comprehensive action plan. As part of our modernisation of the building we were able to transform its energy performance, so we seized that moment.”
Reusen: “If you let things run their own course, you might eventually be confronted with more stringent regulation and be forced to take additional measures anyway. We’d rather get it right the first time around which means we are generating additional savings in terms of energy consumption and CO2 emissions earlier. Buildings with a higher level of sustainability have a better indoor climate and are easier to lease.”
Jochims: “By making our buildings more sustainable, not only do we contribute to meeting climate goals, but we also remain ahead of the competition and are able to offer buildings whose energy bill continues to decrease. This approach has greatly improved the WTC’s competitive position which is reflected in its higher occupancy rate. What is so attractive about our approach is that we are investing ahead of schedule: based on our strategic vision, we are already making improvements before a new lease has been signed. Large occupiers, including the government’s own building agency, as well as major corporate tenants are very enthusiastic about our approach. They have their own sustainability targets and see opportunities to achieve them in partnership with us. Our commitment to creating a ‘Paris Proof’ portfolio shows we really do keep our promises.”
Reusen: “The high scores our funds have received from the Global Real Estate Sustainability Benchmark provides further evidence of that. GRESB measures the sustainability performance of the property investment sector worldwide and Bouwinvest has performed exceptionally well on this front. More than 80% of our portfolio has an above-average sustainability score of 4 or 5 stars, and both our Dutch Office and Dutch Hotel Funds have been rated 'Global Sector Leaders'. This sort of data helps our tenants choose the right building and the same principles apply to our clients when they decide to invest with us.”