ENVIRONMENTAL Social Governance (ESG) has become a hot topic in construction and property management, particularly over the past 12 months.
With the UK government’s commitment of net zero by 2050 and the UN’s recent reports on the measures needed to avoid a ‘climate disaster,’ it has become clear that hitting robust ESG targets is going to be important for the future of the industry.
Therefore, the tight focus on ESG is set to continue as new regulations came into effect on April 1 in England and Wales, which make it illegal for landlords of non-domestic properties to grant a lease to new or existing tenants if their property has an EPC rating below E.
Furthermore, the UK government has announced new standards for England and Wales to become law by 2025, that all commercial rental properties will need to achieve an EPC rating of C or above. With England and Wales implementing these regulations, it seems like Northern Ireland won’t be far behind.
Given the increasing legal requirements, the demand from businesses for sustainable workspaces to meet their own ESG requirements and the construction of grade A BREEAM Excellent new build office buildings, it is no wonder that property owners are seeking to improve their building EPC rating to attract tenants and present themselves as environmentally and socially responsible property owners.
New commercial properties in Belfast such as the City Quays buildings, Erskine House and The Ewart all boast BREEAM Excellent ratings and have been constructed with ESG credentials as a priority, which makes them very attractive to prospective tenants.
However, the vast majority of our built environment is made up of older buildings which require retrofitting to bring them up to standard. There is a real opportunity here for landlords to update their existing stock to attract big companies, given the success of revamp projects such as Urban HQ on Upper Queen Street and Custom House Square.
As a starting point, landlords should assess how their property is performing and establish what needs to be updated or implemented through an assessment such as BREEAM-in-use, which is designed specifically for existing buildings.
Covering a wide range of ESG factors, including energy and water efficiency, materials and waste management, indoor environmental quality, biodiversity, transport and community engagement, the assessment demonstrates landlords’ and developers’ commitment to sustainability and responsible corporate citizenship, while also identifying opportunities to improve the environmental and social performance of their buildings. The certification can also provide a competitive advantage and can lead to increased building value, the attraction of premium tenants, increased rental yields and reduced energy bills.
There are several ways that property owners can improve their ESG performance and improve their BREEAM score. For instance, introducing measures such as energy-efficient lighting, HVAC systems, and building automation systems to reduce energy consumption or increasing their use of renewable energy sources, such as solar or wind power, to reduce their carbon footprint.
Poor water management practices can have devastating effects on the environment, but by implementing measures such as water-efficient fixtures, rainwater harvesting, and grey water recycling, property owners can reduce the impact.
Waste management measures as simple as establishing a recycling programme can improve the sustainability of a building, as well as making an effort to reduce waste during any construction or retrofitting work.
The indoor environmental quality of a building is also taken into account. This can be improved by proper ventilation, air filtration, and the use of low-emitting materials, as well as enhancing biodiversity by incorporating green roofs, living walls and other features that support local flora and fauna.
It’s not only the environmental performance of the building which is important, but also the social performance. Owners can implement social initiatives such as community outreach programs and employee engagement programs to demonstrate their commitment to social responsibility.
Overall, improving ESG performance requires a holistic approach that takes into account the environmental, social, and governance impacts of a property. By implementing these measures, property owners can improve their sustainability performance, reduce costs, and enhance their reputation as responsible corporate citizens.
:: Andrew Glendinning is a chartered building surveyor and licenced BREEAM in-use assessor at Lambert Smith Hampton
