In 2009, the economic shock of the financial crash sidelined emerging interest in sustainability. A decade later, there is a risk the global scramble to arrest the spread of Covid-19 may once again test appetite for more sustainable business, as entire economies struggle to emerge successfully from hibernation.
However, unlike 2009, this crisis has thrown into sharp focus the value we place on clear, blue skies over global cities resulting from lower emissions. Lockdown has underlined the importance of natural outdoor space in promoting wellbeing and this time around, the commitment to more sustainable ways of living and working may actually increase.
New habits
Global shocks tend to accelerate existing trends. ESG was on the agenda for both business and government, yet measures taken were incremental. Our conversations with customers show the pandemic could be the tipping point. Our office customers already recognised that strong environmental credentials attracted talent and reinforced their licence to operate, and they’re now indicating this will gain momentum, accelerating demand for sustainable, healthy and well-located workspace.
Sustainability plays an important role in our customer offer, and is now underpinned by an ambitious new strategy to transform our portfolio to net zero carbon by 2030.
We are launching from a solid platform, having achieved a 73% reduction in carbon intensity over the last 10 years. Decarbonisation of the grid helped, but the driver was stretching efficiency targets that drove innovation. As part of the strategy we’re committed to achieving another bold target: reducing embodied carbon in our developments by 50% to below 500kg of CO2e per sq m by 2030.
Development generates a significant proportion of our industry’s emissions and can constitute half of British Land’s footprint in a typical year. Tackling this quickly is critical. Therefore, from this year we will offset residual embodied carbon on all new British Land developments.
Sustainable buildings are already our standard, with 100% of new developments BREEAM Excellent or above. Our trial of retrofit instead of new build at 1 Triton Square and 100 Liverpool Street (pictured) has materially reduced the embodied carbon, with both developments forecast to exceed our 2030 target when they complete. Additionally, both buildings have leased very well. This demonstrates how conviction to try a new approach can accelerate progress and deliver commercial benefit.
The challenge will be achieving our 500kg target on new builds. We will always favour reuse and recycling, but where we have no option but to demolish and build from new, we will have to innovate with design and materials.
Our team is researching options, from cross laminated timber for the structure to non-traditional and recycled materials for the facade.
To drive progress, from this year a mitigation payment will be applied to our developments of £60/tonne of carbon. To be clear, this is not a shadow price, but an actual cost, the financial impact of which will incentivise the team to innovate in order to make development appraisals viable.
This payment will fund certified offsets for any residual embodied carbon, with the remaining money put into our new transition fund – the first of its kind – to retrofit our standing portfolio, research new materials and make loans to the service charge to support the portfolio’s transition.
A net zero carbon portfolio is a bold target which will be difficult to achieve. However, growing interest from customers and our experience driving transformational progress underpin our belief that now is the time to be bold.
Simon Carter is chief financial officer of British Land
