Working towards net zero carbon

It’s more important than ever that we keep the momentum in the fight against climate change. Our new five-point plan sets out how we’ll become a net zero carbon business within the next ten years.

To play our part in reducing global emissions, over the past decade we’ve developed and embedded a robust sustainability strategy, delivered against stretching carbon targets, invested in renewable energy, reduced the energy consumption in our buildings and considered carefully how and where we source our materials. In doing so we’ve positioned ourselves as a global sustainability leader in our sector.

Last year we met our 2030 science-based carbon reduction target 11 years early, reducing our emissions by over 40% against a 2013/14 baseline. But there’s still a lot more to be done both across our own business and in collaboration with our wider industry. That’s why we’ve increased the ambition of our carbon reduction targets in line with the latest climate science, and why we’ve committed to becoming a net zero carbon business by 2030.  Our strategy is bold  with clear actions to support the world to limit global warming to 1.5°C.

To become a net zero carbon business, we’ve developed a five-point plan:

1. Reduce our operational energy use

The first step to becoming a net-zero carbon business is to reduce our operational carbon emissions. Following the pledge we made at the COP21 Convention on Climate Change in Paris, in 2016 we became the first commercial property company in the world to have its carbon reduction target approved by the Science Based Targets initiative. In November 2019, having achieved our target 11 years early, we increased our level of ambition, committing to reducing our absolute emissions by 70% by 2030 compared with a 2013/14 baseline.

As most of the operational carbon emissions for a building are associated with energy consumption, we also have an energy reduction target to reduce our energy intensity by 40% by 2030 compared with a 2013/14 baseline, for properties that have been under our operational control for at least two years.  To achieve this we’ve developed bespoke energy reduction plans for each of our assets and as of Q2 2020 we’ve reduced our energy intensity by 19.4%.

To ensure our future assets also meet these targets, we’re designing our commercial buildings using the Design for Performance  approach to set energy intensity targets. This tool aims to close the performance gap by ensuring that new office developments operate as efficiently as they were designed to. We’re mapping our performance against the UKGBC’s pathway to net zero to ensure that we’re in line with industry best practice.

2. Invest in renewable energy

We have a strong track record of both generating on-site renewable energy and procuring renewable electricity. Since 2016 we’ve procured 100% REGO (Renewable Energy Guarantees of Origin) backed electricity and have installed capacity of 1.5MW of renewable on-site generation, including photovoltaic electricity and heat pumps. This means we’re nearly halfway to achieving our 2030 target of delivering 3 MW of on-site renewable electricity generation by 2030. 

As part of our net zero carbon strategy, we will increase the amount of renewable electricity we generate and move our procurement from REGO-backed generation to direct purchasing from renewable projects through Power Purchase Agreements (PPA).

3. Use an  internal shadow price of carbon

To support us in assessing climate-related risks and opportunities as we transition to net zero carbon, we’re using an internal shadow price of carbon. This internal metric gives an investment’s carbon risks and opportunities a monetary value, so that we have a standard metric to assist investment decision making.

We’ve set our internal carbon price at £80/tonne CO2. This  was calculated by estimating how much we’re spending on carbon reduction projects currently and how much more would be needed long-term to achieve our goals. This balances out expensive retrofit projects with cost-effective early design choices in our development pipeline. £80/tonne CO2 is in line with the recommendation from the Commission on Carbon Pricing for a carbon price level consistent with the Paris agreement and aligned with guidance from the United Nations Global Compact on carbon pricing. Importantly, it’s also in line with the Department for Business, Energy and Industrial Strategy’s (BEIS) forecast of carbon prices through to 2030.

In our investment decisions, this shadow carbon price helps our business quantify the medium-term transition risk associated with the UK shifting to a low-carbon economy. It helps us capture the financial risk of continued carbon emissions in the likely future event of a carbon tax being imposed on our industry, as is currently the case with heavy industries such as steel and cement. It’s also here to support the business case for transitioning to low-carbon solutions in our own operations. Our Sustainability Team work with our Investment, Development and Asset Management colleagues across the business to align our capital allocation strategies to our net zero carbon pledge and factor transition risk into our decision-making process.

4. Reduce our construction impacts

Embodied carbon emissions are the greenhouse gas emissions associated with the non-operational phase of a project, including supply chain emissions arising from extraction of resources, manufacture of products, transportation and assembly of a building. As our building operations become cleaner, the impact of our low carbon design and construction methods will become proportionally bigger.

At the beginning of the design stage, an embodied carbon assessment will be undertaken by a qualified carbon consultant. Each project will be set a specific embodied carbon target reflecting project-specific opportunities such as retention of existing structures. We expect each project to demonstrate embodied carbon reductions throughout the construction process and will produce an embodied carbon report at project completion.

We’re reducing our construction impacts by maximising re-use of any existing assets to reduce the extent of construction or demolition required and using fewer materials to drive down both cost and carbon emissions. We’re also avoiding use of materials with high carbon intensity, such as traditional steel and concrete, instead using locally sourced materials with high recycled content as far as possible. 

5. Offset remaining carbon

Once carbon emissions have been minimised as far as possible, we’ll direct funds to carbon offset projects which actively take carbon out of the atmosphere, such as carbon sequestration from tree planting. We’ll also prevent further emissions from being released into the atmosphere, for example by launching a forest conservation project or subsidising a renewable energy project that allows a move away from fossil fuels.

We’re working with an established carbon offset project developer to purchase such options and importantly, to ensure that each credit is independently verified, transparent and traceable. Our development projects will be expected to make an allowance in their budgets for the cost of offsetting related to the project activities, which the Sustainability team will assist in calculating.

We are confident that our net zero carbon strategy will equip us with the necessary tools to reach our target by 2030. Importantly, it also sets out a clear set of actions that can be shared with the industry to drive the net zero agenda forward.