Strategic approach to climate change

Jan von Mallinckrodt on worthwhile climate protection in the real estate sector

There’s still so much to be done to reach climate change goals. A quick Google search for "climate change" shows: The current headlines in Germany are not very flattering for a country which, along with 179 other nations, has ratified the 2015 Paris Agreement. The international accord aims to limit the increase in the global average temperature to well below two degrees Celsius above pre-industrial levels. The German government has outlined out how that can be achieved in its Climate Action Plan 2050. It aims to reduce greenhouse gas emissions by 80 to 95 percent compared with 1990 levels by the year 2050. That will also involve implementation and emissions savings within the real estate sector: if this goal is met, nearly all the country’s buildings will be heated, cooled and supplied with power through climate-neutral means. At the same time, the plan aims to cut the final energy consumption of properties by 50 percent by 2050. But the first milestone on this path already seems to be at risk. According to the current climate action report from the German government, greenhouse gas emissions had only declined by 28 percent by the end of 2017. And it is questionable whether the gap can be closed so as to achieve the target of 40 percent by 2020 – another reason for the real estate industry not to sit back. Not only does it need to stay on course, it needs to pick up the pace. But what does that mean in practice? And who needs to be on board?

More than ten years ago, Union Investment integrated sustainability standards into its business strategy as one of the pioneers in the real estate sector – with our own Sustainable Investment Check and green lease agreements, which we developed with the German Property Federation (ZIA) and market participants. The learning process that we went through back then enables us to take concrete steps now toward a sustainable future. 

For example, we decided to formulate our own carbon dioxide emissions savings target to achieve by 2030. The important preliminary work has been completed: together with the German Industry Initiative for Energy Efficiency (DENEFF), we have developed an initial indication that shows us where we are with individual properties and our portfolio – and when exactly we need to take measures to comply with the Climate Action Plan. Introducing energy monitoring will be crucial: it will eventually provide us with all the necessary data on energy consumption in our entire property portfolio. Consumption data has been documented since 2009, currently on an annual basis. The energy monitoring will give us detailed information in shorter intervals (and automated with system support), so we can identify and implement optimisations at short notice.

But achieving climate change goals takes much more. It takes partners and a clear implementation strategy. Our strategy is called “Manage to green” and it focuses on identifying sustainability potential in buildings and harnessing it using property-related asset management strategies. We believe that investors and tenants will respond positively: institutional clients, because it significantly increases the transparency they need in the area of sustainable investment and helps quantify its impact – while optimising risk management. Tenants, because sustainable buildings offer cost advantages and increased comfort – not least thanks to new ideas from tech startups. That gives us hope, despite headlines to the contrary. Because we are convinced that climate action is achievable in the real estate sector – and it’s worth it.

Best wishes
Jan von Mallinckrodt

Title image: Union Investment/Adele Marschner

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