London Strategic Land, the investment company working to bring more and better housing to London, has appointed Hillbreak co-founder, Jon Lovell, to its Advisory Board. He will bring an independent perspective on ESG trends and priorities, advising on the integration of pertinent factors into fund strategy and the investment process.
Commenting on the appointment, Jon said: “Addressing the acute housing crisis in and around London is one of the most pressing and systemic challenges for the city region and the wider UK economy. It is crucial that all new homes built for the Capital are fit for the future, whilst also meeting the needs of today. I’m therefore delighted to be taking on this role with London Strategic Land, a business with great potential to be part of the solution, and I look forward to helping the team to integrate rigorous attention to relevant environmental and social factors into its investment processes.”
He continued, “Increasingly, institutional and private investors are looking for investment solutions that deliver positive environmental and social outcomes alongside a competitive financial return. With quality, sustainability and accessibility as central guiding principles to the planning, design and delivery of new homes, there’s a significant opportunity for investors to realise these combined objectives.”
Mark Tagliaferri, Chairman of London Strategic Land, said: “We are delighted that Jon has agreed to join our advisory board. We believe Jon and the team at Hillbreak can assist us in our objective of achieving high social impact on our sites. The team at LSL strive to create places which are sustainable environmentally and socially. Jon’s experience will be invaluable in helping us demonstrate, validate and measure these important objectives on our sites and as we develop and grow as a business.”
Lovell joins Robin Hoyles, former Group Land and Planning Director at Crest Nicholson plc, Claire Fielding, Partner at Town Legal LLP, Karen Alcock, Managing Director at Kanda Consulting, and Jennifer Ross, Founding Director of Tibbalds Planning & Urban Design, on the Advisory Board.
Lovell brings a wealth of independent advisory experience to the role. He currently sits on the ESG Committees of Round Hill Capital, BMO Real Estate Partners and the Responsible Property Investment Group of Royal London Asset Management, as well as the Advisory Board of the Urban Land Institute in the UK.
https://www.hillbreak.com/wp-content/uploads/2020/04/dsc03937.jpg6671000Timia Berthoméhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngTimia Berthomé2020-04-02 10:18:582020-04-02 10:19:23London Strategic Land appoints Lovell to Advisory Board
Integrity, Innovation, Impact – a new ESG Strategy for Round Hill Capital
Round Hill Capital launches new ESG Strategy, advised by Hillbreak
Underpinned by a refreshed statement of Core Values for the Company
Jon Lovell appointed to global ESG Committee to help support continued oversight
Since its foundation in 2002, Round Hill Capital has become a market leader in the real estate accommodation sector – offering a fully integrated investment, development and management approach alongside venture capital for early stage, high growth property technology companies.
Hillbreak was engaged by Round Hill Capital to develop an Environment, Social and Governance (ESG) Strategy to help to underpin its corporate and investment management activities. Working with Round Hill Capital’s Executive Committee and a Company-wide Steering Group, we undertook in depth analysis to identify opportunities for a compelling ESG strategy that aligns with the Company’s pioneering, macro-driven and nimble approach to business.
Extensive internal surveying and dialogue was a key part of our approach, to further engage collaboratively with employees and decision-makers in the process of determining the core areas of focus for the ESG Strategy. We found significant appetite for Round Hill Capital to formalise a comprehensive and proactive approach to responsible property investment that aligns with investor objectives and supports financial returns and which also, notably, embraces key ESG impact themes emerging within the market.
Examination of the Company’s current activity revealed several examples of strong ESG-related business practices, which presented a clear opportunity to build on the existing internal culture to more consistently integrate ESG considerations into the investment process and development and asset management practices.
The resulting ESG Strategy sets out clear ambitions targeting performance and positive change, supported by a refreshed statement of the Company’s Core Values, which clarify Round Hill Capital’s commitments as a Group and its expectations of the conduct of its employees and wider stakeholders. Features of note include:
A focus on Round Hill’s core strengths of innovation, flexibility and proactivity – the Strategy highlights positive ESG impact, first mover advantage and stakeholder engagement as key features within its overarching business objectives.
Highlighting integrity alongside innovation, ensuring an underpinning of consistent standards and a continual drive to take account of ESG impacts, risks and opportunities in all business activities.
A structure for embedding ESG more formally into the real estate investment process. A suite of decision-making tools and best practice resources are currently being developed.
Prioritisation of internal capacity building and reporting capability, including systematic internal training, the development of ESG requirements for operating partners, and extension of investor and external reporting to include ESG performance.
The ESG Strategy combines strong foundations with the flexibility for Round Hill to capitalise on its strengths and take a positive, opportunistic and responsible approach to ESG.
Implementation will be led by a newly established ESG Committee, to which Jon Lovell, co-founder of Hillbreak, has been appointed as an independent member.
Commenting on the new ESG Strategy, Lovell said, “Working with Round Hill Capital has been a unique and insightful experience for Hillbreak. The Company’s blend of fast-paced successful growth and investment agility in alternative sectors, together with its core values, has created a really interesting opportunity to present a distinctive approach centred on integrity, innovation and impact. We’re so pleased to have been retained to help support Round Hill Capital with the realisation of its ESG goals.”
Paul Bashir, President and COO, commented, “Our new ESG Strategy is the formal expression of our innovative approach to community, wellbeing, environment and risk. Round Hill Capital is really enthused by the prospect of working with our investors and other stakeholders to drive positive social and environmental outcomes and change alongside the delivery of investment performance.”
He continued, “Hillbreak has been an excellent partner for us to work with in helping to bring forward our new ESG Strategy. They have been challenging, bold and ambitious, which sits perfectly with how we do things at Round Hill Capital. I’m delighted that Jon will continue to bring insight, ideas and objectivity by serving on our new ESG Committee.”
About Hillbreak
Hillbreak provides training and strategic advisory services for organisations seeking purpose and competitive advantage in a changing urban world. Its mission is to expedite the transition to a sustainable policy, business and investment environment by bringing intelligence, challenge and inspiration to its clients and stakeholders.
About Round Hill Capital
Round Hill Capital is a leading global real estate investment, development and asset management firm. Since inception in 2002, Round Hill Capital has acquired and repositioned for long-term institutional ownership over 110,000 residential units and student housing beds. Round Hill is a responsible landlord of assets offering housing to a range of occupants, from students through to senior citizens.
Round Hill Capital has an established track record of generating high risk-adjusted returns and invests in and asset manages real estate on behalf of some of the world’s leading institutions and private investors.
Further information on Round Hill Capital is available at: www.roundhillcapital.com.
https://www.hillbreak.com/wp-content/uploads/2019/04/facade-828984_1280.jpg7201000Jon Lovellhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngJon Lovell2019-04-03 15:03:282019-04-09 10:46:39Integrity, Innovation, Impact – a new ESG Strategy for Round Hill Capital
Hillbreak recently teamed up with our long-standing friends and collaborators, Creative Concern, to support and advise the University of Manchester NHS Foundation Trust (MFT) on the development of its new sustainability strategy, known as ‘The Masterplan’.
The strategy follows sector guidance developed by the Sustainable Development Unit (SDU) and NHS Improvement, and incorporates the following four core themes:
Environment: realising environmental gain
Health: enhancing health and wellbeing
Future: Being future ready
Community: delivering social value
These in turn are woven through the ten categories under the Sustainable Development Assessment Tool, which is the UK healthcare sector tool for measuring and improving sustainability performance. These include: corporate approach; asset management and utilities; travel and logistics; adaptation; capital projects; greenspace and biodiversity; sustainable care models; people; sustainable use of resources and greenhouse gas emissions.
As the largest Acute Trust in the UK, ambitions for the new strategy are high. It has been endorsed by Andy Burnham, Mayor of Greater Manchester, in the context of his ambition to make Greater Manchester one of the leading green cities in Europe.
It was crucial to consult with the Trust’s diverse staff base to understand what the Trust’s sustainability goals and objectives should be – and how the Trust could lead the field in a national context.
Informed by MFT staff views, and using our combined knowledge of megatrends, strategic foresight, sustainability reporting and governance, we supported the MFT team to help develop ‘The Masterplan: Making Sense of Sustainable Healthcare, 2018-2023, including through a series of strategy workshops.
The Strategy, which was approved by the Trust Board and published in November, has already been deemed by NHS Improvement (NHSI) as a national exemplar.
https://www.hillbreak.com/wp-content/uploads/2018/11/pexels-photo-415779-1.jpeg426640Jon Lovellhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngJon Lovell2019-04-01 07:12:552019-04-04 07:18:12The masterplan – a national exemplar of a sustainable healthcare strategy
Like it or not, GRESB is the defacto index of choice for the
majority of real estate investors looking for a convenient proxy measure for
ESG across the funds and companies in which they invest. When Hillbreak engages
with institutional investors around the world on behalf of its manager clients,
it is the consistent point of reference that nearly all will point to,
irrespective of their relative maturity on the responsible investment curve.
In many cases, especially in Asia but commonly in North
America and parts of Europe too, investors have yet to develop their thinking
on how they should effectively integrate ESG into their real estate allocations
and investment strategies. Yet they will often acknowledge that ESG
considerations are becoming material and, in the absence of a fully considered
approach, are easily seduced by the simplicity (for them) of asking or
instructing managers to submit to GRESB and to disclose their results.
At the more advanced end of the spectrum, typical of a
number of institutional investors in Northern Europe, and especially from the
Nordics and The Netherlands, a more informed view underpins the approach. But
here paradox prevails: whilst critical of the inherent limitations of a single,
relative global benchmark applied to a highly heterogenous asset class, they
will at the same time be relying heavily on that benchmark to drive investment
decisions and engagement strategies. For example, some will now insist that all
of the funds in which they invest achieve a minimum ‘star rating’ on the GRESB
1-5* scale, or at least present a detailed route map to demonstrate how they
will get there. The classic folly of trying to compare apples with oranges.
Admittedly, for those investors with the most sophisticated ESG strategies and policies, GRESB is treated as one of a few tools to support their approach. Yet for many, especially in the non-listed sector, it is very much a case of throwing all ESG eggs into the one GRESB basket.
This is a triumph of concept and marketing for the founders
and now, the incumbent owners of GRESB, the Green Business Certification Inc. (GBCI).
We have commended the driving forces behind GRESB in the past for the impact the
service has had in driving ESG up the real estate capital markets agenda, and
we continue to hold the view that the movement would be unlikely to have the
profile that it does now were it not for the agency given to investors by the
tool.
The irony, of course, is that the greater the traction GRESB
receives in the market, the more important it becomes for its owners and
operators to be accountable to its customers for its accuracy, transparency,
reliability and fairness. And here is where things stumble heavily (it may be a
little hyperbolic to claim that they fall flat on their face).
What are the issues?
The recently released response to the 2018 GRESB Survey Consultation from the Better Buildings Partnership (BBP) reveals the frustrations of many of those (major) real estate companies and fund managers that have a history of GRESB participation going back to its founding year, many as managers of multiple participant funds. Strip away the diplomatic veneer, and the BBP response is damning. Moving far beyond polite requests for improvements to the user experience (of which there are some), the BBP members call into fundamental question the trust that can be placed in GRESB. Of particular note are the observations relating to:
Inconsistent and arbitrary treatment of evidence,
commentary and clarifications uploaded to GRESB (with the same evidence or
clarifications being accepted in some cases and declined in others) resulting
in different scoring outcomes for identical inputs.
Lack of transparency, openness and fairness in
the scoring and validation process (the ‘black box’ factor), including:
No opportunity for participants’ results to be
changed retrospectively in the GRESB portal where errors in scoring have been identified.
Participants subject to the full validation
process receiving unfair advantage from the tailored guidance given to them by
GRESB but which is not shared with others (this effectively amounts to
selective coaching by GRESB of some participants).
Opaque guidance resulting in materially
different approaches to data reporting amongst participants, in good faith.
Questionable peer group allocations and no
accounting for the investment strategy of individual entities. In the real
world, the relevance and materiality of ESG factors to the risk profile and
impact of funds will vary greatly between, say, an opportunistic vehicle with a
short holding cycle and a core fund of trophy assets managed over the
long-term.
Methodological concerns that create incentives
for perverse behaviours (the ‘tail wagging the dog’ factor), apply arbitrary
conditions (e.g. on the timing at which certain measures may have been
installed), require information that is often simply not available or internationally
comparable and, more profoundly, risk allocation and divestment decisions being
made that are based on a biased depiction of portfolio and asset quality. A key
issue in this regard is the inadequate distinction between assets over which
landlords have management control, and those that do not.
Where are the challengers?
One might be tempted to draw a parallel with contemporary politics
in that, in the absence of a credible and effective opposition, the more complacent
an incumbent power can be and the more maladministration it can get away with.
How resonant does that feel in many parts of the world right now, by the way?!
In the case of GRESB, a comment we often hear from investors is that it is the
best of a bad bunch of indices available to them that have applicability to
both listed and non-listed real estate vehicles. Faint praise indeed! To where
should (or could) investors or participants turn for an alternative? None are particularly
forthcoming.
That said, there are emerging examples of automated,
AI-driven innovations which give an indication of what the future for asset-
and portfolio-level benchmarking might hold, although these are currently
subject to major constraints of their own, giving rise to similar efficacy and
transparency concerns.
GRESB has always claimed to listen to its stakeholders, but in reality, this is subject to an important caveat: if those stakeholders stump up some cash, which, in the spirit of transparency, we should declare that Hillbreak does not – we have always taken the active decision to stand outside of the GRESB tent. Sure, the Survey is subject to annual iteration, typically to a rather modest extent, and there is an extensive governance structure which is inclusive of many users of the service – both investors and participants. But these iterations have not resulted in a resource that is fit for the purposes to which much of our industry is putting it, especially when it comes to the questionable efficacy of making positive or negative screening decisions based solely or predominantly on GRESB scores.
All change (please)?
The 10-year birthday of GRESB is approaching, and much
promise has been made of improvements to
come to mark its landmark anniversary. Some of those outlined are
welcome, especially the distinction of the Assessment into separate Management
and Performance Components and the development of an as-yet-undefined Data
Quality Standard. However, these fall sort of the reboot that is needed and
which, in our view, is already long overdue. Where so much is as stake, duty of
care and fitness for purpose are paramount. We continue to wonder if the
custodians of GRESB have truly grasped the burden of responsibility that they
have placed upon themselves.
Educating investors on the limitations of GRESB as a proxy
for risk, quality and performance (arguably, a role for GRESB itself) is
rapidly moving up the list of priorities for fund managers, as the number of
allocation decisions influenced by the Benchmark become greater. Of course, it
is incumbent upon investors to ensure that they understand the systems they are
deploying to inform their allocation decisions, especially if they have a
fiduciary responsibility to others. Yet it is clear to us that this is commonly
not the case and there remains much work for investors and managers to do
together as a key tenet of the client-manager relationship.
The ideal milestone for Hillbreak to reflect on past progress and the scale of the challenge ahead.
One: Happy Anniversary, Hillbreak
It’s three years to the day since Hillbreak began active trading. Perhaps that seems trivial? It is, after all, a blink of an eye. Yet for us, those three years have marked an extraordinary transition.
When we set out in 2015, the notion that we’d be asked by some of the world’s marquee real estate organisations to help them navigate their way in a fast-changing world seemed ambitious to say the least. Now, we’re at risk of complacency by thinking it routine.
Sure, it’s been three years of hard work to execute our mission: to expedite the transition to a sustainable policy, business and investment environment by bringing intelligence, challenge and inspiration to our clients and stakeholders. During that time though, we’ve seen a market begin to transform, with the UN Principles of Responsible Investment moving firmly into the mainstream and the Sustainable Development Goals, amongst other frameworks, capturing corporate and institutional attention (if not always true imagination).
The market seems to have come a long way in that relatively short time. It feels – anecdotally and with some empirical indication – that stronger, smarter and altogether more ambitious attitudes to Environmental, Social & Corporate Governance matters have taken root in the conscience of our industry.
It would be all-too-easy, when caught in this positive ESG bubble, to think that the future is bright and that we’re collectively beginning to find the track to resolving many of the big global problems.
A nice thought, but not one to get carried away with.
Global Budget Crisis
The true reason that 1 August 2018 is significant provides a far more sobering barometer of how things stand.
As well as being a Hillbreak anniversary, today is #EarthOvershootDay: the date when humanity has used more from nature than the planet can renew in the entire year. Our annual ecological budget has been exhausted, and we’re only seven months in. What’s more, we’ve never reached this milestone so early in the calendar. The rate at which we are overharvesting and polluting continues to get greater.
Think of it in banking and financial accounting terms. In this case, the capital held and accounted for is natural capital, rather than financial. Sustainability comes when we are able to live off of the interest generated by the capital held. In reality, we are consistently drawing down on the capital meaning that we are left with less at the end of the accounting year than we had at the beginning. That means less interest being generated in each subsequent year too. We are increasing the deficit year-on-year by liquidating stocks of ecological resources and accumulating waste (primarily carbon dioxide in the atmosphere) at an ever-faster rate.
It’s a loss-making enterprise and investment is insufficient to secure a break-even future, let alone a profitable one.
Of all of the indicators concerning the health of our economy/society/planet, this is perhaps the most fundamental and inescapable. Yet, despite the fact that human life and the economy are inextricably reliant on the ecosystem services provided by natural capital, it is a fact that seems all-too-convenient for many economists, executives and politicians to ignore. This is primarily because financial and political returns are measured (in the main) on quarterly bases and electoral cycles respectively. These competitively motivated, short-term fixations tempt us to disregard the long-term security of our shared capital.
So, whilst responsible investment trends are advancing, true sustainability still seems a remote prospect.
Happy Anniversary, Hillbreak. Now drink up, we’ve got a lot of work to do!
https://www.hillbreak.com/wp-content/uploads/2018/07/elbe-philharmonic-hall-2482637_640.jpg414640Jon Lovellhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngJon Lovell2018-08-01 07:00:342018-07-31 17:51:52Double Dating
Formally-approved Science Based Targets (SBTs) are a scheme of the Science Based Targets Initiative (SBTi), a venture of the UN Global Compact, CDP, World Resources Institute and WWF. They have been gaining much attention and some traction amongst corporates and institutional investors; at the time of writing, 105 companies have in place targets formally approved by the SBTi.
In essence, these are targets adopted by companies to reduce emissions proportionately in line with the level of decarbonisation required to meet the <2oC global warming goal of the Paris Agreement on Climate Change.
Certainly, SBTs have useful application at a macro or portfolio level. For example, they can be a tool for policy-makers to establish future carbon budgets and related policy instruments for individual economic sectors, or they can assist investors in setting climate mitigation goals across their respective investment universes. However, a principal benefit often cited of SBTs is that they provide evidence-based pathways against which to pin the carbon reduction strategies of individual entities, including within sector-specific contexts. This, we challenge.
Whilst SBTs have their place, including a welcome shift in thinking towards corporate climate action being proportional to associated global impacts, we question their role and utility at the individual entity level in the absence of sector-wide agreements to meet the necessary pathways.
Indeed, rather than being a force for rapid progress on the urgent need to mitigate climate change, they may actually have an unintended and dangerous dampening effect on the rate and extent to which individual companies – and sectors – achieve their full carbon reduction potential.
Of the various methodologies recognised by the SBTi, the Sectoral Decarbonisation Approach (SDA) is the most applicable to real estate organisations, with a normalisation approach based on floor area and a carbon intensity pathway of 55 percent by 2050 from a 2010 baseline.
Driven by perceived or directly expressed investor requirements, a number of real estate organisations have established formal SBTs to demonstrate their commitment to the <2oC goal of the Paris Agreement. They have, understandably, received plaudits and achieved enhanced brand profile for taking an early stance in line with their market leadership on responsible property investment.
A race to the bottom
Aside from certain methodological limitations (including, in particular, on the question of how best to deal with Scope 3 emissions in a real estate context), we have a more fundamental concern with SBT-compliance being assumed by the industry as a badge of leadership for responsible investment when the SDA pathways represent the average level of decarbonisation needed of individual sectors. If organisations at the front of the ESG agenda are adopting targets based on the global sector average, the chances of those sector pathways being realised – and the goals of the Paris Agreement as a consequence – become very remote indeed.
There will be many real estate organisations with portfolios centred on advanced jurisdictions, such as the UK, where very little or no real action will be required of them, either because the continued decarbonisation of the grid will essentially do the job of achieving SBT-compliant trajectories for them, or arrangements can be made to purchase 100% of electricity from renewable sources at rates competitive with brown electricity. Worse than that, the efficiency of portfolios could actually regress, and an SBT could still be realised. There may also be unintended consequences relating to technology selection.
A problem amplified
In addition to specific investor requirements, the rationale for establishing SBTs at a house or entity level has been amplified by their positive recognition in the latest assessment framework of the Global Real Estate Sustainability Benchmark (GRESB), the most widely utilised portfolio-level barometer of attendance to ESG issues for the industry. By attaching ‘points’ to compliance, GRESB participants will have an added incentive to pursue formal SBT accreditation. Recognition is similar in the latest edition of the CDP Climate Change Module.
It means that schemes such as GRESB and CDP will be of limited effectiveness in driving the necessary sector-wide performance because they will be rewarding participants for setting out to achieve what should be considered a floor-level trajectory. In those cases where entities can rely entirely on grid decarbonisation in the jurisdictions in which they operate, this amounts to nothing more than recognising and rewarding an administrative process, albeit one that has involved a good deal of technical work undertaken in good faith by those wishing to demonstrate leadership. Perhaps this does warrant some time-limited credit, but the impact of true portfolio performance indicators on industry benchmark positions will be diluted in the meantime.
A better approach for investors
Investors that recognise the risks of climate change to capital market stability and investment performance, are, quite rightly, motivated to use their engagement activities with investee funds and companies as a means of positive influence to help drive decarbonisation. Requiring or encouraging the adoption of SBTs by those entities in which they are invested is, therefore, a seemingly obvious responsible investment tool. Interestingly, their widespread application across the asset classes may actually help to reinforce the merits of increasing capital allocations to real estate as part of comprehensive portfolio decarbonisation strategies.
However, we contend that, especially in mature markets, investors should not treat SBT compliance by individual entities as a marque of responsibility. Instead, they could aim to move towards science-based targets being a ‘lowest common denominator’ indicator for their allocations, complemented by stipulating clearer requirements on real estate companies and funds to demonstrate how, and by when, they will achieve (net) zero carbon status.
Towards net zero
In the meantime, and depending on case-by-case circumstances, we will continue to recommend and support our real estate clients’ efforts to pursue SBT compliance because of the increasingly clear demands for them to do so by investors and analysts. We will do this, however, with full acknowledgement of the limitations of the SBT approach, and will typically be encouraging greater emphasis on total decarbonisation pathways as part of a positive investor engagement and climate risk management journey.
This article was authored jointly by Jon Lovell, Co-Founder & Director of Hillbreak, and Dave Worthington, Managing Director of Verco.
https://www.hillbreak.com/wp-content/uploads/2018/05/architecture-2205334_640.jpg426640Jon Lovellhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngJon Lovell2018-05-09 14:00:082018-05-09 17:07:33The trouble with Science Based Targets
M&G Real Estate is the property investment unit of M&G Investments and has £29.5 billion of assets under management globally (as at 30th of September 2017). It has had an active Responsible Property Investment (RPI) programme for over a decade and is widely regarded by industry stakeholders, with whom it engages regularly on a range of environmental, social and related governance matters, as an international market leader in this regard.
Report: Responsible property investing 2017
The recent publication of its 2017 Responsible Property Investing report follows a comprehensive review of its ESG activities, and sees the launch of a new vision and updated set of priorities for its responsible investment activities across the globe.
Hillbreak was pleased to advise M&G Real Estate throughout this process. We worked in close partnership with its exceptional team of RPI specialists to engage and support the Board and senior leaders to explore, define and substantiate a new vision centred on enriching the lives of people and communities by creating and managing world-class places, in turn delivering positive value for investors, society and the environment.
The new RPI Strategy includes a focus on four themes, which according to Hillbreak analysis, stakeholder feedback and wider market insights, are considered ESG priorities because of the risks they pose to financial markets generally, and the resilience and social utility of the built environment. These are specifically:
Socio-economic benefit – creating positive socio-economic outcomes by developing high quality places where people want to be and, through proactive participation in communities, supporting jobs, skills development and economic growth. 2025 targets for this theme include 100 places globally having benefitted from community programmes delivered by M&G Real Estate.
Environmental excellence – delivering environmental improvements at assets to reduce operating costs, carbon emissions and the use of natural resources, thereby helping to attract and retain occupiers and ensuring that environmental risks are managed. 2025 targets for this theme include securing green building certification for 50% of assets (by value) globally and realising a 25% reduction in energy intensity and associated greenhouse gas emissions based on an index trend for all landlord procured energy.
Health, wellbeing and occupier experience – considering health wellbeing and experiential factors in how buildings are designed and managed so that occupiers have happy and productive employees, retail destinations attract customers and homes are places where people want to live. 2025 targets for this theme include reaching 10 million people through health, wellbeing and inclusivity programmes, and measuring and improving the satisfaction, happiness and wellbeing of occupiers.
Smart, secure and connected – implementing connectivity solutions to harness opportunities and future proof investments in a world where smart physical and digital infrastructure is crucial to competitiveness. At the heart of this theme is the 2025 target to deliver enhanced digital and physical connectivity across the asset base through a framework of activities underpinned by thought leadership.
The new strategy is underpinned by a series of ‘strong foundations’. These are the corporate and investment management fundamentals, such as encouraging occupiers to sign up to our green lease clauses and the integration of material RPI issues into the acquisition due diligence process, which M&G Real Estate believe must be in place before it can deliver its RPI objectives. Two key principles guide the overall approach:
Enhance and Transform – being at the forefront of identifying and influencing the drivers of change shaping our investment strategies accordingly, we will continue to deliver strong returns for our investors in the long term.
Safeguard and Future Proof – combining innovation with best-in-class management will set the bar for exceptional workplaces homes and leisure destinations which have enduring appeal and benefit local communities and economies around the world.
In Hillbreak’s view, the new RPI Strategy reflects positively M&G Real Estate’s rigorous house-wide approach to its fiduciary responsibilities and will further consolidate its position as a leading responsible manager of non-listed real estate funds globally. In particular, the focus on embedding tailored ESG principles and objectives into individual fund strategies sets an important tone for the wider market; it is only through this type of bespoke integration, with individual fund managers having ownership of their approach, that the global responsible property investment agenda will move forward effectively.
https://www.hillbreak.com/wp-content/uploads/2018/03/architecture-2256489_1920-copy.jpg630945Jon Lovellhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngJon Lovell2018-03-16 08:03:272019-04-09 10:48:29Responsible Property Investing with M&G Real Estate
Sustainable Building Design: Principles and Practice
Miles Keeping, co-founder of Hillbreak, has co-edited a unique new book which offers detailed, environmentally-sound design solutions to a wide range of building engineering challenges. Sustainable Building Design: Principles & Practice, published this month by Wiley-Blackwell and co-edited by Miles with David Shiers, uses case examples and project data provided by engineers and designers at Arup Associates. It covers a broad range of relevant issues, with focused commentaries and explanations presented in an accessible format for use by students, busy practitioners and informed clients.
Whilst this book stresses the importance of a unified approach to design, the text is divided into six principal chapters, each addressing an important aspect of sustainable architecture and engineering. These chapters (Master Planning, Transport, Energy, The Building Envelope, Environmental Services, and Materials) may be read on their own or in sequence as part of a narrative. Throughout the book, photographs, architectural and engineering drawings and diagrams, examples, and other data illustrate the case studies. Numerous web links are provided to additional information. This inspirational book:
Focuses on the work of Arup Associates, the award winning architectural and engineering practice
Uses real-life examples of functioning buildings and structures to provide information and guidance on the development of sustainable solutions
Miles Keeping is a Chartered Surveyor and Chartered Environmentalist working in professional practice. He co-founded the Hillbreak consultancy with Jon Lovell in 2015 and is Visiting Professor in Sustainable Real Estate at Oxford Brookes University.
David Shiers trained as an Architect and is currently Reader in Sustainable Architecture in the School of the Built Environment at Oxford Brookes University.
https://www.hillbreak.com/wp-content/uploads/2017/12/pexels-photo-425135.jpeg480640Jon Lovellhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngJon Lovell2017-12-11 18:58:272019-04-09 10:54:41Miles Keeping co-edits unique new book on Sustainable Building Design
The joint venture partners* of Airport City Manchester have launched an Embracing a Changing Future Prospectus and are asking for stakeholder feedback on their aspirations for delivering positive, long-lasting impacts for the economy, local communities and the environment.
Produced in collaboration with Hillbreak and Creative Concern, the Prospectus lays out a vision for a world-class, multi-business campus, where occupiers create, trade, learn and collaborate, driven by commercial endeavour, social purpose and the opportunity to translate corporate ambition into realised local impact and value. It describes an Airport City community that is united by the spirit of ambition and innovation, as well as the commitment of the joint venture partners and their Development Manager to deliver outstanding buildings, spaces and services. By creating a vibrant, healthy, environmentally-positive setting, together with brilliant career, learning and training opportunities for local people, Airport City Manchester stands to be a genuine flagship of the Northern Powerhouse, supporting commercial success in a rapidly changing and highly connected world.
The Embracing a Changing Future vision is built around four strategic pillars: opening up a world of opportunity; creating a place where great things happen; empowering an ambitious community; and securing a lasting legacy. A wide range of programme ideas and initiatives are set out to underpin Airport City Manchester as one of the most exciting business destinations in development today and one of the most significant in the UK since the 2012 Olympic Park. When completed, it will incorporate 5 million sq ft. of offices, hotels, advanced manufacturing, logistics facilities, hybrid and ancillary retail space.
To provide feedback on any part of the Embracing a Changing Future Prospectus, or to suggest ways in which the vision for Airport City Manchester can be realised, please visit: airportcityfutures.com
* The Airport City Joint Venture Partners are Manchester Airport Group, BCEGi, Carillion PLC and the Greater Manchester Pension Fund.
https://www.hillbreak.com/wp-content/uploads/2017/11/acm.jpg437756Timia Berthoméhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngTimia Berthomé2017-11-20 06:00:462021-10-01 09:33:26Embracing a Changing Future at Airport City Manchester
Potential £10bn rental bombshell just twelve months away in buildings failing green standards
Research on the impact of new green standards has estimated the value of failing commercial property in England and Wales could be as much as £10bn in annual rents.
The estimate is based on data included in a major new report by global advisory, broking and solutions company Willis Towers Watson, which calls for radical policy measures to green the UK’s building stock.
Willis Towers Watson – Real Estate Climate Risk Report 2017
The report, to which Hillbreak was a principal contributor, contains research by big data firm DealX showing that nearly a fifth of commercial properties in England and Wales are currently failing the Minimum energy efficiency standards (MEES) due to come into force from April next year.
The research has found over 115,000 commercial buildings – 17.5 percent of those rated – in England and Wales have Energy Performance Certificates (EPC) rated F or G. Landlords will be forbidden from re-letting commercial buildings with EPCs below E from next April.
Analysis of the figures by property consultancy Daniel Watney LLP based on the EPC data and the new business rates valuations estimates that the equivalent annual rental value of F or G-rated commercial buildings could be as much as £10bn. Figures released by the Investment Property Forum last year estimated the annual 2015 value of UK commercial property rents to be £55bn.
The Willis Towers Watson Real Estate Climate Risk Report brings together major listed firms and high street names including British Land, Land Securities, Lendlease, NatWest and the John Lewis Partnership to examine how to best bring property up to standard and help the UK meet the targets enshrined in the Paris Agreement, the world’s
The listed firms say that while they can leverage their economies of scale and the latest technology to achieve substantial energy efficiency gains, the key challenge will be to get smaller businesses to green their buildings.
Recommendations in the report for greening real estate include:
Government funding for a mass retrofitting programme
Ratcheting up the minimum energy efficiency standard to an EPC D rating by 2020
The industry-wide adoption of Display Energy Certificates
Potentially combining DECs with science-based targets in future legislation to drive ongoing emissions reductions
The report also details the potential harm to real estate if action is not taken to limit climate risk, proposing tougher stress testing and increased translation of climate risk to balance sheets. Many firms are not adequately insured against extreme weather events, as seen in the wake of the UK’s 2015/16 winter floods, which caused £600m in uninsured damage.
Paul Chetwynd-Talbot, managing director of the real estate practice at Willis Towers Watson, said:
“Buildings create 40% of carbon emissions and the fact than one in five properties are falling short of standards is worrying. Investors – many of whom are pension funds – increasingly recognise the risks associated with climate change. But we need to see more affirmative action from Government to help retrofit older buildings and drive forward take up of renewable energy.”
Miles Keeping, co-founder and director of sustainability consultancy Hillbreak, said:
“It is of course impossible to identify the precise value of the total rents at risk due to MEES. But relying on rateable value data gives us a very tangible sense of the money landlords are putting at risk if they do not attend to their EPC-related risks appropriately and very soon.”
Martin Siegert, co-director of the Grantham Institute for Climate Change and the Environment at Imperial College London, said:
“The need to decarbonise our economy is critical. It is going to be a profound change: the developed world will need to have no net carbon emissions by 2050. Ending emissions from our electricity system, manufacturing, transport and supply chains will be challenging enough for our larger companies, but we will need all of our smaller companies to achieve this too.”
Sarah Cary, head of sustainable places at British Land, said:
“Retrofitting old buildings on a mass scale requires a far more complex solution than simple tax incentives to replace boilers or windows. Retrofitting should be set as a priority for a national infrastructure programme.
“The benefits would be twofold: it would be a boon for job creation, and it would work wonders in helping reach energy goals.”
Paul King, managing director of sustainability at Lendlease Europe, said:
“We need to make sustainability easier for everyone to engage with – both in terms of consumers and companies. An industry-wide agreement to have LCD screens on the front of every building showing real-time energy use would be more than welcome. Just as with the example of energy labelling on white goods, while it may not directly cause many consumers to switch from one business to another, the incentive to a CEO to avoid having a negative label compared with a competitor could generate real results in driving businesses to retrofit their buildings.”
Caroline Hill, head of sustainability at Land Securities, said:
“Changes in technology and the ability to access growing pools of data have allowed us to set increasingly ambitious commitments to reduce both energy intensity and emissions by 40% per square metre by 2030. If more leading businesses agreed to using 100% renewable power, this could provoke a serious step-change in how society approaches the challenges we face.
“Giving property owners a hard stop deadline to improve buildings or lose the right to rent them out has clearly had some positive effect. Ratcheting MEES so all buildings must be at least D grade by 2020 would provide the impetus for inefficient buildings to get the investment they need.”
Andrew McAllan, managing director of Oxford Properties Group and chairman of the Canadian Green Building Council, said:
“Most ‘Tier 1’ companies – those with the greatest capital reserves and profits – are by and large already taking the necessary action on making their buildings greener and making more efficient use of energy. It’s that next level down of ‘Tier 2’ companies that need engaging and support. Mandatory reporting of energy consumption would be useful: what gets measured gets managed.
“The best sustainability strategies are built on a foundation of good data, and there are ways of bringing in these measures without making them onerous for smaller businesses. Once you have that compulsory recording in place, smaller businesses then see the easy efficiencies they can make on their utility costs. Combined with something like carbon pricing to add impetus to the need to invest in more efficient installations, that is how we can effect the change we need.”
Richard Garner, head of commercial agency at property consultancy Daniel Watney LLP, said:
“As our research into the value of England and Wales’ F and G rated buildings shows, many investors in commercial property face a ticking timebomb with their properties being potentially unlettable from April next year – this is particularly the case in the office hotspots of Westminster, Kensington and the City, which have commercial space with a collective annual rental estimate of nearly £800m currently not up to standard.
All the evidence demonstrates that adding sustainable features to offices adds value and drives worker productivity and satisfaction, advantages that will serve landlords well over the long term.”
Jon Lovell, co-founder and director at sustainability consultancy Hillbreak, said:
“It is important that that the government clarifies some of the glaring gaps in the confusing regulations. Many large fund managers and REITs are on top of them, but we have a real concern for the long tail of smaller landlords, businesses and family trusts, who own a disproportionate amount of F&G rated properties and will suffer if they don’t get their acts together very quickly.”
— ENDS —
Contributors to the Willis Towers Watson Real Estate Climate Risk Report 2017 included Hillbreak, British Land, Land Securities, Lend Lease, Oxford Properties, John Lewis Partnership, Nattiest, Hermes Investment Management, Blackstock, Grantham Institute for Climate Change & the Environment and DealX.
For more information, please contact Blackstock Consulting / Tyron Wilson / tyron@blackstockpr.com / 07725 197364
Notes for editors
Daniel Watney LLP is not a contributor to the report, but their research on the value of F + G-rated property is based on the DealX data within the report. The rental estimates are based on the latest rateable values used to calculate business rates, calculated using the average rateable value in each local authority and the number of F + G-rated buildings in each district.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.
About Hillbreak
Hillbreak is a unique training and advisory firm that helps organisations seeking competitive advantage in a changing urban world. Its mission is to expedite the transition to a sustainable policy, business and investment environment by bringing intelligence, challenge and inspiration to its clients and stakeholders. Please visit hillbreak.com for further information or follow us on Twitter, Facebook, and LinkedIn.
An interactive one-day course for sustainability managers and responsible investment professionals
It is now increasingly common for property companies, real estate trusts and fund managers to employ sustainability professionals to lead, manage and support their responsible investment and ESG activities. Very often, these professionals are expert in environmental and/or socio-economic matters but have limited experience in, or knowledge of, key commercial property disciplines.
By assisting sustainability and responsible investment professionals working within a property context to better understand the fundamentals of real estate markets and related surveying disciplines, our aim with this highly-interactive and intensive one-day course is to enhance their ability to engage with their colleagues and stakeholders in the furtherance of positive ESG outcomes; and enhance their contribution to the strategic, operational and financial goals of their employer organisations and their respective investor clients.
Objectives
Participants can expect to develop:
A stronger appreciation of the commercial property market, including present and future challenges.
A better understanding of core property investment and development processes.
A working knowledge of valuations and appraisal methods for property investment and development schemes and how sustainability factors interact with these
Deeper insights about the work undertaken by different professionals within the sector, including the notable standards by which they are governed (e.g. valuers, investment managers).
Familiarity with, and understanding of, property jargon.
The knowledge with which to connect ESG objectives and principles to ‘traditional’ commercial property drivers.
Course outline
The unique course, specifically tailored for real estate sustainability and ESG professionals, will be run in a roundtable format with a combination of classroom-style teaching, Q&A, individual and group exercises and facilitated discussions. In this way, it is hoped that all participants will learn by having the opportunity to steer content whilst interacting with each other and the facilitators.
Agenda:
Welcome, introductions and ice-breakers
Examining the state and function of the property market and considering its current and future challenges, and salient market trends
Following the money: the property investment processes, who the market participants are, their roles and objectives, and how that shapes their strategy and approach
Understanding property valuation processes, and how they interface with sustainability factors
Identifying the key obligations and rights of landlords and occupiers, and how they impact sustainability risks and opportunities
Changing skylines: the property development process, including the scope of development, who does what for whom and why, how development appraisals are undertaken, and the impact of sustainability factors
Considering the language used by real estate market participants and what this can mean
Additional details
Course length: one day
Capacity: capped at 15 participants
Eligibility: exclusive to ESG and sustainability professionals working in real estate
Learning Materials: All course resources provided via the online Hillbreak Learning Hub as well as access to post-course support from our instructors
Refreshments: provided (including lunch)
Pricing
£600 excl.VAT per person
Prospectus
https://www.hillbreak.com/wp-content/uploads/2023/08/gridlines-smaller-file-size-for-website.jpg450800Joe Lovellhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngJoe Lovell2024-03-04 17:46:202024-03-13 12:33:35Real Estate Fundamentals for ESG & Sustainability Professionals – LONDON
Integrating ESG into Real Estate Investment Management
Q2 registrations for 2024 are now open for the BBP Real Estate ESG Training course, delivered by Hillbreak. Due to the high demand expected and the need to ensure an impactful learning experience for participants, the course is being delivered to groups of between 15-20 individuals. Check the full list of available groups and course dates and make sure that you are booking the right one based on your availability; we cannot guarantee that booked places will be able to be transferred from one group to another. Swapping groups once your course is underway is usually not possible.
The key details of the course include the following:
Part 1 of this programme will be a 2-hour online introductory session; the majority of the training, Part 2, will be delivered in person over one full day, please ensure you are available to attend BOTH parts. The in person session will be held at The Space In Marylebone, London and will include lunch and refreshments for all participants.
Group F 2024 Course Dates
Part 1 – ONLINE (2 hours) via Zoom: 20 June 2024 (10:00-12:00) BST
Part 2 – In-person in London : 27 June 2024 (9:00-17:30) BST
Audience
In this revised format we bring together participants from Asset Owner and Manager organisations, and those from Advisory & Consultancy firms in the spirit of radical collaboration which the BBP has been advocating. It has been re-designed especially for real estate professionals working within an asset management context, including those working for fund management and investment advisory institutions, Real Estate Investment Trusts and private property companies; as well as advisory professionals in capital markets, investment advisory, valuation, leasing and transactions-based roles. It is open and applicable to those in the following roles:
Fund managers
Portfolio and asset managers
Investment/ transaction managers
Development managers
Investor Relations specialists
Product development and distribution specialists, especially those looking to incorporate ESG characteristics into new or existing funds
Real estate finance professionals and analysts
Equity raising
Debt sourcing and structuring
Investment brokerage / consultancy
Agency (i.e. buying, selling and leasing assets and portfolios)
Valuation
Capital markets research
Please note that the course has been developed to fulfil a particular industry skills development need and is intended for the audience set out above. The BBP and Hillbreak reserve the right to reject booking requests from individuals or organisations that do not fall into eligible role categories, including, for example, those in ESG and sustainability consultancy roles.
Learning Outcomes
At the end of the course, participants will:
Have deeper knowledge and understanding of the key environmental, social and governance factors pertinent to commercial real estate investment.
Have greater awareness of salient market trends, including investor, lender, occupier and other stakeholder expectations, and the implications of these for real estate portfolios and their managers.
Be able to identify the ESG factors that are material to a range of commercial property types, including across the spectrum of investment strategies, from core to opportunistic.
Be able to identify and advise on the ESG-related risks and opportunities that are material to different transaction and capital raising contexts, including understanding the relationship with property value
Be able to identify and assess ESG-related risks and opportunities to real estate investments in the short and longer-term.
Know what needs to be done at each stage of the investment lifecycle to address these ESG-related risks and opportunities – and how to factor these into investment decision-making.
Know how to measure, set targets for, track and report on ESG factors, including in relation to risk profile, environmental performance and social impact.
Understand the scope and limitations of the principal ESG measurement, benchmarking and certification frameworks, and the role these can play in improving transparency.
Be confident in driving forward the environmental and social performance of assets under management, based on a stronger appreciation of some of the practical interventions that are available
Have better understanding of how ESG-related strategies of investors and occupiers are evolving and how this impacts on the advice and insights that clients need from their advisors and agents
Have deeper knowledge and understanding of material ESG factors and their effects in different investment contexts, within and beyond the transaction of assets, portfolios and operating platforms
Be more confident to integrate ESG factors into investment strategy advice and appraisals
Be able to justify the advice given to clients and the positions represented to clients’ counter-parties in the context of the evolving ESG landscape.
Course outline
For this group, the course will be split into two parts. Part 1, a 2-hour online session, and Part 2, a full day delivered in person in London 1-2 weeks later. The principal elements of content will cover the following:
Module One (Context & Strategic Considerations)
ESG drivers and market trends: understanding how investment and operating contexts are changing in response to environmental and societal imperatives.
New risks and opportunities: defining key ESG topics, such as Net Zero and social impact, and their application to different property types and asset strategies.
Financial and non-financial returns: unpacking the relationship between ESG, property value and investment performance.
Measurement and transparency: certification, benchmarking and reporting frameworks applicable at the asset, portfolio and corporate level.
Module Two (Practical Implementation)
Prioritising ESG interventions throughout the property investment lifecycle, including integration into asset business plans and the growing role of sustainable finance.
Ways of engaging with other stakeholders, such as occupiers and operating partners, to secure the delivery of ESG interventions and outcomes.
Establishing roles and responsibilities, ensuring accountability and incentivising action across the value chain.
Market leadership: examples of best practice and innovation from around the sector.
Pricing
The pricing below includes both live teaching sessions, all training materials, lunch and refreshments on the in-person training day, and access to our online Learning Hub platform where you can continue to access useful resources and reach out to Hillbreak after your initial programme has been completed.
Participants from BBP Member organisations: £750 + VAT per participant
Participants from organisations that are not members of the BBP: £1000 + VAT per participant.
https://www.hillbreak.com/wp-content/uploads/2021/01/bbp-logo_new.jpg99539Timia Berthoméhttps://www.hillbreak.com/wp-content/uploads/2021/02/hillbreak-green.pngTimia Berthomé2024-02-06 15:15:112024-04-12 10:27:57BBP ESG Training for Real Estate Professionals – Group F 2024 (In-Person LONDON)
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