CREFC’s autumn conference was held in London on 8 November. CFP has long worked with the UK trade association for the commercial real estate finance industry. Colleagues Bram, Joris, Olivier and Andres attended the conference, where they participated in a roundtable discussion on ESG, real estate sustainability and data. At the table were consultants, bankers, real estate owners and building users, all faced with legislation and sustainability goals.
Together with partners including David Stephens of HSBC – with whom we launched the Green Buildings Assessment Tool in the UK – the perks and flaws of data were discussed. Bram Adema presented the Green Buildings Tool as a solution to many of these challenges. In this article, we bring you up to speed.
Data is key in real estate sustainability. However, collecting the required data is complex and creates problems for all parties, as the roundtable discussion revealed. The Green Buildings Tool makes data collection far easier. At both building level and portfolio level, much of the required information can be obtained quickly and easily. But the Green Buildings Tool not only provides data, but also supports the actual sustainability of buildings. In the tool, quick wins are immediately visible, offering a great deal of added value for real estate investors and building users who are not always familiar with technical installations and their potential. This turns a complex process of data collection and comparisons into a quick and easy decision that can be recouped in the short term. CFP project manager Joris Kok: “The Green Buildings Tool actually works as a leading indicator by showing which buildings and which measures are best to focus on first.”
Also at the table was David Stephens, Head of Real Estate Finance at HSBC, who noted that the tool is also useful in identifying risks. Risk assessments are essential when applying for finance to purchase real estate or to make it more sustainable. The Green Buildings Tool provides quick insight into the sustainability status of buildings. Are they in bad shape with an unfavourable EPC, for example? If so, they are more likely to eventually become stranded assets and can no longer be leased or used. This brings greater risks in issuing a loan. Conversely, if a building scores well, there are more opportunities for a green premium.
One topic that is gaining more attention in the world of real estate and ESG is climate risks. To what extent are buildings climate adaptive and future-proof? Is the building in an area of frequent flooding or is there a higher risk of forest fires? If so, this poses a risk. First of all, this is useful information for real estate owners and users, but banks also take it into account when issuing loans. CFP is developing a climate risk module in its tool so that these characteristics of buildings can also be seen at a glance.
When applying for funding, a sustainability plan and its impact frequently comes into play. That requires preparation and again: data. Roundtable participants concluded that the Green Buildings Tool also contributes in this respect, as the data from the tool provides insight into the expected costs, savings and payback periods of investments. This specific data makes the conversation easier for both banks and loan applicants.
“Data is absolutely key in assessing risks and finding opportunities“– David Stephens, HSBC
A what-if scenario was also discussed at the table.. Bram Adema, CEO of CFP suggested: “What would we win if every building had a digital twin?” The participants were unanimous in their response that this would make their lives easier: whether you need to assess financial risks, make properties more sustainable or want to invest.
The goal for the Green Buildings Tool is therefore to become the LinkedIn for buildings. LinkedIn enables large-scale access to data on individuals and businesses, which would be a huge job to sort out without the platform. Similarly, CFP aims to create digital twins with the Green Buildings Tool so that building data can be accessed in one place anywhere in the world.