The UK government’s Transition Plan Taskforce (TPT) has included guidance from The Better Buildings Partnership (BBP) and recommendations from real estate associations in its finalised climate transition guidance for investors and fund managers.
TPT, set up by UK Treasury in 2022, has released “deep dive sector guidance” and states that, when defining objectives and priorities, investors may consider the BBP’s guidance for real estate, and that when disclosing, investors may consider resources including the ESG Metrics for Real Estate paper.
The BBP guidance was produced in 2022 and the ESG metrics paper was updated at the beginning of the year by the Association of Real Estate Funds (AREF), British Property Federation (BPF), CREFC Europe, European Association for Investors in Non-Listed Real Estate Vehicles (INREV), Investment Property Forum (IPF), and Pensions for Purpose and the Good Economy.
The TPT guidance for asset owners and asset managers says that, in the context of metrics and targets: “An entity shall disclose information about the GHG emissions and removals metrics and targets that it uses in order to drive and monitor progress towards the strategic ambition of its transition plan, and report against these metrics and targets on at least an annual basis.”
In a joint statement, AREF, BBP, BPF, INREV and IPF said the finalised guidance – which the Financial Conduct Authority (FCA) has stated it intends to draw on for its incoming SDR sustainability disclosure and labelling regime – “are powerful messages to asset owners, managers and other market participants to apply these metrics guidance for real estate”.
Paul Richards, CEO at AREF, said: “This is terrific news from TPT – building on existing work and establishing a clear framework for our members, real estate funds that fund UK buildings, and a clear direction of travel for the real estate industry to deliver a more sustainable future.”
Sarah Ratcliffe, CEO of BBP, said: “This latest guidance from the TPT is an important step forward in supporting the disclosure of transition plans aimed at delivering on the UK’s commitment to a net-zero UK economy. We are very encouraged that the TPT has sought to leverage existing guidance from the real estate sector, consolidating best practice and the critical drive for consistent and comparable metrics.”
Ion Fletcher, director of policy at BPF, said: “With the property sector increasingly focused on the green transition, it’s important for there to be a common language when it comes to reporting on plans and progress. The TPT’s latest guidance provides a helpful dictionary for asset owners and managers that will support clarity of reporting and underpin the property sector’s ongoing attractiveness to investors as we transition to net zero.”
Lonneke Lowik, CEO of INREV, said: “INREV has long supported metrics that will facilitate consistent, measurable, comparable and verifiable reporting. These are critically important for real estate investors and managers and we appreciate the TPT listening to the industry in developing the guidance.”
Sue Forster, CEO of IPF, said: “The publication of the asset owners sector guidance and the asset managers sector guidance will be very helpful to those in real estate who are striving to produce plans that meet this standard.”
Melville Rodrigues, coordinator of the ESG Metrics for Real Estate paper and head of real assets advisory at Apex Group, said: “Terrific that the TPT has referred to our ESG Metrics for Real Estate paper. In light of approaching the FCA officials and others within industry – with the goal of creating a best-practice benchmark – I have received tremendous support for this initiative. I am particularly grateful for the collaboration with the working group, including with updates to the metrics paper on account of SDR and other regulatory developments.
“Our real estate sector’s credibility depends on harmonising ESG metrics and setting benchmarks which facilitate transition planning. This is a pressing concern for the sector given that the built environment contributes to about 25% of the UK‘s greenhouse gas emissions. The TPT’s reference to the metrics paper will hopefully facilitate the harmonisation of ESG metrics for our sector.”
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