Despite industry efforts to decarbonise building portfolios, retail real estate asset managers and owners lack a sector-specific trajectory towards achieving climate-neutrality, according to a new report published by BPIE – Buildings Performance Institute Europe.
The report highlights that the current rate of decarbonisation of retail buildings is not happening fast enough to meet climate goals. Extreme weather conditions, rapidly expanding floor area and growth in demand for energy consuming services exacerbate the issue. The report also marks the launch of Paris-Proof Retail Real Estate, an initiative that looks to develop a vision and strategy to support the European retail real estate sector reach net-zero carbon emissions by 2050, in line with the Paris Agreement.
According to the report, failure to put in place a decarbonisation strategy now could lead to value erosion and stranded assets in the years to come.
’In Europe, while GHG emissions targets are well defined for 2030 and 2050, these are not yet transposed into meaningful guidance for individual industry sectors,’ said Zsolt Toth, senior project manager at BPIE.
’If we are serious about decarbonising the full building stock by 2050, the retail real estate sector and policymakers need to have a common understanding of who needs to do what, and by when. The strategy should be measurable, sector-specific, and disaggregated from high-level political targets.’
Clemens Brenninkmeijer, head of Sustainable Business Operations at Redevco, an urban real estate investment management company, also believes that ‘the need for deliberate actions and tangible results to significantly decrease emissions in the built environment is becoming more urgent for retail real estate managers every day’. ‘This report provides insight into where the retail real estate sector in particular stands, and what should be the next step.’
While this may seem evident, developing a forward-looking decarbonisation strategy for businesses amid a changing policy landscape is not a simple exercise, said Joost Koomen, Secretary General of ECSP, the European Council of Shopping Places, representing retail and mixed use destinations and their communities.
’Aligning the broader long-term 2030 and 2050 goals with short to medium term investment decisions will be important, particularly in a rapidly changing industry that has been hit hard by the Covid-19 pandemic,’ noted Koomen. ‘Market actors urgently need to understand how to plan for the longer term while also ensuring stability within the short to medium term.’
As BPIE’s analysis shows, most of the risks associated with climate change are expected to appear in the medium to long-term and thus are not captured by the relatively short-term models used in most current risk management practices. Data gaps, confusion of metrics and protocols, as well as the particular nature of carbon risks could give rise to a collective mis-assessment by real estate markets.
