Surging power costs due to, amongst many things, extrinsic factors like Russia’s invasion of Ukraine have not gone unnoticed. Combine that with record-breaking temperatures this summer and it’s clear that environmental policy is on everybody’s agenda. Time will tell where the new Prime Minister takes things from here. However, given that the use of buildings is one of the nation’s biggest polluters, it follows that policy surrounding the use of commercial property is a target for future legislation. As a result of this inevitable, impending change, environmental credentials are being held in higher regard.
So what environmental credentials are out there?
BREEAM
The most commonly referred to accreditation is the “Building Research Establishment Environmental Assessment Methodology”. It was once considered the world leading method of assessing environmental sustainability and is the methodology of choice in the UK.
BREEAM analyses the environmental performance a building is designed to achieve and informs property owners what changes are needed to bring the building up to standard. If the building meets the threshold, it will obtain the all-important BREEAM certification, attractive to potential investors and occupiers alike.
Some say the BREEAM system is too flexible. It’s possible to have a building that isn’t energy efficient but can obtain a certificate by capitalising on certain specific items, such as air quality. This is good for property owners (in terms of marketability) but not necessarily for the environment (in terms of actual environmental impact). Furthermore, the biggest critique of BREEAM is that it is overly concerned with the design of the building, rather than its actual environmental performance whilst it is in-use. Again, this is great for owners looking for accreditation, but not for carbon emissions.
LEED
“Leadership in Energy and Environmental Design” is a certification program run by the U.S. Green Building Council (“USGBC“).
LEED does not use in-house licenced assessors, like BREEAM. Instead, LEED’s building design team collects data and sends it to the USGBC to assess. The LEED rating system is pass or fail, whereas with BREEAM a building can meet a proportion of each individual criteria. Also, BREEAM’s multiplying system means some categories are worth more than others. Therefore, LEED is perceived as a slightly stricter methodology. With LEED, if a building is inherently ‘not-green’ then it is not going to be accredited.
BREEAM v LEED
BREEAM assessments are carried out against nine criteria, two of which aren’t included in LEED’s evaluation, being:
- health and wellbeing; and
- transport.
LEED has its own unique categories but generally speaking, LEED puts emphasis on the type of building whereas BREEAM gives more weight to the facilities within the building in its assessments.
NABERS
NABERS is the “National Australian Built Environment Rating System”. Following its success in Australia, NABERS UK was launched in November 2020. NABERS separates itself from design-based assessments, like LEED and BREEAM, by measuring what it calls “the actual energy use of offices”. Their aim is to close what is referred to as the ‘performance gap’ between how much energy a building is designed to consume and what it actually consumes.
There is some desire in the market to move towards this system. Fundamentally, a building can have a satisfactory BREEAM or LEED rating but that doesn’t translate to an ongoing improvement in environmental performance year-on-year, which is needed to achieve net-zero.
The assessment must be carried out annually and focuses on how property owners can continuously improve a building’s sustainability rather than a pass/fail certification system.
EPCs
Since 2018 commercial properties need an EPC rating of E or above for them to be let in a new lease. From April 1 2023, this requirement will apply to all leases, meaning it will be unlawful to continue letting a commercial property with an EPC rating of less than E. Suggestions are that the target EPC rating will increase to B by 2030. On that basis, roughly one million non-domestic buildings need to be improved in the next eight years.
Conclusion
The discourse surrounding environmental policies and companies’ impact on society only seems to grow. It has seemed that governments around the world have historically pushed back timescales and avoided implementing meaningful policies. Now, the time has come for change. The commercial property industry must be ready to adapt and adapt fast.
Key Points
- Environmental law is set to change to achieve net zero carbon emissions.
- Emphasis will be put on environmental performance of buildings.
- Accreditations like BREEAM, LEED and NABERS are becoming increasingly significant for owners, investors and occupants alike.