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2019 has seen a huge increase in public awareness of climate change and the development of a mainstream view that we are now dealing with a climate emergency caused by global warming. It is an established fact that business operations and the buildings in which they operate contribute significantly to global warming, but currently they are only required to report on their carbon emissions: there is no requirement to make reductions. But the pace of change is gathering …

Background

Since the Paris Agreement was signed in 2015 a number of initiatives have been introduced to steer the global economy towards a low carbon/high resilience model to limit increases in global temperatures. The sense of urgency increased when, in October 2018, the Intergovernmental Panel on Climate Change published a special report (the IPCC Report) stating that ‘urgent and unprecedented’ changes were needed to meet the goals of the Paris Agreement.

Responding to the World Green Building Council’s 2018 Net Zero Carbon Buildings Commitment, in May 2019 UKGBC launched its own Framework Definition for Net Zero Carbon buildings – the first step towards the development of a whole life carbon approach for buildings. Within days the UK Committee on Climate Change published its report calling on the government to set a legally binding target of net zero carbon emissions by 2050. (Scotland‘s Climate Change Bill sets 2045 as their net zero target and the Welsh Assembly has set a target of 95% reduction in emissions by 2050). By the end of June Parliament had passed the legislation making the UK the first major economy in the world to pass laws to end its contribution to global warming. But how are we going to achieve this?

Mandatory reporting

Whilst legislation requirements to take action to reduce emissions are currently relatively light touch many larger companies do have to collect and report on a range of carbon-related data.

All UK quoted companies have to undertake mandatory greenhouse gas reporting, publishing emissions data alongside their annual Directors’ Reports. Since 1 April 2019 and the introduction of the Streamlined Energy and Carbon Reporting (SECR) regulations, mandatory reporting also applies to large unquoted companies and LLPs meeting two or more of the criteria (turnover of £36m+, balance sheet total of £18+ and 250+ employees).

In addition, every four years ‘large undertakings’ (businesses with 250+ employees or £39.8m+ turnover and an annual balance sheet of £33.4m+) must also undertake assessments under the Energy Saving Opportunities Scheme (ESOS).

Of course we can provide more detailed advice on ESOS and SECR if you are unsure whether they affect you.

Voluntary action

The government hopes that by increasing transparency in reporting it will become clear to businesses how energy wastage is affecting their bottom line, motivating them to put into place measures to reduce energy use and save costs.

But the current reporting measures, whilst welcome, are just targets. What we’re seeing more and more of now is businesses seeing the shift towards ethical and environmentally responsible consumerism and responding with voluntary action to reduce their carbon footprint. In September 2019 23 organisations with £300bn of combined assets under management signed up to the Better Buildings Partnership’s Member Climate Change Commitment which highlights the need for both new and existing buildings to be net zero carbon by 2050. All signatories have committed to publish information by the end of 2020 on how they will implement measures to work towards the legal net zero carbon targets.

How can Hollis help?

There is little doubt that mandatory reporting will become more onerous, both at national and local level, but we can also expect that, at some point, businesses will be obliged to implement carbon saving improvements.

Net zero carbon targets cannot be achieved without collecting data – so this is the starting point. Meeting the targets will also have a material impact on business decisions and it’s important from a risk perspective to be aware of what those are.

We can help by taking you through a five-stage process:

We start by working closely with you to understand your portfolio, the data you already have and identify what data you need and how to get it.

We can work with you and your key stakeholders to work out which issues are material and prioritise the actions that will result in the maximum gains in energy efficiency. This will result in a strategy, which can be published as your pathway to net zero, and give measurable targets at a portfolio and individual asset level.

Read the full briefing note here.