It’s certainly a cause for celebration that the European Union has laid out a roadmap to become the first climate-neutral continent by 2050. It does, however, entail ever-tightening regulatory measures that need to be acted on – not by Brussels, but by us. And the first wave of measures are coming fast, in fact, they’re already here.
These measures are part of the European Climate Law – more commonly known as the less foreboding European Greenhouse Deal – and one of the major focal points is on property. Buildings, the European Union identified, account for 40% of the energy consumed in the EU, and for 36% of energy-related greenhouse gas emissions. A staggering amount. The same EU report also identified great room for improvement, estimating that around 75% of buildings within the Union are not yet energy efficient – or, at least, have not yet presented that they’re energy efficient. Meeting these targets is imperative as 95% of the buildings across the 27 nations from the EU are expected to still be standing in 2050, at carbon neutrality.
How wil this affect your office buildings?
As of this year, these strict measures are already in effect so it’s never been more important to think about energy solutions. The Netherlands, for one, has decreed that as of 1 January 2023 all office buildings within the country must have at least an energy label C (a primary fossil energy consumption capped at 225 kWh per m2 per year). And in order to receive the certification your building needs to be subject to an assessment, Otherwise, you may no longer be able to use the space as an office. A serious risk. Concerningly, the Netherlands Enterprise Agency reported that only around 50% of the 65,000 office buildings in the country meet the target – meaning around 32,500 offices run the risk of closure this year. But for many, it could be a simple fix: compiling a carbon-usage report. According to the same report, 41% of offices are still yet to be registered. This means that close to 14,000 offices in the Netherlands may be eligible for the energy label C, they just don’t have the data to prove it.
The quick fix is smart metering, using tools to analyse and understand energy consumption in a clear, accurate and concise manner. For many property owners, this will provide tangible proof that their buildings already meet the legal standards for 2023, but for others, it will open an avenue to address their properties’ shortfallings. The consequences of non-compliance with these measures are not so clear cut, but the fault will inevitably fall on the shoulders of property owners – so it’s in the interest to invest early in a smart meter, to save hardship down the line. But the pressure to become more energy efficient is not only being plied on the government level, it’s coming from the corporate sector as well. Environmental, social, and corporate governance (ESG) is fast becoming a hot metric in many industries, and those falling behind are being – or soon will be – heavily penalised.
How LCA-policies impact your business
Apple, for one, wants to clean up the entire lifecycle of its products and recently announced that it’s urging its supply chain to champion decarbonisation goals, tracking and auditing its entire network’s progress toward carbon neutrality. To achieve this goal, Apple will need an energy solution that relies on accurate data that’s either been compiled in-house or by a third party – very similar to what European governments are sourcing. This data will be imperative for the survival of the companies that work alongside Apple, as without it they run the risk of being dropped from the network. The full life cycle assessment (LCA) – a more honest carbon calculator that avoids burden shifting and allows decision makers and consumers to compare products, seeing which has the least environmental impact – that Apple has employed means everyone involved needs to be actively working to reduce their footprint. If one fails, they all fail.
It does need to be remembered that LCA isn’t new – far from it. The Guardian reported an uptick in companies embracing LCAs over a decade ago, citing Unilever as one the leading names utilising the method and taking responsibility and accountability for their product portfolio. We’ve since seen major brands like Marks and Spencer, Ikea and Nestle adopt the method, plying pressure on their respective networks. With heavier pressure coming from the government and societal levels, we can expect to see even more companies adopting LCA to adhere to the European Climate Law.
Growing demand for environmental responsibility
But, however powerful of a force regulations are for change, the true driver is the consumer, the end client. Conscientious shopping isn’t just a buzzword it has some real impetus. Forbes reported in 2022, that more than 75% of consumers will discontinue their relationships with organisations and companies that treat employees, communities, or the environment poorly. Many of them won’t bow out quietly either, voicing dissent and outrage through social channels. More and more consumers expect organisations to be ethical, sustainable and committed to virtues other than profit. Consumers are then demanding hard data and figures that prove action is being made.
The same demands are being made by financial institutes all around the world. ABN Amro, for instance, will soon embed the ESG risk score of the companies in its client’s investment portfolio onto its trading platform, allowing its investors to see precisely the impact their investments have made thanks to easy to understand ESG reports. ABN Amro is forcing accountability and championing sustainability, putting its own ESG ranking in the public domain for its own investors and clients. Spin the globe to another corner of Europe, Bulgaria, and the fintech giant Payhawk – notably the first Bulgarian company to be awarded unicorn status – is preaching the same message: ESG reporting and sustainability are paramount. Payhawk goes as far as to call ESG one of the major trends to watch for 2023.
There is then legislative, business and financial accountability for not taking responsibility for the efficiency of your operations and the buildings you work from. And as we entered 2023 this accountability is becoming a risk on all three fronts. A risk of being forced to stop operating, especially for those in the Netherlands, a risk of being swept up in an LCA drive and the risk of losing clientele. However, the risk can easily be dampened by being transparent, by presenting your data.
The starting point is to track the average annual energy-efficiency performance of your property – or properties if that’s the case – to pinpoint both your strong and weak points. Only when data is made easily available can problems be addressed. It’s also only with data collected through energy solutions that you can create ESG reports proving that a property complies with EU regulations and is committed to wider ESG goals. The expectation for companies to not only become more sustainable but to prove that they’re becoming more sustainable is here to stay.
Discover how you can start collecting the E for your ESG with Rhino here.