Green certificates are becoming the norm in CEE but words like ‘excellent’ or ‘platinum’ don’t always provide enough information about a building’s overall environmental impact. Developers, architects and advisors were discussing the real cases of ESG principles` implementation during a panel at the European ESG Property Forum conference in Warsaw, moderated by Oana Stamatin, ESG Chief Officer at Colliers.
ESG is an abbreviation, which is getting more and more popular in public discussions on the European property market. There is no doubt that in the face of climate change the whole market should cooperate and act as a unity. But what exactly do different groups of market players understand as E, S or G? Which of these three letters is the most important to them?
Unsurprisingly, developers bet mostly on the environment. “We focus on each letter, but ‘E’ is the major one for us. Our core strategy is certification. A couple of years ago we started with a ‘Go Earthwise with Panattoni’ programme. At that time, we were focusing on BREEAM. We set up a whole certification system for our properties, as one of the first developers on the market. Together with the green solutions, we focused on ‘S’ – we were trying to introduce as many improvements for the employees as we could. After two or three years, we had seen that we achieved our goals, so we proceeded further on – we upgraded the certification in our buildings from ‘Good’ to ‘Excellent’. In the Czech Republic, we’ve got the highest-rated warehouse building in Europe, certified at the ‘Outstanding’ level. Day by day, step by step, we are trying to reduce our water and energy consumption within the buildings,” said Emilia Dębowska, Sustainability Director at Panattoni.
Her views were partially shared by Adam Targowski, Group Head of ESG at CTP: „I would say ESG is embedded in our business model, that is quite unique. We don’t build to trade, we build to keep. This strategy requires a lot of attention to detail and quality. So that works very well with ‘E’. Back in 2010, we started developing warehouses that have sufficient capacity on the roof to install photovoltaic panels. Soon after that, we started installing it on a large scale. ESG is nothing new and that’s definitely our case. When it comes to the letter ‘E’, we see it as a way to get rid of our carbon footprint. Warehouses are a great place to produce electricity, first to satisfy the needs of tenants, then – to make a profit for the owners of the properties. Buildings, which are made to keep, not to trade, are more likely to be high-quality products that will last for years. When it comes to ‘S’, we strive to be present in local communities for long. We don’t just come and leave after a year or two but, we`re a long-term part of the community. In our largest parks, we’re developing so-called ‘clubhouses’. These are buildings that have nothing to do with warehousing or logistics, they are offering amenities for the people. In some of them, we’re providing doctor services, shops and canteens, or even meeting rooms. Bringing amenities close to the people plays quite a significant role because as we all know, warehouse properties are usually located remotely from the cities. And last, but not least, we’re cooperating with local municipalities, improving the infrastructure that is used by people. ‘G’ part, the governance is often considered a burden by many companies. When it comes to us, we consider ‘G’ as an enabler, because, in our case, it is an angler to drive the business at full speed.”
ESG issues are increasingly often a major component of due diligence procedures. Joanna Plaisant, Strategic Partnership and Sustainability Associate Director at Arcadis presented an insightful opinion on this matter: “We have started to observe that in some of the transactions, our sustainability team comes in first. The investors want to check if the building is sustainable, and how much it will cost them to get it to the desired sustainability level. And after that, they can decide, if they want to have the technical due diligence or not. The carbon net-zero journey for a building is something that everybody needs to participate in. We all need to be neutral by 2050. There’s no question mark here. But we really need to have some common measurement system, a taxonomy. In Europe, we all complain that we don’t have a benchmark for embodied carbon emission. We work with, for example, Asian investors who have already set governmental benchmarks that they need to fit into. Even if we know, ’how much’ today, without such benchmarks we simply don’t know, if we’re doing better.”
Another aspect of introducing ESG principles in modern properties is a large amount of produced waste, which could be reused. And this is where circularity comes in. “Embodied emissions amount to 60% of the total emissions that a building will have during its whole life cycle. And a lot of that is upfront. So, when we know that as humans, we’re going to construct a city the size of Paris every week until at least 2040, we definitely have to do something about it. We can’t continue to build with virgin materials and continue to construct shells that are very heavy emitters of carbon, like concrete and steel. We should switch to biomaterials instead. However, I think the best materials we have are the ones that we’ve already manufactured, and that are actually being wasted today. Keep in mind that over 38% of the waste generated in the EU is construction and demolition waste. 40% of our all resources, including water, are used for construction and demolition practices. And this is where the circular economy comes in. What are some of the circular practices that we need to be pushing for? The first one is keeping in mind, that today only 1% of our construction materials globally are being reused after demolition. We definitely have to change that,” said Tina Paillet, Co-Founder of Circotrade and Senior Vice-President of RICS.
And what does the execution of ESG strategies look like in the eyes of an architect? “We should simply build to last – because the worst thing that can happen to a building is demolition without the re-use of the waste materials. We have to design buildings that can be used for a very long time, by fathers and by children. How to do it? I recommend five simple principles. First – build something beautiful, so nobody would like to destroy it. Second, do it in a flexible way. We cannot predict the future, but we should be open to anything that the future brings. Third – do not follow the latest fashion in architecture. Build a classic, not a bestseller. Buildings which were built according to the latest trends, after 15 years are often in a difficult situation, because they are not fashionable anymore, nor vintage yet. Number four – build on a strong commercial basis; this is something that we, architects neglect, concentrate on the beauty. And last, but not least, we should always implement all possible green technologies, which are available at the moment,” said Szymon Wojciechowski, Founder & CEO of APA Wojciechowski Architects.