As project managers, we’re always looking to ensure that the building refurbishment work we undertake future proof the property for years to come and avoids an ESG ‘stranding risk’.

The UK Government is planning to make significant legislative changes to accelerate the move from a current average commercial EPC rating of a ‘D’ to a minimum ‘B’ rating within the decade, and generally improve the energy efficiency of the UK’s building stock.

In England and Wales all commercial buildings will likely need to achieve an EPC ‘B’ rating by 2030 to be lettable. While this is a step in the right direction, it doesn’t solely address the energy usage crisis, with actual operational energy use a far more significant metric. Much research has been done to support the fact that, although an EPC provides a snap shot in time of a building’s modelled energy performance, and a good EPC is better than a bad, it often has little correlation with the actual operational energy usage over a building’s lifespan, as read on the building’s energy meter and reported on bills.

But why is understanding your in-use energy performance so important, and how might this affect EPCs in the future.

Measuring operational energy usage is important for many reasons, including:

• Reporting energy usage to stakeholders: tenants and property owners will increasingly come under pressure (or legislation) to report their carbon footprint. In fact, a recent government consultation was tasked with looking at replacing EPCs with in-use metrics for large buildings later on in the 2020s. Other legislation like Streamlined Energy & Carbon Reporting (SECR) and the Taskforce on Climate-related Financial Disclosures (TCFD) will increasingly play a pivotal role in helping the UK reach its net-zero by 2050 targets.
• Reporting on net zero targets: as more landlords commit to net zero, they will need to ensure they are on track, based on quarterly or annual reporting of carbon emissions. Obtaining in-use energy data from tenants, which may well form part of any greenhouse gas scope 3 emissions commitment, will be critical to monitoring performance.
• Improving energy consumption and reducing emissions: identifying how much energy you are using allows you to improve your building’s performance and ultimately saves you money with ever increasing energy prices. Having insulated building envelopes is important, but ‘smart’ building controls where systems are only operating when needed is also key.
• Asset value: evidence suggests there may be a ‘green premium’ for buildings which perform well under ESG related criteria, which in turn can command higher rents, shorter void periods and ultimately higher asset value.
• Public relations and rising awareness: people want to invest in, work in, and build real estate with a social and environmental purpose. ‘Greenwashing’ is tolerated less, and the Generation-Z demographic are far more aware and willing to speak up against inconsiderate developments.

It’s also important to understand what metric is being used to measure your energy usage. Energy Use Intensity (EUI) normalises energy use by floor area. Energy intensiveness is simply energy demand per unit area of the building's floorplan, usually in square meters or square feet. This allows you to compare the energy demand of buildings, so you can see which performs better.

For landlords and occupiers alike, the time to gather your data and take action to reduce your carbon footprint and energy usage intensity is now. Being proactive in your approach will ultimately save you time and money in the long term with ESG related legislation only tightening.

Further information

Contact Jack Pugh

Contact Dan Jestico

Building & Project Consultancy