Our farmers are fed up
In this edition of Real Green Estate, I’m looking at the hottest new sustainability rating for commercial properties in the UK (joking, it’s not that new), along with what’s bothering our farmers and how banks should be throwing their weight around a bit more when it comes to decarbonising real estate.
CIBSE will become the new NABERS UK scheme administrator. Before getting into what all those acronyms mean, I first need to confess that I stole that pun from a previous Chartered Institution of Building Service Engineering (aka CIBSE) report, and also apologise to anyone who works closely with NABERS as they must be absolutely sick of hearing it.
For those of you who've never heard of NABERS, it gets funnier because the scheme originally comes from Australia. The National Australian Building Environmental Ratings Scheme is a sustainability rating for the built environment, offering a one to six-star scale. It evaluates buildings on energy, water, waste, and indoor environment, helping owners benchmark and improve performance against similar properties.
The key thing here is that NABERS annually measures a building’s ✨operational efficiency✨, which is arguably more relevant for understanding the actual carbon impact of a building. That’s in comparison to Energy Performance Certificates (EPCs), which rate a building based on how it should perform, not how it actually performs. To put it into perspective, your building could maintain an EPC A rating (the highest possible) even if you left the windows open all year with the heating and air conditioning running at the same time.
Last year, EPCs got dragged when Lord Deben, chair of the Climate Change Committee, said they were “not fit for purpose”. The Times followed suit, writing a spicy article on EPCs and calling the scheme “a national scandal”. Despite this, little has changed; EPCs are still squarely a part of the UK government's Heat and Buildings Strategy, which details how the UK will decarbonise buildings as part of achieving net zero by 2050. That means NABERS UK is currently voluntary. However, change could be brewing: the government held a consultation around three years ago on introducing a performance-based policy framework for commercial buildings. Let’s see what happens here 👀
I saw this video on my LinkedIn feed the other day, but it’s from a story from last month, where farmers gathered their tractors in front of parliament to protest against a lack of government support for UK food production. The farmers’ main bone of contention is over cheap imports that undercut their prices, which is only possible, according to the farmers, because the imports don’t adhere to the same food standards as the UK. Their second issue is on wild flowers, but I’ll get to that in a second.
On being undercut on food prices - they have a point. The UK historically has had some of the cheapest food globally as a proportion of income, which is indeed due in large part to cheap imports. Since the late 80’s, food imports have risen to represent around 50% of what we eat in the UK, and since Brexit, the UK government is less encumbered by regulation preventing them from importing at the lowest prices.
In the same layer of Mazlow’s hierarchy, but in stark contrast, housing costs have more than tripled for millennials in comparison to their grandparents. This is where the UK government has painted itself into a corner, I feel. Especially with the general election looming, no political party is going to risk voter backlash by hiking food prices to support UK food and farmers, or by dropping rents or mortgages to make increased food costs more manageable. Bear in mind that the boomer generation - who own more than three quarters of nation’s property wealth - are also still the biggest voting cohort in the UK.
With regards to wild flowers, I believe the farmers are referring to the government incentives for ‘Countryside Stewardship’. They again make a good point: it appears the government is greenwashing (biodiversity-washing?) by incentivising UK farmers to grow wildflowers and bird food to boost local biodiversity, while simultaneously importing cheap food that contributes to biodiversity loss abroad. I’m sure Scope 3 will have something to say about that.
In the long run, and unfortunately for the farmers, rural land use does look set to change dramatically. One of the most interesting developments could be in the widespread adoption of precision fermentation as a food source. Agricultural land takes up 70% of the total UK land currently. However, precision fermentation could reduce this percentage significantly as it requires far fewer resources to produce the same amount of food, particularly protein. This decrease in land needed for agriculture could lead to a reduction in property prices, as more land becomes available for housing. There are loads more factors as to why that wouldn’t be the case, but at the risk of this bite becoming a whole meal, I’ll leave this one there for the moment.
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Just a great report from Bisnow on how banks and other real estate lenders could do so much more to incentivise borrowers to decarbonise their assets. Highlights include:
Only a third of the world’s largest real estate lenders have set decarbonisation targets for their property loan books
The number is much higher for oil and gas decarbonisation targets, despite the built environment representing 40% of global carbon emissions.
A 2022 CBRE survey found that 84% of respondents would seek out a building with energy-reducing features and 58% would pay a premium for a building with on-site renewables
It’s not just regulations that are bringing forth change, tenants are having an influence too.
Sustainable lending activity grew from $6B in January 2016 to $332B in September 2021, according to the PRI.
We’re looking at an increase of over 5,000%(!) in less than six years. But more green funding still needs to shift to real estate (and it needs to stop being voluntary, surely? Sorry, I linked that video last week but I’m still not over it)
I highly recommend reading the whole report for more great nuggets.
MIT Press collected some lovely books on more sustainable built environments, in case you’re looking for some bedtime reading.
For now, thanks for reading this! 💚
Director @ Turley | Net Zero
7moThanks Jo, NABERS does change your mindset. I am in Wales and have seen our proposals for environmental requirements for farms to be linked to the subsidies given. They seemed pretty reasonable to me, but triggered huge protests. There is a psychology around farming that is different to other industries.