How smaller developers can steal a march on the path to net-zero carbon

February 25th, 2021

Tackling climate change is, or should be, at the top of every real estate company’s agenda. The government has set out its plan to bring all greenhouse gas emissions to net zero by 2050 and “deliver the most ambitious environmental programme of any country in the world” through national and regional planning policy and increasingly rigorous building regulations. With the UN Climate Change Conference taking place in Glasgow this November – and with the Americans back at the table – the time for procrastination has passed.

Embracing sustainability makes sound business sense. Institutional capital is placing an ever-greater emphasis on environmental, social and governance credentials, and our house view is that there will be a meaningful “green premium” in yields for assets that score highly on these credentials. In addition, there will be significant benefits in terms of the planning process and tenant demand from residents who want to live in a sustainably developed property.

Amro has pledged to become a net-zero-carbon business by 2030. Being innovative and nimble by nature, there is an opportunity for SME developers like us to steal a march. However, the net-zero-carbon goal has to be achieved with fewer resources at our disposal than those available to the large, listed developers. The urgency of the climate change crisis means the spirit of shared endeavour has never been more critical.

Fabric first

Here’s how we’re turning rhetoric into action. First, cultural change is key. Sustainability needs to be central to every decision made – not just in the design and construction of new developments, but also in our operational management platform. This drive needs to come from the top, with everyone in the business being bought in.

Next, achieving net-zero carbon depends not just on intention, but also on resources. We need to accept that with change comes cost. Investing in training and education is essential to focus all staff on the shared goal and ensure the required expertise is instilled throughout the business. We’re placing sustainability commitment, knowledge and experience at the heart of our recruitment policy – and we are bringing in the required external expertise where needed.

We’re also taking a “fabric first” approach to new developments, ensuring sustainability principles are embedded into the design as a top priority from the outset of the project. As well as specifying and sourcing technology and products with a high sustainability performance, this means thinking about the wider issues that will contribute to optimising the building’s energy use and minimising waste. These could include the building’s location, typology and orientation, or the window-to-wall ratio.

It’s crucial to prioritise the challenge of embodied emissions for existing buildings and recognise the need to rethink disposal strategies where buildings are near their assumed end of life. We’re looking at a number of opportunities to retain foundations and structures to enhance and extend the life of existing buildings, where the “easiest” and most widely used strategy would undoubtedly be to knock down and start again.

Finally, we’re knowledge-sharing across the business. The regulatory environment is having a huge impact on the speed at which SMEs are adopting net-zero-carbon strategies, driven by trailblazers such as the GLA. The Wiltern, Amro’s BTR development currently under development in Ealing, will achieve 62% above Building Regulation Part L compliance on completion, driven largely by GLA planning requirements. Utilising what we’ve learnt, these standards are now being adopted as best practice across the business, including in Seville, where our PBSA project will be the greenest building in the sector in Spain when it completes next year, far exceeding country regulations.

Start the journey

Net-zero carbon presents a significant challenge for SME real estate developers, but also a huge opportunity.

In addition to playing our part in protecting the environment, we believe Amro’s net-zero-carbon strategy will deliver enhanced investment returns and generate benefits in terms of the planning process and tenant demand for our developments. Net-zero carbon is not just the right thing to do – it makes sound business sense, and 2021 is the year to start the journey.