Decarbonising our portfolio
At Landsec, we're committed to playing our part in tackling the climate crisis. As part of this we're making good progress against our ambitious science-based carbon reduction target and transitioning to net zero.
Throughout the past decade, Landsec has established itself as a global sustainability leader in its sector. We’ve set and achieved ambitious carbon targets, invested in renewable energy, and reduced energy use in our buildings. However, in 2019, the world’s carbon emissions continued to increase, and so the coming decade is critical for the world’s response to climate change, and the need to limit the worst of its impacts.
In 2016 we became the first commercial real estate company in the world to have its carbon emission target approved by the Science Based Targets Initiative, linking our targets with the science of climate change. In line with our aim to lead our sector, in 2019 we became the first UK REIT to increase the ambition level of our science-based carbon reduction target, aligning it to a 1.5oC scenario. Our approved science-based target (SBT) will see us reduce our absolute carbon emissions by 70% from a 2013/14 baseline over the next eleven years. This year we reduced our carbon emissions by 42% in line with the updated target.
Transitioning to net zero carbon
The independent Committee on Climate Change recommended, and Government accepted, that the UK should aim to be net zero carbon by 2050. It stated that this is technically feasible with known technologies, and those who can, should aim to be net zero carbon sooner than this. To support the world in limiting global warming to 1.5ºC we are transitioning to net zero carbon which we are achieving through our science-based carbon reduction target. Starting with The Forge, the UK’s first net zero building, all our future developments will be net zero.
To transition to net zero carbon we are taking the following 5 actions:
1. Reduce operational energy use
The first step in transitioning to net zero is to reduce our operational carbon emissions. For that reason, as part of our net zero carbon strategy, in 2019 we increased the ambition of our science-based target, aligning our carbon reductions with a 1.5ºC scenario. Our current target is to reduce our absolute carbon emissions by 70% by 2030 from a 2013/14 baseline. Our target includes scope 1, 2 and a portion of scope 3 emissions from downstream leased assets. This year we reduced our carbon emissions by 55%. A key way we can reduce carbon is by lowering the energy use of our assets, and this has the additional benefit of reducing our customers’ energy costs. Find out more here.
2. Invest in renewable energy
Since 2016, all the electricity we procure is REGO-backed renewable and we are looking to move our procurement towards direct purchasing from renewable projects through Power Purchase Agreements (PPAs). We aim to increase the amount of renewable electricity we generate on our sites. Our current on-site renewable electricity capacity is 1.5MW, halfway to our commitment of achieving 3MW.
3. Use an internal shadow price of carbon
As part of our net zero strategy, we’ve set an internal shadow price of carbon to help us consider the cost of carbon emissions in our investment decisions. We established our price of carbon at £80 per tCO2e based on the required investments in carbon and energy reduction to meet our science-based target. This price is also consistent with the United Nations Global Compact guidance on carbon pricing and the Department for Business, Energy and Industrial Strategy’s forecast of carbon prices through to 2030.
4. Reduce construction impacts
We’re committed to continue reducing the carbon emissions associated with our construction activities. When developing a new building today, we include embodied carbon emissions from our supply chain in this commitment.
We recognise that reducing the emissions arising from our construction activity including; extraction of natural resources, manufacturing, transport and construction is crucial. This is because they represent a significant footprint as these typically amount to about half of the total emissions associated with the building over its entire life. Importantly, retaining the existing structure or repositioning assets has the most impact when creating high-quality spaces at minimum carbon emissions.
Across our development pipeline, we’ve continued reducing as a priority the embodied carbon emissions in our supply chain. From early design to developed design, Timber Square demonstrated a 15% reduction in embodied carbon intensity, for an intensity just over half that of the typical benchmark. Timber Square uses an embodied-carbon Value Engineering schedule to track all proposed design decisions to the defined carbon budget set at developed design stage.
The first step is to simplify our designs to limit the cost of materials. Buying fewer materials is the best way to reduce carbon. Find out how we are doing this here.
5. Offset remaining carbon
To be truly net zero carbon in construction, we will need to offset emissions once we have minimised all those on site. We are buying our first carbon offsets for the Forge through a third-party provider. We ensure our offsets meet the eight principles laid out by the UKGBC to safeguard the environmental integrity and guarantee the quality of the offset. We aim to do this by funding projects that remove carbon from the atmosphere via procurement of carbon credits. By financing projects in developing areas around the world, these credits have a further social impact through job creation and the support of sustainable living in line with the United Nations (UN) Sustainable Development Goals.
For more information please read our Net Zero Carbon Pathways document
Tackling our full carbon footprint
Although we’re making good progress on reducing our own emissions, we recognise that we also have an important role to play in influencing emission reduction of our supply chain and customers.
Every year we report on the entire range of measurable carbon emissions associated with our business. These include the ones we control, like when we use energy to heat and power our properties, as well as emissions indirectly associated with our business, like the embodied carbon emissions produced by construction companies and suppliers when they work with us to develop a property. Our full carbon footprint can be found here.
We are committed to increasing the amount of renewable electricity generated on our sites and pioneering low carbon technologies to improve the efficiency of our assets.
We're seeing more on-site renewable generation come to life as new developments and refurbishments complete and the technologies we specified in design are activated.
Since 2016 we have sourced 100% of our electricity supplies through our corporate contract from REGO-backed renewable sources through our corporate contract with Smartest Energy, and we are looking to move our procurement towards direct purchasing from renewable projects, through Power Purchase Agreements (PPA).
As of 1 April 2016, all the sites we manage are supplied by SmartestEnergy, the UK’s first officially certified 100% renewable electricity producer. And we are proud to have been the first property company to join RE100, a group of influential businesses committed to renewable energy.
Investing in Solar PV
We are also committed to increasing the amount of renewable electricity we generate on our sites with a target of achieving 3MW of renewable electricity capacity by 2030. Our current on-site renewable electricity capacity is 1.4 MW, and we are running feasibility studies for installing solar PV at three of our assets.
Energy efficiency across our operational portfolio
Energy efficiency at new developments
Our assets should support the changing needs of customers, which means investing in low-carbon and energy efficient buildings and technology. New assets must move from dependence on gas towards all-electric solutions like air source heat pumps. We’ve begun this transition within our developments, scaling back fossil fuel-dependent boilers in favour of electric heating and cooling. This means our assets will be powered by cleaner energy as the volume of renewable energy resources on the grid increases.
Part of becoming more resilient is being aware of the physical risks of climate change, like flooding, sea level rise and overheating. As the climate becomes hotter and wetter, we need to be sure our assets still deliver the same quality of experience to our customers. At present the percentage of our portfolio at high risk of extreme weather in the lead up to 2030 is 1.1% when measured by value. As climate change will gradually increase the level of risk over time, it’s important we continually reassess the risks.
We continue evolving our strategy to address climate-related risks and opportunities. As part of our approach to manage transition risks, in November 2019 we announced our commitment to transition to net zero carbon. We also increased the ambition level of our science-based target, aligning it with a 1.5°C scenario. In addition to reducing our operational emissions, by improving the energy efficiency of our assets, we’re looking to increase investments in renewables, such as corporate PPAs, managing the future risk of higher energy costs. We’re also implementing an internal shadow carbon price, anticipating a potential carbon price in the future, to inform our decision-making process. Furthermore, we’re reducing carbon emissions across our construction activities by setting embodied carbon intensity and reduction targets for each of our developments. Finally, we’ll offset any remaining carbon emissions through carefully selected projects which actively take carbon out of the atmosphere.
We mitigate climate risks through physical measures, insurance and business continuity planning. At present, the level of residual risk to our assets is low up to 2030. In our development pipeline, we’re designing and constructing high-quality buildings and spaces capable of delivering operational resilience over their lifetime, considering how the UK’s climate will change in the coming decades. We’re confident our focus on energy transition and mitigating physical risks means our business will continue to be resilient to the impact of climate change.
The Task Force for Climate-related Financial Disclosures (TCFD), launched in 2017, encourages businesses to build resilience to the possible outcomes of climate change. We’re committed to acting on the recommendations of TCFD.
Landsec considers climate change a principal risk and material issue. In line with the Task Force on Climate-related Financial Disclosures’ (TCFD) recommendations, since 2017 we’ve committed to assessing and reporting on material climate change risks across our portfolio, ensuring we have the appropriate strategy and mitigation plan in place.
This year, we have worked again with Willis Towers Watson in assessing and quantifying climate-related risks. This study has provided us with an updated view of these at portfolio and asset level, and allowed us to understand the potential financial impact of transition risks, such as policy and legislation changes and shifts in market preferences. This is informing our approach to managing climate risks across our portfolio, including new developments. Through our net zero carbon strategy, we’re managing the transition risks, supporting our transition to a low carbon world. This strategy is helping ensure we remain resilient and relevant in the long term.
Read our full TCFD response in our 2021 Performance and Data Report.