Plugging the net zero data gap
A data-driven approach to achieve net zero in the property sector
The British Property Federation commissioned Savills to undertake research into the net zero data challenges (“Closing the Data Deficit”).
Co-funders and contributors:
The Climate Change Committee’s 2023 Progress Report to Parliament contains the following call to action:
“The next ten years are the crucial period to decarbonise buildings”
The Climate Change Committee noted that buildings still remain the UK’s second highest emitting sector after surface transport and that progress in making substantial emission reductions has “stalled” since 2010.
Robust energy data is fundamental to understanding a property’s energy performance. A substantial part of UK real estate is tenanted which poses particular challenges for accessing and sharing the energy data required to develop and implement decarbonisation strategies.
Recognising the crucial role of data to enable the sector to reach zero emissions, Farrer & Co is pleased to have sponsored research commissioned by the British Property Federation and carried out by Savills exploring the energy data conundrum. In the Report, Savills explore the key data challenges in tenanted space and what can work to overcome these obstacles and make policy and sectoral recommendations on “Closing the Data Deficit” to help drive the transition to net zero.
Below we set out briefly the relevance of this research to various sectors and a summary of some of the key themes and recommendations arising out of the research.
Who is this relevant to, and why?
“Closing the Data Deficit” – key findings and recommendations
To highlight the benefits of greater transparency and better quality energy data, why the data deficit exists, and the actionable strategies identified by Savills’ research, a summary of some of the key findings and policy recommendations in the Report are set out below.
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What are the broad benefits of improved data quality and transparency?
The Report highlights that:
Data will help the UK to realise its net zero aspirations
Better energy data, and the insights it brings, affords owners the ability to understand the energy performance across their property portfolio. They can then take an informed, data-driven approach to identifying areas and opportunities for action and have a solid platform upon which to engage with tenants to promote energy efficiency.
Data is key for unlocking energy reductions
A 2024 report by the UK Green Building Council into retrofitting large offices indicated that optimising a building’s performance could reduce operational energy use by 26%. This illustrates that improving the quality and transparency of data (and of course acting on it to track and manage building control systems in response to and in tandem with occupier behaviour) can be a significant tool in the net zero box. This can reduce costs for tenants and potentially increase the value of owners’ investments.
Data bolsters monitoring progress towards net zero
Data is needed both as a lever to drive positive change and to evidence that change. Quality data allows landlords to draw up and then assess properly the efficacy of their net zero strategies and their progress in meeting carbon targets, in addition to enabling improved reporting on that progress.
Collaboration is key to improving outcomes
The Report foregrounds the importance of landlord and tenant collaboration.
A substantial part of the UK property sector is tenanted – more than half of commercial property (by capital value) and one-third of residential property.
of commercial property (by capital value)
of residential property (by dwellings)
For tenanted and multi-tenanted commercial assets, in many cases it will be the tenant who manages the energy supply and therefore has access to the energy data. In some multi-tenanted scenarios, whilst a landlord may have access to the data for the common areas which it controls, there may be a range of providers supplying different tenants.
Fostering a collaborative relationship between owners and occupiers is key to facilitating better outcomes for the property sector.
Unlocking the siloing of data driven by supply arrangements in tenanted properties is a critical step for the sector to decarbonise.
"A key message of the Report is that a siloed approach to carbon reduction doesn’t cut it for the substantial tenanted real estate sector. The Government and the property and energy industries need to work together to develop a policy framework and implement a culture to promote the collection and the sharing of good data and a collaborative approach between owners and occupiers where they work together to set sound net zero pathways and targets.”
Claire Sheppard, Senior Counsel, Farrer & Co
Why the energy data deficit?
The Report recognises that the collection and analysis of energy data is “complicated, lengthy and costly”, acknowledging that owners “face a range of organisational, behavioural, technological and legal barriers”.
Cultural, Organisational and Behavioural Issues
The Report identifies considerable cultural, organisational and behavioural barriers, in particular relating to “resourcing and human error; a lack of trust in landlords; concerns around reputational risk; and a lack of environmental awareness or misaligned priorities”.
Resourcing and cost issues and human error: If owners and occupiers are using manual data collection, the Report notes that there are labour and cost constraints and human errors. Owners have to fill in gaps with suboptimal information, such as Energy Performance Certificates (EPCs) which do not actually measure energy performance.
Trust: The research identified a lack of understanding and trust between owners and occupiers. Occupiers had:
- reputational and anonymity worries about sharing data; and
- concerns about the use of the data and that the information might be monetised and result in an increase in occupier costs.
Environmental awareness and priorities: The Report notes that some occupiers do not want to prioritise tackling energy consumption in their premises (particularly if they have other greater sources of emissions elsewhere within their business); those with sustainability agendas are clearly more likely to engage and to expect a mutual sharing of energy data with owners.
Technological solutions
The Report concludes that manual data collection tends to lead to inaccurate and incomplete information; technological solutions, like automated data collection, can help address many of the issues.
The Report discusses the benefits of smart meters and automation, with their ability to collect accurate, detailed and regular data. Nevertheless, these technological solutions can be expensive, their installation can interfere with a building’s operation (eg requiring a power down) and their ongoing maintenance can be costly. While the research demonstrated the benefits of using third party software and data providers, these come at a cost and the Report acknowledges that it is difficult for owners and occupiers to choose between the proliferation of providers and that there is limited inter-operability between different providers.
Legal constraints
Statutory framework: Data protection and privacy laws (including the General Data Protection Regulations (GDPR)) can form a barrier to access to energy data, particularly in the residential sector.
Contractual arrangements: Green lease provisions (clauses in rental agreements that promote the management and improvement of a building’s environmental performance and impact by its owner and occupier) can include mandatory data sharing requirements but green lease provisions are often challenging to introduce and implement; they can be refused by occupiers and are not always adhered to or enforced.
"Across the real estate sector, there is a spectrum of available energy data ranging from audited, reported information through to estimated and inaccurate energy performance data based on building design rather than use. An accurate evaluation of a building’s operational energy use is fundamental to enable the owner and occupier to achieve net zero; promoting the development and uptake of technological solutions to facilitate the automated collection and analysis of robust energy data is key.”
Christina Tennant, Knowledge Lawyer, Farrer & Co
Actionable strategies to tackle the data deficit
The Report analyses good practice examples and case studies to consider how to improve the collection and use of energy data.
Good practice
Developing constructive relationships with tenants by sharing information and demonstrating benefits
The Report notes that the greatest incentive for occupiers to share data is understanding the financial benefits of improved energy performance – principally the potential for reduced energy bills.
The Report notes that certain measures taken by landlords can build trust with and provide reassurance to occupiers that shared data is put to a beneficial use. Such measures which the research identified included providing advice on improving energy performance or energy audits to occupiers.
Owners may therefore wish to:
- demonstrate the energy savings that owners and occupiers can realise through sharing data; and
- share advice with occupiers as to how to reduce energy consumption.
The value of communication
The Report concludes that alternative avenues for data transparency and quality can be explored by engaging at different levels of an organisation. In particular, the Report notes that:
- asset and property managers have an important role to play in collecting data; they can build relationships with occupiers and they can assist with analysing data and implementing strategies, thanks to their knowledge of the building’s operation; and
- investors may be able to encourage data sharing, where they have relationships with both owner and occupier.
Case studies
- Ice Breaker One and Perseus – mandatory framework and automated data sharing – The Report considers Perseus, a programme initiated by the not-for profit organisation, Ice Breaker One, to automate the sharing of carbon data between an occupier and its bank, so that the bank can then automate its sustainability reporting. The Report suggests that a similar system might be utilised in the real estate sector, enabling secure data sharing to be used for the sole purpose of supporting the net zero pathway.
- Décret Tertiaire – governance framework – The French system imposes mandatory requirements for data collecting and monitoring for certain tertiary space, and requires the owners and occupiers to prepare a net zero action plan and achieve targeted energy consumption reductions or face regulatory enforcement action. The Report considers this a good model for the Government to explore.
- NABERS UK (National Australian Built Environment Rating System) – performance-based rating scheme – The Report analyses the use of the NABER UK scheme, which uses verified meter data to benchmark the energy consumption of office buildings against other buildings within a similar category. The Report considers that this tool is an example of using accurate data to set carbon strategies.
What are the Report’s conclusions and recommendations to the Government?
The Report concludes that access to occupiers’ energy data is essential for owners to achieve net zero for their buildings. The Report identifies four key reasons for requiring this data:
- To calculate baseline emissions and set targets.
- To prioritise the relevant assets and establish a net zero action plan.
- To set detailed net zero pathways.
- To measure the impact of actions and to report against targets and commitments.
The three main ways of improving data collection and sharing, are to:
- Make data sharing mandatory.
- Encourage greater use of smart meter technology.
- Promote more collaboration between owners and occupiers.
The Report’s recommendations to the Government are:
Mandatory data sharing
- Explore new and innovative ways of requiring mandatory data sharing between owners and occupiers combined with requirements for joint low carbon strategies.
- Encourage minimum data sharing requirements in commercial leases, including through reform of the Landlord and Tenant Act 1954.
- Explore whether energy data could be considered a "legitimate interest" within GDPR.
Encouraging smart meter rollout
- Explore how owners and occupiers can be encouraged to work together to install smart meters and share smart meter data.
- In partnership with Ofgem and key stakeholders in the energy sector, explore additional ways in which smart meter data might be shared directly with certain authorised property owners.
Promoting collaboration in the real estate and energy industries
- Explore new and innovative ways of requiring mandatory data sharing between owners and occupiers combined with requirements for joint low carbon strategies.
- Create a new Building Energy Data Taskforce, bringing together representatives from all sides, to ensure a common understanding of the challenges and to explore solutions.
Green leases
- The real estate sector should continue to expand the use of green leases.
- Show leadership by making all new commercial leases for Government buildings green leases.
Promoting the Use of Performance-Based Energy Metrics
- Encourage the adoption of performance-based rating schemes, such as NABERS UK.
- Show leadership by adopting performance-based rating schemes, such as NABERS UK, for new and existing office buildings leased by the Government.
Next steps
The Report recommends engaging further, and undertaking additional research, with stakeholders in the Government and the real estate and energy industries, in order to establish the approach for implementing the recommendations which is suitably tailored to account for the various challenges identified in the Report.
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References
Climate Change Committee Progress in reducing emissions 2023 Report to Parliament.
2023 Progress Report to Parliament - Climate Change Committee (theccc.org.uk)
UKGBC (2024) Building The Case For Net Zero: Retrofitting Office Buildings
Building the case for net zero: retrofitting office buildings | UKGBC
Retrofitting-Office-Buildings-Building-the-Case-for-Net-Zero.pdf (ukgbc.org)
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