Commercial property firm Land Securities has set itself stretching sustainability targets on the back of growing pressure on organisations to reduce their carbon footprints.
The company is one of the UK’s biggest landlords with more than 2,500 clients and 7.6 million square metres of UK commercial property.
Several tenants have said they want more environmentally friendly premises when their leases expire. Some have indicated they will require carbon neutral buildings within three years.
Royal Mail, Barclays Bank and insurer Norwich Union are among clients which aim to become carbon neutral or claim they already are.
Land Securities’ environment director Dave Farebrother believes clients’ climate policies will create a "growing willingness to pay a premium for buildings that help them achieve targets".
He said improved design and construction could cut energy use significantly, but technological limits make it impossible to operate a building with zero emissions, so companies will continue to rely on carbon offsets to claim carbon neutrality.
"Until we understand what carbon neutral really means, it will just cloud the issue of carbon management," he said.
Land Securities’ targets exceed regulatory requirements for the energy and wider environmental performance of its commercial buildings. Regulations for new build set energy performance requirements through targets for carbon dioxide emission rates. These vary according to the size, type, shape and heating of buildings. The average target is a 27% cut in the rate of emissions from commercial buildings built to 2002 standards.
Land Securities aims to design all new developments to have CO2 emission rates 20% further below these regulatory requirements. Measures to meet the target will include high efficiency boilers, natural ventilation for shopping malls, and further use of systems that distribute chilled water to cool buildings.
In its existing managed offices and retail premises, Land Securities aims to cut CO2 emissions by 5% this year against a baseline of the average emissions for 2004-07 and by 10% by 2010. Average CO2 emissions for 2003/04 to 2005/06 were about 60,000 tonnes, so it aims to cut about 3,000 tonnes this year.
The 5% target covers landlord services and is broken down for offices, shopping centres and retail parks to cover areas including lifts, common parts lighting, domestic hot water, heating and air conditioning. But it excludes tenants’ own energy use, which is "a key factor in energy consumption". It also excludes long-term contracts managed by a subsidiary, Land Securities Trillium (LST).
"All shop units are effectively black boxes to us," said Mr Farebrother. "The tenants have dedicated gas and electric supplies and can do virtually anything they want."
Data from sub-meters is made available to tenants, and Land Securities has begun holding energy reduction workshops across its office portfolio. Energy managers and environmental champions promote energy-saving measures among occupiers.
Land Securities’ strategy sets out goals to reduce energy use, meet demand more efficiently through technologies such as combined heat and power, source on or off-site renewable energy supplies, and offset any remaining CO2 emissions.
The aim is not to be carbon neutral, explained Mr Farebrother, but "to raise awareness and give carbon a value to internalise environmental impacts".
Land Securities will extend use of technologies such as ground source heat pumps, which it found cut heating and cooling CO2 emissions by about 40% in a refurbishment. It is also considering wind turbines and solar water heating, but Mr Farebrother believes more efficient systems such as natural gas-fuelled condensing boilers are usually more cost-effective than small-scale renewable technologies for lowering carbon footprints.
Working groups are exploring innovative technologies such as a small-scale fuel cell and on-demand controlled ventilation - matching heating and cooling to occupiers’ needs.
More significant savings can be made by cooperating with tenants, especially under long-term contracts which typically last 20-30 years. These agreements increasingly include energy-saving conditions and transfer risk to Land Securities to help companies meet objectives, with separate targets agreed with clients.
Under a 20-year partnership with Norwich Union, LST provides energy management services for 19 buildings. Chilled beams are already cutting CO2 emissions from the company’s headquarters by 18%.
Land Securities is also testing a strategy to procure 90% of timber from Forest Stewardship Council-certified sources across the Department for Work and Pensions (DWP) estate, to reach 100% in all projects by 2010.
Sustainability targets in PFI contracts with government departments can provide more scope for innovation. For instance, a ‘spend to save’ clause in the DWP contract covering 1,400 properties allows Land Securities to recover the cost of £2 million worth of investments in water and energy-saving measures.
This has cleared the way for schemes such as retrofitting waterless urinals and increased insulation in boiler houses, which Mr Farebrother says contributed to cutting costs by £1 million last year alone.
LST is negotiating to introduce similar "spend to save" schemes for the DVLA and Norwich Union.
All new government buildings must achieve an ‘excellent’ rating under the Building Research Establishment’s Environmental Assessment Method (BREEAM), which sets criteria for pollution; water; ecology; land use; materials; energy use; and transport.
Mr Farebrother says speculative development makes an excellent BREEAM rating more difficult in commercial portfolios. But Land Securities set a target to achieve at least a "very good" design rating for all offices, retail warehouses and shopping centres.
Deborah Brownhill of Building Research Establishment Certification Ltd said Land Securities’ targets appear to be "hard-hitting and well thought out". She added: "Setting a very good standard for all buildings will do more for the environment than building one excellent flagship property."
Land Securities aims to cut its own impacts by recycling 90% of non-hazardous demolition and construction waste by 2010. It also plans to roll out stricter environmental standards to suppliers.
Its 2007/08 targets do not apply to projects already on site, but are included in contracts for new-build schemes submitted for planning permission after 1 May 2007, and to future refurbishment projects. If it achieves them, it will be well-positioned as policy tightens to tackle rising carbon emissions from non-domestic buildings, estimated to be 18% of UK emissions.