Carbon Risk Real Estate Monitor - Framework for science based decarbonisation pathways, toolkit to identify stranded assets and push sustainable investments

Informations projet

CRREM

N° de convention de subvention: 785058

DOI

10.3030/785058

Projet clôturé

Date de signature de la CE 26 Janvier 2018

Date de début 1 Février 2018

Date de fin 31 Janvier 2021

Financé au titre de

• SOCIETAL CHALLENGES - Secure, clean and efficient energy

Coût total

€ 1 487 902,72

Contribution de l’UE

€ 1 487 902,72

Coordonné par

IIO INSTITUT FUR IMMOBILIENOKONOMIEGMBH
Austria

Periodic Reporting for period 2 - CRREM (Carbon Risk Real Estate Monitor - Framework for science based decarbonisation pathways, toolkit to identify stranded assets and push sustainable investments)

Période du rapport: 2019-08-01 au 2021-01-31

Résumé du contexte et des objectifs généraux du projet

The real estate sector is accountable for about one third of all GHG emissions in the EU and therefore plays a crucial role in the achievement of the global climate pledges as agreed to in the Paris Agreement. One of the biggest challenges for the reduction of GHG emissions results from the poor energy efficiency of existing buildings and too low refurbishment rates in virtually all member states of the EU. The reduction of the EU carbon footprint requires a significant increase of energetic retrofits in the existing property stock. For the property industry, tightening legislation on GHG emissions and a decreased market demand for buildings with poor energy efficiency/ high GHG emissions poses the risk of write-downs and premature obsolescence for such assets.
The overall objective of CRREM is to accelerate the decarbonisation and climate change resilience of the EU real estate sector by providing appropriate science-based carbon reduction pathways. This target is achieved by making stranding risks transparent to real estate investors and decision-makers, pushing investments in retrofit measures to improve the carbon performance of buildings. CRREM developed a complete framework that can be applied to benchmark the carbon performance on asset-, portfolio- as well as company-level against transparent decarbonisation targets enabling to derive meaningful risk indicators that are aligned with the requirements of the upcoming EU Taxonomy for sustainable activities and the disclosure requirements as defined by the Task Force on Climate-related Financial Disclosures (TCFD). CRREM enables a standardised assessment of GHG emissions aligned with industry standards like EPRA or GRESB. The carbon performance of individual buildings or large portfolios are projected until 2050 and compared with the decarbonisation pathways derived in accordance with the requirements of the Paris Climate Agreement and the EU National Determined Contribution (NDC).

Travail effectué depuis le début du projet jusqu’à la fin de la période considérée dans le rapport et principaux résultats atteints jusqu’à présent

CRREM has developed a science-based downscaling methodology to derive decarbonisation pathways that are consistent with the goals of the Paris Climate Agreement (i.e. limiting global warming to 2 or 1.5°C) as well as individual target setting. These pathways have been derived at the level of specific building types in individual countries. CRREM has constructed a freely available and easy-to-use tool (available via www.crrem.eu/tool).
The CRREM tool helps to identify which properties will be at risk of stranding. The tool also enables an analysis of the (positive) effects of refurbishing single properties (i.e. undertaking energetic retrofits) on the total carbon performance of a portfolio. The trade-off between operational savings and embodied carbon related to refurbishment measures can be analysed. To sum up, the tool:
•clearly provides an added value for the industry, by enabling a transparent analysis of carbon risks, calculation of abatement costs and timing of retrofit measures.
•provides the perfect opportunity to start a very important dialogue between investors and fund managers about the carbon performance of their assets and possible ways to reduce the carbon footprint.
•can help asset managers report carbon risks in line with other major reporting initiatives, including the TCFD and the EU Taxonomy and PCAF.
•clearly guides a way towards Paris-proof and net-zero real estate.

Additionally, CRREM expanded its pathways to the global real estate markets and residential real estate.
The EIC helped to make sure that the CRREM tool fulfils industry needs by ensuring contextual relevancy and alignment to industry expectations.
By the end of the project the EIC has gained over 40 members, and has now been changed into the Global Scientific & Investor Committee.
To sum up:
•Stakeholder-Engagement was much more intensive than expected: Besides testers from the industry the project team got involved with more than 30 organizations and initiatives globally (like EPRA, INREV, UNEPFI, IIGCC, NZAOA, E-Core, DEEP, and others). Dissemination and industry take up as well as sound content-wise results were supported by massive and far-reaching support from the sector
•a whole special issue of the Journal of European Real Estate Research, focussing on “Decarbonization and Real Estate Investment”. After publication in 07/20, the Special Issue became the most successful one in the history of the Journal
•CRREM engaged Europe’s most prestigious and well-known real estate investors in testing (like Allianz, DWS, Deutsche Bank, CBRE, Savills etc.)
•The consortium was invited to major industry events like ULI Product Council Day, Covenant of Mayors' Investment Forum, New Data in Real Estate Data Lab, ZIA Energietage, Asset Owners Alliance etc.
•The investors and CRREM EIC members PGGM, NBIM and APG supported the CRREM consortium in the derivation of global pathways for all sectors/countries and including residential real estate. The additional pathways have gone much beyond the original project scope
•Successful workshops and seminars held, often with over 200 attendees per event. Examples include the successful CRREM-ERES industry seminar, E-CREDA Workshop, UNEP-FI CCCA Group and more
•CRREM is now mentioned as a strategic partner for many initiatives as stated for example by ULI Greenprint in their last report

Progrès au-delà de l’état des connaissances et impact potentiel prévu (y compris l’impact socio-économique et les conséquences sociétales plus larges du projet jusqu’à présent)

An extract of some highlights from the extra mile taken and achievements beyond the state of the art are listed below:
• The final CRREM Risk assessment tool incorporates additional content such as allowing up to 1,000 properties to be entered
• Massive testing was conducted ensuring broad industry uptake and trust while ensuring a transparent calculation (.xlsx set-up)
• A comprehensive user guide, allowing user to easily get started and a FAQ section on the website help to apply the tool
• An additional guide for investors who want to use the tool outside the EU or for residential properties
• Integration and easily migration of input data from GRESB to CRREM with an additional document providing useful tips on mapping the GRESB asset-level performance data onto the CRREM tool – fully integration by the end of 2021
• The CRREM approach is included as best practise in the EU Sustainable Finance report prepared by the TEG for real estate, boosting sectors confidence in the project results
In addition, the CRREM consortium over-fulfilled all dissemination tasks set out in the Grant Agreement, leading to increased stakeholder engagement, valuable collaborations with many industry organizations like e.g. SBTi, DEEP, BREEAM, PCAF, E-CREDA, E-CORE, WGBC & UNEP FI (and many others).
Moreover, first developers like Allianz RE even started to assess their refurbishment’s future carbon and energy performance by using CRREM and proudly announce that their project “…will be aligned fully compliant with CRREM…” in their press releases.
In total, more than 1,6 M stakeholders were reached throughout various different dissemination activities.
To conclude:
• In total the targets/objectives/tasks of the original project scope have been massively overfulfilled
• CRREM achieved an impact of 67 M € of total additional investments in sustainable energy triggered by the project and 33,5 GWh of primary energy savings triggered by the project
• More than 1,300 assets and almost 9 M m² of space analysed via the CRREM tool
• Investors with more than 350 Bio € Assets under Management (AuM) made use of the tool and pathways so far!

Stranding Approach

National Pathways: Convergence of the carbon intensity in individual countries to the global pathway

CRREM Global Roll-out including Residential Buildings & Key Global Real Estate Markets

CRREM Pathways: Downscaling from Global emissions to Carbon intensity pathways

CRREM Portfolio-level Output: Evolution of Stranding within the Portfolio

CRREM Asset-level Output: Retrofit Simulation- Stranding Diagram with & without Retrofit

CRREM Asset-level Output: CRREM Stranding Diagram