Beyond the sector itself, are there wider societal knock-on effects?
Martin Haran: I found it very strange that the real estate sector didn’t have a carbon reduction roadmap towards the Paris treaty; a roadmap based on scientific targets i.e. the 1.5 and 2.0 degree heating scenarios. Many investors have a will and desire to align their portfolio with the targets agreed in the Paris Treaty. However, they do not have a clear understanding of their current portfolio intensity and the interventions needed to ensure conformity. As real estate is also an internationally diversified investment asset class, it is important to have science-based targets which depict the location specific climatic conditions. Climatic conditions are not uniform. Even within countries, it is important to understand climatic conditions as well as property type and usage to create robust science-based pathways.
With the CRREM  project, we had to create a roadmap. I found that dismaying. Particularly because the real estate sector is recognised as contributing over 40% of GHG emissions globally. The sector has a huge problem, but it also offers huge potential to reduce carbon emissions globally.
When it comes to decarbonisation, the key sectors of industry are so intertwined. For example, reductions from transport emissions and the decarbonisation of the power grid will have big impacts on the carbon intensity of construction, which requires both power and transportation. Equally, if you’re in another sector of industry and you occupy premises, then the carbon intensity of your assets will have impact upon your carbon footprint. Decarbonising real estate brings added benefits to businesses that sit outside the real estate sector as well. Understanding the value-chain and the interdependences within it is crucial to attaining impactful intervention strategies.
Kevin Muldoon-Smith: If we don’t tackle emissions from the built environment, environmental targets can’t be met. On the positive side, if you expose the stranded asset threat, so that people understand the magnitude of the issue, the outcome could be very positively disruptive, because it’s about future-proofing. It promotes the sustainable retrofit of our cities. Sometimes people see real estate assets as distinct from the economy and society, but fundamentally, its where people live, where they carry out their work, the infrastructure is how you travel around. So stranded assets in real estate are systemically related to everything we do.
Depending on your investment horizon, you expect to invest for typically about five, ten or perhaps 25 years. When you look at the time horizons for the ratcheting up of EPCs in the UK, it’s the very same time horizons: 2025, 2030, 2050. It’s been difficult to find an objective premium – how much extra value there is in a sustainable building. I think further exposing the stranded asset threat makes the case for retrofit and property adaptation. It’s about people paying more, it’s the recognition that if they don’t do it, their properties’ value reduces. So the next 20 years will see a lot of change.