CRREM Report of "lessons learned" on Best-practise Users

M Haran, PT Davis, Michael McCord, Daniel Lo, Julia Wein, Sven Bienert, Maximilian Spanner

Research output: Book/ReportCommissioned report

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Abstract

The Carbon Risk Real Estate Monitor (CRREM) project has developed a science-based downscaling methodology to derive decarbonisation pathways that are consistent with the goals of the Paris Climate Agreement. These pathways
have been derived at the level of specific building types in individual countries. In order to make this information immediately actionable by real estate portfolio managers and institutional investors, CRREM has constructed a freely
available and easy-to-use tool (to directly download the tool please visit www.crrem.eu/tool).

The CRREM Risk Assessment Tool offers the possibility for its users to evaluate the progress of a commercial real estate portfolio’s carbon reduction performance against decarbonisation targets in line with the Paris Agreement (i.e., limiting global warming to 2°C or 1.5°C) as well as individual target setting.

The CRREM tool helps to identify which properties will be at risk of stranding due to the expected increase in stringent building codes, regulation, shifting market expectations and increasing carbon prices. Climate risks addressed by CRREM are also referred to as transition risk. The tool also enables an analysis of the (positive) effects of refurbishing single properties (energetic retrofit) on the total carbon performance of a company. Also, the trade-off between operational savings and embodied carbon related to refurbishment measure can be analysed.

The CRREM Risk Assessment Tool was designed in close collaboration with several scientific- and stakeholder committees and was subject to comprehensive moderated testing. After the release of the final version, there was a further steep increase in CRREM and CRREM tool users. As outreach increased the stakeholder engagement further expanded, leading to collaborations with e.g., with SBTi, DEEP, BREEAM, PCAF, E-CREDA, E-CORE, WGBC & UNEP FI and many others. To date a wide stakeholder engagement was reached with more than 2.200 assets and over 12 million square meters of lettable space analysed. Investors and asset managers responsible for more than 400 Bio. Euro Assets under Management (AuM) made use of the tool and pathways to date.

The heterogenous group of users represent a wide variety of the most relevant investors and stakeholders that are using the CRREM tool and pathways. These include institutional investors and asset owners; fund managers, REITs, and
other property companies, asset operators, certification bodies, relevant industry bodies, and academia. The major conclusions of CRREM “best-practice” users include:
❖ The tool clearly provides an added value for the industry, for example enabling a transparent analysis of carbon risks, calculation of abatement costs and evaluating the correct timing of future retrofit measures.
❖ The tool 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.
❖ The tool is useful for setting science-based, Paris-aligned targets for individual commercial real estate properties with regards to the carbon intensity of their assets.
❖ The tool can help asset managers report carbon risks in line with other major reporting initiatives, including the TCFD and the EU Taxonomy and PCAF.

Due to the high level of interest generated over the course of the CRREM project and the utility of the tool for commercial real estate in the European Union, the CRREM project has received a follow-up funding from the Laudes Foundation and further strategic partners. The additional scope now focuses on the annual update of the decarbonisation pathways and on global dissemination activities. The European CRREM project matured and is now a truly global CRREM initiative.

CRREM and GRESB, the ESG benchmark for real assets, have partnered to make the CRREM tool even more accessible to its expansive network of commercial real estate portfolios. By integrating the CRREM tool into the GRESB Portal, GRESB members will have more information on the Paris alignment, performance, and transition risks of their assets than ever before.

This is a lesson learned report on best practices for 2-Degree readiness in real estate. As per Grant Agreement, this deliverable summarizes the lessons learned based on the “2-degree ready” reports that have been prepared by participating investors and CRREM Global Scientific & Investor Committee (former EIC) members ( 1 ). From the completion of the “2-degree ready” reports (2) on company level and consultation records, a basis is formed for best practise communication within the industry. In addition to feedback from investors and GIC members, further feedback has been gathered from companies, asset managers and developers, presented as “Case studies” in this report. The case-studies highlight experiences of CRREM and the reasons why investors use CRREM. This report concludes with the industry best-practises and challenges remaining.

Original languageEnglish
PublisherCRREM
Number of pages54
Publication statusPublished - 14 Apr 2021

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