British Land

Going Naked

British Land Goes Naked

The going naked format was developed
by Green Mondays as a way of sharing
what is working between organisations,
particularly across sectors. It is part of a
new open way of doing business, and
we hope the format will play a significant
role in cross-fertilising sustainability strategies.
The crucial ingredient is one organisation
being willing to lay bare its strategy for appraisal by the crowd, which simulatenously allows the crowd to learn and share from
each other. We take our hats off to British
Land for being a willing subject with their
energy and carbon strategy.
The format works best when the subject organisation recognises the need to
learn from its peers, and wants to identify
its weaknesses. In our mind, there is no
shame in being in the early stages of the
journey of evolution the commitment to
change is what matters.
The format works by drawing on crowd
dynamics. There are four key steps in the
process of Britsh Land going naked;
1. Green Mondays worked with British
Land to create a portrait of its carbon
and energy strategy, focusing on 10 key
areas, based on interviews and public
documents. This was approved by British Land for accuracy, and is included in
the subsequent pages.
2. Green Mondays invited a crowd of relevant experts, mainly those attending
GCE13, to spend 30 minutes completing the appraisal. Each respondent
gave British Land a relative rating for
each area, wrote comments, suggested solutions and listed companies who
they regard as leaders.

3. Every contribution made by the crowd

is included in the Full Appraisal Results,
which is shared with British Land and
the crowd. On the following pages we
summarise these results.
4. On the 26th June, British Land will reply
to the crowd, with an interview between
CEO Chris Grigg and Emma Howard
Boyd of Jupiter Asset Management, and
a Q&A involving some of British Lands
key advisors.
It was undertaken by 114 people, between the 9th and 27th May 2013. A full
list of the respondents can be found in the
Full Appraisal Results.
British Land emerges well from this appraisal. The most popular rating of the
743 given across all areas is significantly
ahead which is a great testament to their
ability to construct a contemporary energy
strategy.
We hope this exercise will help them to develop it further.

British Land - A Business Overview

As the one of the biggest property companies in the UK, British Land believes it has an
opportunity to lead its sector on energy and carbon. And with 36% of the UKs carbon
emissions coming from buildings, and 70% of current building stock expected to be in
place in 2050, its potential to influence is considerable.
Context information

Recognition

The UKs largest listed retail landlord,

with major clients including Tesco,
Sainsburys, Debenhams & Kingfisher
London office clients UBS, HM Government, Bank of Tokyo Mitsubishi, Macquarie Group and Herbert Smith
The largest commercial developer in
London, with 2bn of developments
currently in construction
With a stock market capitalisation of
5bn, British Land sits comfortably in
the middle of the FTSE100
With under 500 full time employees, outsourcing plays a significant role in its
business strategy
Energy spend was 18m in 2012, with
Carbon Reduction Commitment (CRC)
payments amounting to 1.3m
Reported net profit was 269m in 2012

British Land has received substantial recognition for its energy and carbon strategy, reflected in the following:
The only property investment company
globally to appear on both the Performance Leadership Index and the Disclosure Leadership Index 2012
CIBSE Carbon Champion of the Year
and Client Energy Management Award
2013
Property Week Sustainability Achievement Award 2013
Dow Jones Sustainability Index (Europe
and World) listed member
FTSE4Good Index listed member.
EPRA Sustainability Reporting 2012
awarded Gold
In 2012, all of British Lands managed
CRC entities were in the top quartile of
the CRC League table

Total ratings - how did British Land compare with respondents views of comparable areas

Top 10 Findings
All of the crowds 480 unattributed comments, nominated leaders and ratings can be
found in British Lands Full Appraisal Results. These are Green Mondays top ten findings.

The crowd is impressed with British Lands carbon and energy strategy. The most
popular rating is significantly ahead in 6 of the 10 areas considered, and overall the most popular rating given was significantly ahead. The overall average
score equates to marginally ahead, which is almost identical to the rating the
crowd gave Sainsburys.

The cornerstone of the success of British Lands energy strategy is the demand
reduction achieved in the energy under its control, its landlord influenced energy. Having set an aggressive 50% like-for-like reduction target between 2009
and 2015, it has achieved a 38% reduction in the first three years. 45% of the
respondents rated British Lands performance as significantly ahead of comparable organisations, the highest scoring of the 10 portrait areas. This gives British
land important credibility as it seeks to influence other stakeholders.

The gap analysis suggests that the key area for British Land to focus is on its
decentralised energy strategy. The crowd was underwhelmed by the 1% of its
energy coming from renewable sources, being the only area where British Land
was overall considered to be behind comparable organisations. In the portrait we
highlighted British Lands argument that it prioritises demand reduction ahead
of investing in renewable generation in order to avoid over-sized plant. But with
many perceiving the easiest wins to have been taken, and security of supply risk
rising up the agenda, the crowd is now challenging British Lands reliance on grid
electricity.
Targets and measurement emerge as the single most critical part of a successful carbon and energy strategy. While British Land received a good score, it nonetheless emerges as the second biggest gap. The crowds comments suggest
increasing its 2015 target for landlord influenced energy, and collecting more
occupier energy data, would be well-received.
While impressed with what British Land has achieved from paybacks of 3-5 years,
there is a belief that the next 20% will require longer paybacks and more capital
investment. Many respondents point to the low returns of the core business when
compared to its energy perfomance as a rationale for increasing appetite for
longer paybacks.
The crowd is calling for a new relationship with its occupiers, what one respondent calls a whole services solution. This sees British Land emerging as a value-added energy partner, with services including league tables, group buying
of energy, offering green deal financing arrangement and knowledge sharing.

There is a suggestion that British Land should commission some definitive research to try to establish a positive link between energy efficient buildings and
property values. They list a number of global studies that British Land can draw
on for, and the value of this work emerges throughout the appraisal. It will help
communicate the value of its energy strategy to the investment community, and
justify greater ambition internally.
44% of respondents argue that changing the system is critical to a successful
energy strategy for British Land. Theyre supportive of the work British Land is
doing in conjunction with its peers and the Better Buildings Partnership to create
a Landlord Energy Rating (see page 40).
Many make reference to the evolution of sustainability strategies from control
to influence. Whilst the measurement of embodied energy and scope 3 travel
emissions is seen as part of the leadership agenda, the crowd is not asking British Land to introduce reduction targets in these areas. The negative gap asociated with their scope 3 travel emissions suggests that that British Land has done all
it needs to do for the time being.
While British Land has been successful at winning awards for its carbon and

10 energy strategy, there is a belief that it can do more to communicate it better. The

Full Data Report gets praise for its high degree of transparency, but the crowd
makes a distinction between reporting and active communication. This goes for
its investor communications as well as its communication with key stakeholders.

British Land - Gap Analysis

The GAP analysis indicates how much emphasis the crowd believes should be put in
the different areas of British Lands strategy in response to the appraisal.
With a gap of 6.0, the biggest identified gap is in decentralisated energy. Whilst this
was only ranked as the 5th most critical area, decentralised energy is also where British
Land got its worst rating the negative score implies that crowd rates British Land to
be behind comparable organisations. This gap may be an early warning that an issue
such as security of supply risk is yet to be factored properly into British Lands strategy.
With a gap of 4.3, the second biggest gap is in targets and measurement. This owes
more to the high importance that the crowd puts on this area than to British Lands rated
performace, as a score of 4.6 is in line with an average score of marginally ahead.
At the other end of the scale, a negative gap of 0.1 for Scope 3 travel emissions suggests British Land has almost done too much in this area, which could be valuable
feedback. Much of this comes down to the fact that only 5% of the respondent rate this
area as critical, and 15% deem it not important.

How we created the gap analysis

To create the performance scores, we converted the average rating for each area into
a score from -10 (significantly behind) to +10 (significantly ahead). The resulting scores
range from -0.6 to 6.3, with a score of 5 equating to a rating of marginally ahead of
comparable organisations.
The importance scores for each area are created by converting the answers the crowd
gave to how important each area is to a successful carbon and energy strategy for British Land. Their answers were converted into a scale of 0 (not important) to 10 (critical).
The gap is the difference between the importance score and the performance score,
and can be read as the crowds perception of where change is required.

Nominated Leaders and comments

We asked the appraisal respondents to nominate companies that they regard as showing leadership in each of the 10 areas. M&S and The Crown Estate came equal top.
The companies nominated more than once were, with the number of nominations in
brackets; M&S (10), The Crown Estate (10), Hammerson (7), Land Securities (7), Legal
& General Property (4), Lend Lease (4), PRUPIM (4), Sainsburys (4), SKANSKA (4),
Hermes (2), Igloo (2), IKEA (2), McDonalds (2), Unilever (2), Bioregional (2). British
Land was nominated once, compared to Sainsburys being the third most nominated
company when underwent the same process. This may point to a low level of industry
recognition for British Lands achievements.

Section 1: Making the Case

38%
like-for-like
reduction in
3 years

5.2m

1m

in energy spend
saved

invested in
EPCs

British Land describes energy efficient buildings as inextricably linked with how it derives its value. Since 2009 they have saved 5.2m in energy spend from investments
and in the process reduced like-for-like landlord-influenced energy consumption by
38%.
British Land believes that energy efficient
buildings add value by creating sustainable and growing property rental income. It
seeks to have a clear business rationale
for all of its energy initiatives, rather than
pursuing initiatives where the business
case is weak.
Building value
British Land links its energy strategy with
its ambition to be the best property investment company in Europe, through:
Improved relations with regulators.
Carbon leadership strengthens British
Lands relationship with central government, and in planning negotiations with
local authorities.
Being a more attractive landlord. Many
blue chip clients are linking their landlords with their sustainability agenda.
Higher asset values. British Land believes, with time, it will be proven that
sustainability adds value to its assets.
Returns profile
British Lands total accounting return was
9.5% in 2012, less attractive than the returns it achieved through its energy programme. However, with most energy initiatives funded via its occupiers service

charge, payback threshold tends to be

between 2 and 3 years.
In the 4 years since 2009, British Land has
saved 5.2m in energy spend from investments typically paid back within 3 years.
It has reduced like-for-like landlord-influenced energy consumption by 38%,
ahead of its peers.
Onsite renewable generation accounts for
less than 1% of total energy consumed
due to the longer paybacks.
Futureproofing
British Land will often see a business case
in initiatives that do not meet these payback thresholds, but where an investment
in expertise will mitigate future risks or
build competitive advantage. For example, British Land has invested over 1m in
undertaking Energy Performance Certificates (EPCs) in anticipation of legislation
that will make it unlawful to rent a building
that reaches a minimum efficiency standard beyond 2018.
British Land has undertaken two CR
stakeholder reviews in the past 12 months
to ensure it is getting the emphasis of its
strategy right.

View of the Crowd

Importance
rating

How well are they doing?

8.6
The crowd is broadly impressed with the way that British Land constructs its business
case for energy, with the most popular score being significantly ahead.
Greater payback ambition
The current appetite for 3 year paybacks
is seen as in line with the market, and appropriate as the energy team builds confidence with stakeholders, but there is a
growing business case to go further.
There is a discernable school of thought
that says paybacks are not the right way
to look at energy ROI, NPV from discounted cash flows and total cost of ownership are preferred by some .
The green premium case
Many are calling on British Land to commission some definitive research on the
link between energy and carbon intensity
and property value, with a suggested title
of Property valuation in the 21st century.
They listed a number of existing research
that this could build on, including the Australian Property Institute, The Appraisal
Institute, the WGBC and RICS draft guidance.
This would create a number of potential
business case benefits beyond strengthening its internal commitment to its energy
strategy. It would give British Land a message to take to the investor community, a
stakeholder that some see as the trigger
to change.

Measuring intangible value

The crowd is less united on the case for
measuring intangible benefits. Some point
to the value of reputational benefits, worker productivity, reduced absenteeism,
lower CRC costs, and policy influence
and insurance premiums, others argue
that the measurement effort could be better invested elsewhere. A question asked:
Should British Land be undertaking
pioneering research in this area, and
sharing it with stakeholders?
M&S and The Crown Estate are regarded
as leaders in this area.

Section 2: Engaging decision-makers

League
Tables

Exec

Bonus
schemes

1:1

reviews

British Land actively seeks to engage key decision-makers in their energy strategy
through a commitment to transparency, peer pressure and creating structural links between the executive team and its CR strategy, where carbon and energy is a major
focus.
Despite the attractive returns that are
associated with an energy strategy, the
challenge for most organisations lies in
engaging the organisation in what is a
typically non-core business issue. British
Lands solutions include innovations in
transparency, peer pressure and executive bonuses.
The executive team
British Land has created structural links
between the executive team and its CR
strategy, where energy and carbon is a
major focus. These include:
Starting in 2013, British Lands score in
the Dow Jones Sustainability Index is a
bonus criteria for the Executive Committee, needing to surpass British Lands
2012 score of 70% for it to be triggered.
In 2012, British Land introduced a Corporate Responsibility Panel, chaired by
CEO Chris Grigg and including Finance
Director Lucinda Bell and external advisors. This meets twice annually.
Up and down the supply chain
Getting energy onto the agenda of those
managing its property assets is critical to
implementation of its strategy, and British

Land attributes its success on a number

of specific initiatives.
The creation of league tables for site
management and engineers. Using the
data generated by its metering, British
Land produces quarterly league tables
by asset, drawing on the behavioural
economics of avoiding shame and recognition for improvement.
Quarterly 1:1 performance reviews.
British Land has telephone reviews with
each managing agent with responsibility for each asset to agree actions for the
coming quarter and to review completion of past commitments.
British Land runs voluntary environmental working groups in each office building to enable occupiers and building
managers to share best practice and
review occupier and building management league tables for each building.
In 2013 British Land, for the first time, will
be producing a four-page version of its
CR report to increase accessibility for its
stakeholders.

View of the Crowd

Importance
rating

How well are they doing?

8.3
British land scored well in this area, with only 4% seeing them behind and 68% as
ahead.
Executive Committee bonuses
There is a strong sense that British Land
has shown leadership by introducing an
executive reward scheme that reflects
energy and carbon performance. Some
question whether the DJSI is the most
suitable mechanism, with alternative suggestions including a basket of indices
including the CRC and CDP, other more
specific internal targets or occupier satisfaction surveys.

Sector leadership
There is a recognition of the roles played
by Justin Snoxall and Sarah Carey in
working with the sector, and Lucinda Bells
participation in sustainability events such
as Green Mondays is appreciated. There
is a call for Chris Grigg to play a more vocal leadership role on energy and carbon
issues.

League tables
These generate less interest than the executive bonus, but many go out of their
way to highlight British Lands use of
league tables. There is a recognition of
the associated behavioural economics,
as an emerging feature of many leading
sustainability strategies, but a couple of
people who are closely associated with
British Land question how widely understood they are. Questions are asked over
whether they are broken down on a occupier, property manager, asset and fund
manager level.

I hear that some people who input the data for the energy league tables dont
get to see the reporting, which results in them feeling marginalised

Section 3: Targets and Measurement

6yr
stretch-targets

40%

38%

energy reduction
target

already
achieved

British Land uses an evolved target setting strategy for areas where it sees a business
case, and invests in measurement where the business case is less clear. It has added
a system of management actions and KPIs to help direct the focus on an annual basis.
On stretch targets
British Land used to set annual targets
for energy demand reduction, and found
they generated a significant variation in
results between properties and a lack of
meaningful innovation. In 2009, it moved
to 6-year targets with a significant element
of unknown in how it could be achieved,
which has helped them find a deeper level
of reduction without compromising its investment returns.
Main targets
To achieve 40% less landlord-influenced
energy use across its existing portfolio
by 2015 compared to 2009
To achieve 30% less landlord-influenced energy use for newly developed
or acquired buildings within 5 years
To get planning permission for a showcase sustainable building by 2015
2013 management actions
Selected examples;
Work with other landlords to introduce a
landlord energy rating scheme (more in
section on systems change)
Develop and trial a tool to predict energy use to inform leasing discussions
with potential occupiers

Review procurement procedure, including embodied carbon and environmental standards

Work with the UK GBC and the BPF to
influence the development of building
regulations for energy efficiency
Key performance indicators
Selected examples:
Total energy use: kWh by fuel source, %
for each fuel source
Energy intensity: kWh per m, kWh per
person
% energy efficiency of new developments against relevant building regulations
% of developments on track to achieve
BREEAM Excellent for offices and Very
Good or better for retail
British Land is considering adding targets
in areas where it has exposure but limited
control, particularly embodied carbon and
scope 3 travel emissions. Having invested
in knowledge in both areas over the past
year, it is debating internally the merits of
introducing reduction targets.

View of the Crowd

Importance
rating

How well are they doing?

9.0
British Land scores strongly in targets and measurement, with over 70% putting it ahead
of comparable organisations. This is particularly important in an area of strategy identified by the crowd as the most critical in the portrait.
Stretch targets
While a couple of comments highlight the
risks of stretch targets, the majority link
them with encouraging innovation and
providing internal and external stakeholders with a sense of purpose. Stretch will
drive a company to push the boundaries
of what is in the art of the possible and it
seems British Land is doing just that.
Targeting areas of influence
There is less agreement that British Land
should be setting targets in areas where
they have influence rather than control.
Some argue that it is commensurate with
leadership, and triggers collaboration with
other stakeholders, whilst others are concerned that it will appear overbearing to
other parties. Some more detailed comments:
None of the respondents argue the case
for Scope 3 travel targets, with the consensus seemingly commending British
Land for measuring it.
There is greater appetite for embodied
carbon targets, being seen as closer to
core business and an area where British
Land could use its influence to change

the sector
A case is made for setting targets for
occupiers where British Land has access to the data, namely multi-let offices. These may need to be linked with
incentives.
Rather than setting reduction targets,
could British Land set engagement targets, such as a number of green leases
to be signed by a particular date?
Some consider British Lands target to
have planning permission for a showcase sustainable building by 2015 to
be disappointing, pointing to retailers
being ahead on this.

Section 4: Communication

B+
Global Reporting
Initiative

Full
data report

ISAE
3000
assured

British Land has adopted a high degree of transparency around its energy and carbon
data. They have reported annually on CR performance since 2002, including a full-data
report which is available for download and includes a remarkable amount of energy
data. Key Performance data is independently assured under the ISAE 3000 standard.
British Land has adopted a high degree
of transparency around its energy and
carbon data, with key data being independently audited by PWC. Much of this
has been driven by the challenging reporting standards that have been signed
up to, and British Land is not aware of any
of its peers that report like-for-like energy
performance to the same degree of transparency.
Reporting standards
British Land has reported annually on CR
performance since 2002, and reports to
the following recognised standards:
Global Reporting Initiative B+ standard
European Public Real Estate Association (EPRA) Best Practice Recommendations, achieving Gold in the inaugural
EPRA Sustainability Reporting Awards
2012
WRI & WBCSD GHG Protocol for carbon
reporting
Full data report
Available for download on its website, this
report contains a remarkable amount of
energy data covering 98% of its managed
portfolio and 97% of development pro-

jects on site. Of the 200 pages, around 70

are dedicated to energy data, including:
Energy intensity figures including by
floor space and by footfall
Energy use per site, for office, retails
and supermarket, including changing in
intensity on a 3-year basis
Percentage in excess of building regulations, by individual property
Key performance data is independently
assured under the ISAE 3000 standard
Inclusion in other reports
Energy is well represented in the Annual Report, with the inside page stating
We believe achieving leading levels of
efficiency and sustainability in our buildings helps drive our performance
Carbon and energy are not discussed
in British Lands investor relations documents on its website.

View of the Crowd

Importance
rating

How well are they doing?

7.4
The crowd is split between significantly and marginally ahead when it comes to how
British Land is communicating its carbon and energy strategy.
Reporting vs communication
A number of respondents emphasised
the difference between a transparency
over data and actively communicating the
message to key stakeholders. There is a
clear view that British Land is better at the
former than the latter.
Data transparency
The Full Data Report is highlighted for
praise by several people, with one calling it unparalleled across the industry.
A case is made for a link between transparency and energy efficiency, and there
are calls for British Land to think about the
useability of the formats it reports through.
Putting more data in the public domain
increases the chances of external groups
suggesting solutions - should British Land
organise a hackathon?

to the investment community, but the comments were more nuanced. The emerging
message is there is limited point in communicating it as a sustainability message
it will only be effective if British Land can
convince them that its energy strategy has
a material impact on the value of its business.
The Department for Transport is highlighted as a leader to learn from.

Communicating with investors

There was a resounding yes in response
to the question of whether British Land
should be communicating energy issues

I had no idea that British Land has performed so strongly - as both an occupier
and a customer of shopping centres. It doesnt seem readily available unless
you hunt it out

Section 5: Own Energy

9.8m

5.2m

annual energy
spend

cut in occupier
energy costs

2.5m
invested in
energy

The energy consumed in providing landlord services amounted to 123m kWH in 2012,
at a cost of 9.8m. This is referred to as landlord influenced energy, and is the area
of its energy exposure where it has greatest influence and where the results are most
measurable.
Results
British Land has reduced its landlord influenced energy by 38% from 2009 levels,
approaching its 40% reduction target for
2015. Its cut its occupier energy costs by
5.2m from accumulated investments of
2.5m. This divides into the business activities below, with performance data for
2012.
Offices - British Land achieved a 12% reduction in its like-for-like office portfolio,
versus an interim annual target of 6%.
Total building energy use per head decreased by 21%.
Shopping centres - British Land reduced
energy in the common parts of its shopping centres by 10%, versus an interim
annual target of 4%. Energy used per visitor decreased by 14%.
Retail parks - British Land reduced common parts energy in its retail parks by 8%
versus an interim annual target of 2%. Retail park energy use per visitor fell by 7%.
Strategy
The following form the key components of
its landlord influenced energy strategy:
Automatic metering. By 2009 British

Land had comprehensive, but manually read, metering across many sites, By
the end of 2013 it intends to have AMR
installed pretty much across the portfolio.
A focus on improved management
practices. Around 70% of British Lands
reductions have come from tighter management and identifying anomalies.
Importing expertise. British Land employed Australian company EP&T Global to import the expertise and business
models they had developed.
League tables. British Land have engaged its building engineers using
league tables, introducing recognition,
awards and a fear of shame.
Peer comparisons
British Land compares favourably with its
two FTSE100 property peers.
Land Securities has a target to reduce
like-for-like CO2 e emissions by 15% in
the 10 years to 2020. In 2012 it reduced
like-for-like energy use by 4%.
Hammerson has a target to reduce CO2
e emissions from shopping centres by
20% in the 5 yrs to 2015. It achieved
like-for-like reduction in landlord-obtained energy of 8% in the 2 yrs to 2012.

View of the Crowd

Importance
rating

How well are they doing?

8.4
45% of the respondents rate British Land as significantly ahead of comparable organisation for its own energy performance, making this British Lands strongest area in the
appraisal.
Applause for the achievement
While some question whether these figures come from a low base, British Land is
widely commended for its achievements.
The words excellent, impressive and
good are used regularly to describe their
performance.
Where to go from here?
Many express a belief that British Land will
struggle to maintain this performance if it
maintains its current appetite for 3 year
pay backs, and a number of solutions are
suggested including:
Setting carbon reduction targets, which
would shift the focus beyond financial
paybacks
Consider offsetting when 3-year paybacks have been exhausted
A Net Positive target on carbon to drive
renewable investments
The Landlord Energy Rating may help to
create an appetite for longer paybacks
Launch an innovative challenge to help
identify the next level of savings
Adding a forecasted price for energy to
improve the predicted paybacks
Draw on behavioural economics to engage employees in finding further savings

Consider third party financing arrangements that invest in longer term paybacks
Learn from Hammerson on shopping
centre energy management
Clearly, if British Land can create an appetite for longer payback from its occupiers,
who are effectively approving many of the
investments through the service charge,
another level of savings may open up. This
may add to the importance of the occupier
energy strategy discussed overleaf.

Section 6: Occupier Energy

15%

4.4%

reduction in
energy use since
2009

reduction in
energy use in
2012

M&S
working together to share
data

Influencing occupier energy can be challenging for British Land, not least because they
often lack the data and a mechanism for control. From the data that does exist it has
calculated a reduction in energy consumption of 15% over the last four years.
Analysis commissioned by British Land
suggests that occupier energy use is
around ten times the size of landlord-influenced energy, making it an area where
it would like to have a greater impact. But
influencing its occupiers energy is challenging as British Land often lacks data
and a mechanism to control.
Office occupiers
British Land has energy data for its office
occupiers where it procures their energy,
which accounts for over 90% of its office
occupiers but only 7% of total estimated
occupier energy use. From this data it has
calculated that their collective reduction in
energy consumption was 15% on a likefor-like basis between 2009 and 2013,
significantly less that British Lands landlord-influenced energy, and in 2012 alone
the corresponding reduction was 4.4%.
British Land believes that the reduction of
its own landlord-influenced energy, and
the sharing of best practice through its environmental working groups have helped
its office occupiers to achieve greater reductions than if on their own.
Retail occupiers
British Land does not automatically receive data on retail occupier energy
use, and many of its retail occupiers see
32

The Energy Book

themselves as having advanced energy

strategies. In British Lands experience,
they generally do not see good reason for
sharing their energy data with their landlord.
2013 research analysis commissioned by
the British Retail Consortium estimates
that UK retailers have reduced energy
used by 20% since 2008, suggesting British Land is broadly ahead of its retail occupiers. British Land would like to share
more data with its retail occupiers, and
has recently signed an MOU with M&S to
share data and best practices at head office level for 26 assets where M&S is an
occupier.
An energy advisory business for its
occupiers?
British Land is well positioned to monitor
occupier energy use and disseminate
best practice, and it would be valuable to
hear the opinions of British Lands occupiers on this point. British Land has offered
energy audits for its office occupiers and
in some cases funded innovation with
Herbert Smith, a top 5 office occupier,
it identified that Variable Speed Drives
could reduce energy savings of 40-50%
and financed the initial pilot. Is there a
business case for British Land going further down the advisor / funding journey?

View of the Crowd

Importance
rating

How well are they doing?

6.9
Of the areas where British Land has influence rather than control, occupier energy use
is the area that the crowd would most like to see greatest focus. Occupier energy has
a bigger gap than the supply chain and scope 3 travel emissions, and its most popular
rating is marginally ahead.
An energy service to occupiers
Whilst some argue for targets for occupier
energy, the majority call for a different relationship, which one respondent referred to
as a whole services solution. This would
be a new business model, seeing British
Land as an expert that helps its occupiers
in their energy strategy, and which may
create stickiness with its occupiers. The
mentioned elements that could form this
include:
Pooling energy data, to enable its occupiers to benchmark their performance
against each other, and allowing British
Land to extend its Energy League tables to occupiers
A green deal style service, where British Land invests capital in its occupiers
programme and generates a return from
the energy saving. This may require the
establishment of an Energy Efficiency
Fund
Conducting regular occupier surveys,
to help understand which occupiers are
most sensitive to energy, and how attitudes are changing
Knowledge sharing between its occupiers, to identify solutions and reduce
innovation risk

Group buying of energy and technology

one respondent estimated that buying
on a minute-by-minute basis could save
an average 12-14% in electricity costs.
Well positioned for change
The comments in the crowd demonstrate
that British Land is in a good position to
build a more collaborative relationship,
having established credibility through its
own energy performance. The key lies in
establishing shared value for the occupiers.

Section 7: Decentralised Energy

5-10%
sites available

1%

225

energy from
renewables

employees at
British Land

Decentralised energy is emerging as a key component for many leading corporate

energy strategies, but to date British Lands numerous studies are yet to convert into
significant investments - accounting for less than 1% of landlord-influenced energy consumption in 2012.
Decentralised energy is emerging as a
key component of leading energy strategies, but to date British Lands numerous
studies are yet to convert into significant
investments. If we interpret Decentralised
Energy to be about investments in onsite
generation and district heating schemes,
it accounted for less than 1% of landlord-influenced energy consumption in
2012. British Land has however undertaken an appraisal of wind and PV opportunities across its retail portfolio, which found
that onsite generation would be possible
on 5-10% of its sites.
Approach
With outsourcing playing a central role in
its core business strategy, allowing the
management of a property portfolio worth
16.3bn with 225 staff, it would take an
extraordinary reason to invest in the skills
associated with decentralised energy. Its
decentralised energy strategy should also
be seen in light of the following:
British Land believes it makes sense to
reduce operational demand before investing in onsite generation
The returns for onsite generation are significantly lower than demand reduction,
beyond the 5-year payback thresholds

that lie at the lowest end of the returns

generated by demand reduction.
British Land is wary of the government
subsidy risk. Following premature adjustments of the Feed-in-Tariff in the UK,
and retrospective changes in other European markets, the commercial team at
British Land see a need to apply significant discount risk for onsite generation.
The future
British Land anticipates greater use of
DE in the future. It acknowledges that if
security of supply risk increases, British
Lands ability to provide reliable energy for
its clients could move energy onto the risk
agenda, which could create a business
case for longer paybacks.
Peer comparisons
Other developers have made greater investments in single onsite generation projects, though this should be seen in the
context of less progress having been made
in demand reduction. Land Securities, for
example, has invested 563k in a PV array
at a shopping centre in 2012, generating
7% of its common parts energy demand
with a payback of 8.7 years (source: Better Buildings Partnership).

View of the Crowd

Importance
rating

How well are they doing?

5.5
Decentralised energy emerges as the biggest gap in the portrait, but British Land has
to balance this against the fact that only 15% say decentralised energy is critical to a
successful energy and carbon strategy. Some will argue it is the gap that matters most,
that crowd dynamics help to identify future problems.
Underwhelming renewables
This is the only area where British Land
comes out overall behind comparable organisations, albeit only by a few percentage points, as there is a understanding
that comparable organisations are generating more than 1% of their energy demand from renewables.

Partnerships the middle ground?

Given that British Land has outsourcing at
the heart of its business model, it may be
able to find an ESCO-style arrangement
that would reduce the security of supply
risk without it needing to invest in technology and skills. Should British Land invest
in a wind farm?

Security of supply risk

Many respondents write long comments
about the risk posed by capacity shortages in 2015/16. They argue that British Land
is putting a lot of faith in the UKs energy
strategy, citing sources such as OFGEM
and Liberum Capital Partners that predict
capacity shortages, creating a high risk of
brownouts.

Stakeholder engagement required

This case can be argued both ways from
the appraisal results, but what comes
across clearly is that if British Land does
want to go down this route it will have to
expect to lobby occupiers and investors
to get their buy-in.

The case against decentralised energy

There are plenty who argue in their comments that British Land should stick to
demand reduction rather than invest in
decentralised energy. British Land is not
a major energy user, many of its sites do
not lend themselves to onsite generation,
and the challenges of getting occupiers to
agree to longer paybacks are mentioned.

Section 8: Supply Chain

BREEAM
excellent for
offices

30%
exceeding of
part-L building
regs.

9%
reduction in pilot
build

The bulk of energy use in British Lands supply chain is linked to the embodied carbon in
new developments. A typical development is designed to last for 60 years, with embodied energy accounting for 30-40% of total energy used. British Land has commissioned
3 external studies to establish the size and source of embodied carbon, and is debating
the business case to reduce carbon emissions in its construction activity.
Current strategy
High BREEAM standards. One of the
first to adopt BREEAM standards, in
2013 it achieved Excellent for its major
office developments
Exceeding building regulations. British
Land exceeded part L of the building
regulations by an average 30% in new
developments in 2012/13
Setting supplier standards. Its Sustainability Brief defines contractor standards and tendering procedures and was
applied to 90% of development projects
in 2012/3.
Encouraging suppliers to build their
knowledge. Five of British Lands major
projects have been asked to report embodied carbon information
Experimenting with materials. By focusing on the structural design of a pilot
project it was able to reduce the embodied energy in the steel by 9%
Challenges
British Land cites a number of challenges
around embodied carbon:
Weak stakeholder pressure. Only one
of its occupiers (M&S) has asked for in-

formation on the embodied carbon of a

development
The business case. There is a perception that reducing embodied carbon
means higher development costs
Unique design. The bespoke nature of
each development makes it difficult to
set benchmarks for comparative purposes
Key suppliers are beyond Tier 1. British
Land is often many, steps away from the
source of emissions
Next steps
British Land expects more commercial
pressure to emerge, with two Planning
Authorities recently questioning the need
for redevelopment on embodied carbon
grounds. It is exploring the following:
Volumetric embodied energy targets
are specific elements of the design
Working more closely with Tier 2 suppliers
Modular design, where the fabricators
would take create an end of life value
Using internal carbon prices in decision-making.

View of the Crowd

Importance
rating

How well are they doing?

5.8
Only 16% of respondents argue that British Lands energy and carbon supply chain is
critical to a successful strategy, and the emerging gap is the third smallest of the 10
areas considered.
Collectively, the crowd seems to agree
with the three significant challenges
around embodied carbon that British
Land mentions. Contextual comments include very difficult indeed, this is the
most challenging question yet and one
respondent went as far as arguing that
embodied carbon is so difficult to measure that I would question its relevance.
The drivers of change
A number of drivers of change are listed, but they are not positioned as likely
to drive near-term change. BREEAM and
LEED are cited as helpful but not driving
the agenda, and one respondent argues
that it is unlikely to be a major issue without the introduction of a substantial carbon tax.
The embodied carbon / cost relationship
The comments in the survery suggest
that there is disagreement over the link
between embodied carbon levels and
development costs. No crowd members
cite examples of where lower embodied
carbon has been linked to lower development costs.
Suggested next steps for British Land include:

Pioneering low carbon design and providing industry case studies

Leading the development of an embodied carbon labelling scheme
Establish baseline data for key materials in buildings
Focusing on suppliers who can reduce
embodied energy
Engaging retailers and occupiers, as
there is little understanding amongst
end users
Supporting existing initiatives e.g.
WRAP / UK GBC database

Section 9: Scope 3 Travel Carbon Emissions

81%
of total footprint

1st

5m

property co. to
measure
Scope 3

daily visitors to
BL properties

British Land is under no obligation to calculate its Scope 3 emissions, and it is the first
major UK property company to do so. The voluntary inclusion of scope 3 travel emissions has a transformative impact on British Lands carbon footprint, due to the approximate 5m visitor trips per day to the supermarkets, shopping centres and retail parks
within its estate. And finding a business case for reduction is difficult.
Results
Prior to the inclusion of scope 3 emissions,
British Lands 2012 annual carbon footprint
was 441,326 t CO2e, of which around half
was attributable to embodied carbon in its
supply chain. When scope 3 travel emissions were included, this figure increased
13-fold to 5.7m t CO2e, accounting for
81% of its total footprint. These new emissions would also be scope 3 emissions of
its supermarkets, shopping centres and
retail park occupiers.
How should British Land respond?
This figure dwarfs the 40,000 t CO2e that
British Land has saved from its landlord influenced emissions, and raises questions
about how British Land should respond.
Options could include ensuring travel
emissions play a greater role in shaping
the designs for new developments, and
initiatives to reduce emissions for exiting
sites, such as funding bus services or providing more cycle facilities.
The business case
British Land has had its scope 3 travel
data for around 3 months, and it is considering the business case for reduction.
Like embodied energy, it feels very little

commercial pressure from stakeholders

investors, for example, are yet to use this
information to estimate the sensitivity of
British Land to rising petrol costs. British
Land can see a growing need to present
scope 3 emissions as part of planning
applications, and it anticipates collaboration with its occupiers to develop solutions.

View of the Crowd

Importance
rating

How well are they doing?

4.3
British Lands negative gap for its approach to its scope 3 travel emissions suggests
that the crowd almost thinks that British Land has done too much in this area.
As one crowd member put it British Land
should be applauded for calculating its
scope 3 travel emissions, which will put it
ahead of its peers, but unless it can generate significant investor interest Id rather
see it focus on other areas.
In the guidance questions we asked the
crowd if they are aware of any companies
who are actively reducing measuring their
scope 3 travel emissions. Interserve was
mentioned for having a publicly stated
goal to reduce its Scope 3 emissions by
50% by 2020, but it is not clear that this is
comparable.

A couple of the respondents suggest that

Hammerson has been exploring this area
with retailers for several years, so there
may be a case for collaboration. One recently attended a Hammerson / BPP event
where M&S, Tesco, Kingfisher and John
Lewis were discussing these problems.

I would say this is an area of lower priority. However there is an opportunity to

be seen as a leader simply by having a full understanding of, and disclosing,
Scope 3 travel emissions. Scope 3 emissions of this kind are almost a 2nd generation scope 3 - i.e. they are 1st generation Scope 3 for retailers, supermarkets
and shopping centres.

Section 10: Systems Change

Landlord
Energy
Rating

Sharing case
studies

Partnerships

A growing number of corporate energy strategies see systemic change as a key feature. British Land is working collaboratively with peers and trade bodies on initiatives
that reduce the energy and carbon intensity of the property sector.
Transparency is critical
British Land believes a lack of transparency around the operational energy performance of buildings is impeding change,
as prospective occupiers and investors
are not able to understand their exposure
to energy prices or carbon. The existing
rating systems (BREEAM, DECs and
EPCs) have operational shortcomings.
The Australian experience
British Land points to the NIBRS system
in Australia, which is widely associated
with turning Australia into the global leader in commercial building energy use. By
providing a landlord energy rating, it enabled the Australian government to set a
minimum standard of 4.5 stars, with other commercial occupiers following suit.
Landlords in Australia have been forced
to take operational energy efficiency seriously as a result.
Landlord Energy Ratings
One of British Lands management actions for 2013 is to work with other landlords to introduce a landlord energy rating
scheme, which it is doing through The
Better Building Partnership (BPP). The
BPP is developing a Landlord Energy
Rating, the UK equivalent to the NIBRS

rating, and having been unable to persuade the UK government to introduce

LERs on a mandatory basis it is working
with its members to develop and trial a
voluntary rating. The results of the trial are
expected in the early summer.
An article by British Land CEO Chris
Grigg in Property Week in November 2012
called for the development of the LER,
writing At the very least, I expect leading property companies will begin to use
Australian-style data to market buildings.
Other initiatives
British Land is collaborating with its sector
through the following:
Participating in working groups to encourage best practice, including the
UK Green Business Council, the British
Property Federation, the European Public Real Estate Association (reporting)
and the BBP.
Providing energy data to journalists for
articles on issues such as embodied
carbon.
British Land regularly publishes case
studies on our energy reductions,
to share best practice and lessons
learned.

View of the Crowd

Importance
rating

How well are they doing?

7.5
With 44% of respondents arguing that changing the system is critical to a successful
strategy for British Land, it is clear that this is now a legitimate area of energy strategy.
British Land agrees with this, and the
crowd clearly like British Lands approach
- 80% of those who expressed an opinion
put British Land ahead of comparable
businesses. As a result, British Lands gap
here is the second smallest of the 10 areas
considered.
Asset transparency
Most of the comments in this section focused on the development of the LER,
which lies at the heart of British Lands
strategy. On the question of whether the
LER will be transformative, 13 state they
believe it will be and 6 argue it will help.
There are no negative responses to the
LER.
Other initiatives
The crowd also suggested the following
additional avenues for systems change:
Closing the gap between as designed
and as built, citing work done by the
GBC and AECB Carbonlite programme
Moving to a system of open data to
overcome the barriers created by the
various interest groups involved in the
management of a building, and sharing
this with all stakeholders
The whole building side of energy consumption, including tenant use.

Many of the comments mention the importance of having a NGO acting as the
central co-ordinator between the property
companies, highlighting the importance of
the work being done by the BPP, GBC and
others in this area.