Nuveen, the fund manager that owns 70 St Mary Axe in London and Berlin’s Cube building, has pledged to cut emissions across its £133bn property portfolio in what it argues is the largest commitment of its kind by a global real estate company.
The US-based group, one of the world’s biggest real estate managers, said it will overhaul its buildings, including fitting solar panels and better insulation, in a bid to achieve net zero emissions by 2040.
Michael Sales, chief executive of Nuveen real estate and real assets, said the 2040 target was “essential to create a better world for future generations. It will also help mitigate climate risk across our real estate strategies and future-proof our investments.”
Landlords have ratcheted up their commitments to decarbonise their portfolios over the past year in response to growing demand from tenants and heightened scrutiny of the role property plays in climate change. In the US, buildings account for 40 per cent of the country’s carbon emissions, according to the Environmental and Energy Study Institute.
Nuveen, which also owns Sydney’s 183 Clarence Street, said it planned to use 100 per cent renewable energy, monitor energy usage to ensure properties were operating as efficiently as possible, install solar panels on site and consider refurbishment rather than redevelopment.
Abigail Dean, head of strategic insights at Nuveen real estate, said within five years, Nuveen would look to “rapidly expand” the amount of on-site renewable energy at buildings, as well as reduce the energy intensity of buildings. It aims to cut energy consumption by 30 per cent by 2025.
“We expect that our European portfolio will hit these milestones more quickly than our buildings in other parts of the world,” she added.
Dean said the cost of the work would vary significantly between buildings. A warehouse could achieve net zero by a combination of lighting upgrades, improvements to heating and cooling and solar panels, but other builders would be more expensive to upgrade.
She added that whether Nuveen or the occupier covered the cost would vary by building.
“There will be opportunities for us to undertake work to improve the energy performance of buildings that would typically be a tenant cost, but we might look to incorporate that into lease negotiations,” she said.
Nuveen said carbon offsets would be a “minimal part” of its efforts. “If some tenants are reluctant to work with us, we may need to offset their emissions,” said Dean.
Several other big property groups, including CBRE Global Investors, have also announced net zero plans.
Derwent, a London-focused office landlord, laid out plans to make its buildings net zero by 2030 last July. The leaders of companies taking on Derwent’s space are “people in their thirties or forties who have always lived with climate change. They would prefer green space,” said Paul Williams, the company’s chief executive.
Workspace, another London office landlord, issued a £300m green bond this month to fund the refurbishment of older buildings to make them more environmentally friendly. It aims to become a net zero business by 2030.