Jargon Buster - Sustainability in Action
BBG are proud members of the Heart of the City’s SME Climate Action programme.
The initiative aims to assist real estate firms in their journey to becoming more environmentally conscious and sustainable.
The real estate sector has a huge part to play in combating the global climate crisis.
At BBG we recognise our responsibility to our clients and to future generations. As such, we are actioning a range of sustainable initiatives with the guidance of the Heart of the City.
Progressing through the programme has greatly improved our knowledge of the ways in which we can reduce our own emissions and assist our clients in their production of more sustainable products.
Please find below a brief jargon buster of some of the key terminology and policies currently used in the real estate industry.
Energy Performance Certificate
Tells you how energy efficient a building is, using a rating range from A (very efficient) to G (inefficient). The report includes estimates of energy costs and the performance indicators of the property.
EPC ratings incorporate a range of factors including the building’s aspect, type of air conditioning, floor size, ceiling height and window type and aspect.
The EPC includes additional information on specific improvements that can be made to increase the energy efficiency of a building.
Minimum Energy Efficiency Standards
Originally drawn up in 2015, these regulations made it illegal for property owners to grant a new lease at a property with an EPC rating of less than E (I.e., F & G).
From 1st April 2023, this will apply to all existing leases.
Energy White Paper
In response to the climate crisis, the UK Government intends to increase the minimum EPC rating for all existing leases to:
• EPC C from 2027
• EPC B from 2030
Please note: some exemptions do apply, visit this website to learn more.
Climate Change Levy
This is an environmental tax charged on the energy that a business uses. The aim is to incentivise the energy efficiency of businesses.
Energy suppliers are responsible for charging the appropriate CCL once a business has registered. Registration is compulsory in the UK.
Climate Change Agreement
A voluntary agreement whereby a business can reduce CCL payments by up to 90% through improving its energy efficiency in line with specific targets which are monitored over time.
Those signed up must supply reports of their energy usage and carbon emissions and measure against agreed 2-year targets.
A rating standard used by RICS (Royal Institution of Chartered Surveyors) that aims to help commercial owners and occupiers assess the sustainability of fit outs against a set of good practice criteria and benchmark performance.
The SKA rating assesses in three stages: Design/Planning, Delivery/Construction, and Occupancy Stage Assessment. This model helps to improve the accuracy of the assessment and allows greater accessibility for those utilising the scheme.
Building Research Establishment’s Environmental Assessment Method
A global method for assessing the sustainability of projects including master planning, infrastructure, and buildings.
The scheme uses a third-party assessor to ensure accuracy and accountability.
BREEAM ratings range from Outstanding (with a score ≥85%) through to Unclassified (with a score <30%).
Leadership in Energy and Environmental Design
A further method for assessing the sustainability of projects. Similar to BREEAM which is used in the UK, while LEED is popular in the US.
There are several further differences in methodology with BREEAM utilising assessors to gather data and supply quantitative analysis, while LEED relies on data provided by the building design team.
LEED ratings range from Platinum Level (with a score of 80+ points) to LEED Certified (with a score of 40-49 points)
Becoming net zero requires a business to reduce their emissions to the absolute minimum or, if possible, to no emissions at all.
Net zero is achieved when the emissions produced match the emissions removed from the atmosphere. However, reducing emissions is the aim and offsetting should only be used for unavoidable emissions.
To be carbon neutral means to balance the amount of carbon emissions you produce by offsetting an equivalent amount of carbon. An example of offsetting is to plant trees.
Offsetting emissions can be done by supporting carbon offsetting projects through websites such as Climate Partner.
As such, you can be carbon neutral without reducing your emissions.
Carbon offsetting refers to a process where you cancel out the amount of carbon you produce through avoidance offsets or removal offsets.
Avoidance Offsets – this refers to when carbon is prevented from entering the atmosphere elsewhere in the world. For example, investing in solar panel projects offsets carbon as it allows renewable energy to be utilised elsewhere instead of fossil fuels being used.
Removal Offsets – this refers to when carbon s directly removed from the atmosphere. For example, reforestation is a removal offset because trees remove carbon from the atmosphere.
Environmental, Social and Corporate Governance
ESG refers to the three main components needed to measure the sustainability and social impact of a business. ESG investing is a growing term used synonymously with sustainable investing and socially responsible investing. The ways in which a business incorporates approaches to tackle climate change and their contribution to greenhouse emissions is becoming an increasingly key factor in investors decision-making process.
For more information, please contact BBG’s Daisy Walder.
M: 07701 364755
DD: 020 3713 1961
E: [email protected]
To make sense of more commercial real estate jargon, look at another of our handy Jargon Busters: Making sense of London Offices.