Creating an esg standard for retail assets

HOW DO WE MEASURE AND BENCHMARK DIFFERENT RETAIL ASSETS ACCORDING TO THEIR OPERATIONAL ESG CREDENTIALS, AS WELL AS STRIVING FOR BEST PRACTICE?

WHY IS A STANDARD IMPORTANT?

The creation and embedding of an ESG standard across the retail managed portfolio is critical in realising our sites’ sustainability objectives in tandem with client requirements for green performance. More than ever, we are being asked by clients and occupiers what our strategy is in relation to ESG and green credentials. We are now in a position, with the support of Savills Earth and the expertise within the team, to harness the good work already undertaken and ensure that the Savills vision on ESG is realised.

To address this, we have created the Savills Property Management ESG Standard, to which all the shopping centre and leisure assets we manage are now being assessed against.

Communicating to our site teams what ESG means for them and their sites is fundamental to ensuring its success. Breaking down the parts so that they can fully focus on areas within environmental impact and performance, and explaining and demonstrating how we monitor and report on this, is key. A lot of the actions on an ESG strategy will be around the environmental elements, so first we need a baseline to work form; a set of core principles that our managed sites can easily adopt and embrace.

A set of focus areas including general governance, health and wellbeing and data reporting will be at the heart of these core principles. For the retail sector, the sustainability standard will lay out the fundamentals of ESG performance and the potential growth of the assets’ green credentials.

The standards themselves cover several areas, including community engagement, waste reporting and compliance. These guidelines and criteria are then judged by a panel of peers and sustainability experts and accredited as appropriate through bronze to platinum grading. Always evolving, we are challenging our teams to push the ESG agenda with our service partners, occupiers and clients. This ensures that the realization of an ESG standard is embedded at all levels of our touch points.

Furthermore, each site will be asked to complete an ESG self-audit to determine the baseline and areas in which improvements could be made. These again will align to client requirements and help to push the agenda of ESG across the retail network.

TANGIBLE IMPROVEMENTS

Some of the fundamentals of the retail ESG strategy are within the areas of waste and recycling. As a direct result of the baseline, we have been able to reduce the amount of waste going to landfill from 7,000 tonnes in 2019 to zero in 2021, reduced our hazardous waste output by 50% in the same time period and, most notably, increased the energy from waste by a staggering 713% - now 850,000 tonnes of general waste is being used as energy from waste.

To be able to make data-led decisions in regards to ESG is paramount. Savills now have the ability to pull a variety of data into a central warehouse where we can map and visualize the data in a user friendly and informative way. For example, when working with service providers, we can count vehicle types in a retail park and calculate the carbon footprint of a site which is hugely is valuable when setting targets for reduction. We can also analyse the type of engine to determine occupancy of electric vehicles (EV) and vehicle age as well as other metrics for benchmarking and strategic decision making.

As demand grows in the UK, there is a focus on solar PV and EV charging and people expect to have these types of green energy and accessible charging facilities readily available. Our customers are becoming more aware of not only their responsibilities towards ESG, but also the commitments from our clients, sites and occupiers as we head toward sustainable targets of net zero 2030. As a minimum, where practical, all of our retail sites will undertake feasibility studies on EV charging potential within the managed car parks. Partnering with companies such as Podpoint, BP Chargemaster and Tesla allows us to grow the network of available charging destinations within our retail portfolio.

Currently, Savills managed sites have over 700 EV charging stations in over 100 retail destinations. This is set to increase throughout 2022, as centres such as Metro Centre in Gateshead get approval for 200 new EV charging bays and solar PV to power them.

CHALLENGES AND FURTHER EVOLUTION

Capacity and grid availability are challenges to the roll out of additional EV, so working with Savills Earth and the Savills Energy team on a coordinated approach is required in order to correctly scope out the increased EV charging facility requirements.

Ensuring our supply and occupier partners are aware of, and adhere to, minimum standards of a sustainability framework for retail shop fits is a further challenge. Each retail destination will have a different set of criteria for achieving this, but the most common requirements are around low energy or LED lighting, PIRs (passive infrared) and sensors so as to achieve zoning of lighting and heat recovery systems to increase efficiency and reduce heat loss. The materials used on the fit out also play a big part, and where possible it is encouraged that sustainably sourced wood, local stone and other natural materials are used and produced in the UK where practical to reduce the impact of sourcing.

There are a number of ways in which we encourage our occupiers to operate their spaces in a sustainable way, including switching off lighting, checking temperature set points, and encouraging the use of ecolabel cleaning products to reduce the volume of harmful chemicals – or if possible, remove all chemicals entirely. Navigating ESG can be difficult. Breaking it down to its component parts and communicating this in the right way, to generate not only buy in, but enthusiasm, is crucial to the effectiveness and the outputs.

It’s clear that we must build on the baseline of the ESG agenda, and ensure this is at the forefront of everything we do within retail. ESG touches all elements of the day-to-day operations of a site and over the course of 2022 and beyond, the standard will be fully adopted and championed across our managed network. As technology improves and solutions become more affordable, we have built-in flexibility to evolve the standard. A gold standard today might be only be silver in a few years. This will help encourage and bring forward more ESG enhancements in the future.