What is the industry doing? – Re:Imagining Retail

What

IS THE INDUSTRY DOING?

WHAT ARE LANDLORDS IN UK & EUROPE DOING TO REDUCE THEIR CLIMATE IMPACT?

As retail investors across Europe are increasingly looking to improve their ESG credentials, we explore how several landlords are putting strategy into action. This includes large scale renewable energy generation or energy reduction strategies being implemented in major shopping centres (e.g. Ellandi, Nuveen and Sonai Sierra). Several investors go even further and believe that a scheme can only be truly sustainable if all of their retail occupiers also have an ethical and environmentalist backed approach across their supply chain (e.g. Green Pea in Italy and ReTuna in Sweden).

While some energy improvements are extremely costly, other solutions through modest capex can reap significant benefits, both from operational expenses but also the building’s energy performance. It’s possible to move up the energy performance certificate (EPC) ladder by changing the light bulbs and, although this is unlikely to be enough to reach the grade B required by 2030, it remains an important step change.

Ellandi have installed smart technology LED lighting solutions to replace existing those that have reached the end of their natural life in car parks, malls and back of house areas. In the Strand Shopping Centre in Bootle LED lighting has been installed in the 560 space multi-storey car park, with savings in electricity of circa £55,000pa and a threeyear payback. At the Marlands in Southampton, 705 mall lights have been replaced with LEDs, which consume 90% less energy and have a lifespan 40 times that of non LEDs.

The new LEDs were installed alongside automated emergency lighting, as well as a wireless control system using occupancy and daylight sensors. Both projects have delivered financial savings to occupiers as well as for facilities management as the new lighting is more reliable and requires less maintenance.

In terms of supporting the power needs across their portfolio of Community Centres, Ellandi are working with sustainability consultants Syzygy to implement installation projects that generate solar PV electricity. The Trinity Centre in Aberdeen has their largest PV system of 150kWh located on the centre’s roof. Since installation this has generated 845,000kWh of electricity and an average annual net income return of 15.7%. The electricity generated is the equivalent to the yearly electricity usage of 221 average UK households and has saved 325 tonnes of CO₂ (the same as planting 1,844 trees).

The Islazul Shopping Centre, Madrid

One of the key principals in moving towards a net-zero future is not just the way we source energy, but the way we use it and minimise its wastage. In Nuveen’s UK Swindon Outlet Mall, artificially intelligent technology has delivered substantial energy and carbon reduction at low cost via a dedicated smart energy programme. Continual computer monitoring of energy use observes over eight million energy data points and has identified when equipment was on unnecessarily or needed maintenance. This has resulted in a 36% energy use reduction and delivered over £600k savings to tenants. Solutions like these will be central to achieving operational energy efficiency ambitions and Nuveen are rolling these out across their portfolio.

In the recently redeveloped St James Quarter in Edinburgh, Nuveen have diverted 95% of site materials from landfill with a significant proportion of concrete being recycled and reused within the new scheme. Good design has been adopted to optimise natural light and ventilation to reduce operational carbon. This has helped Nuveen achieve an Excellent BREEAM In Use Certification.

Having low carbon credentials is one thing, but the ethos also has to continue to run through the lifeblood of the management team. The Islazul Shopping Centre in Madrid has the highest BREEAM performance in Spain, which was achieved in 2012. However, this accreditation is also determined by how a building is managed throughout its life, meaning that management must continually engage with sustainable actions. As such, the management team are always looking for new ways to improve ESG credentials under the umbrella of the 17 sustainability goals of the United Nations.

Solar generation clearly varies in potential in different parts of Europe its performance at different times of the year. With almost 50 shopping assets owned or managed in Southern Europe (Portugal, Spain, Italy and Greece), photovoltaic (PV) has been an important consideration for Sonae Sierra in reducing their energy import costs and security of supply when powering their schemes.

Portimão Shopping Center, Portugal

However, maximising the solar array on the roof of a shopping centre can be at odds with limiting the need for powered lighting systems and the gains from natural light – both in terms of limiting environmental impact, or providing a positive shopping experience. Sonae Sierra have been utilising cutting edge technology that incorporates photovoltaic glass into skylights. The first large-scale glass installation project with solar sensors was carried out at the Portimão Shopping Center in southern Portugal. Glass was installed with solar sensors with a generation capacity of 30,500 kWh/year. The installation has allowed a reduction of 20tCO₂ each year obtaining clean energy at a 70% lower cost.

Increasingly sustainability is being engineered into building construction and fabric, but how can landlords follow this through with its occupiers? One of the best examples of a sustainable retail building is the Green Pea Shopping Mall in Turin, which opened in December 2020 from the investors behind Eataly. The eco-friendly shopping hub occupies 15,000 sqm of retail space across five floors and only offers sustainable products “created in harmony with nature” related to energy, movement, interior décor, clothing and leisure; the fashion floor is devoted to sustainable fashion brands such as Timberland, Patagonia, Ecoalf, North Sails, K-Way, The North Face, Napapijri, and Re-Hash.

As well as sustainable interiors, the building is made only with recyclable materials such as steel, iron and glass and can be completely dismantled. Its wood

is from local forests that were destroyed during a storm in 2018 and the interior floors are made with recycled wood. The building is painted with Airlite: a paint that reduces air pollution by 88%. In addition, more than 87% of its hot water is generated by a geothermal plant and more than 88% of its thermic energy and almost 90% of its electric energy for lighting come from renewable PV sources.

The retail sector needs to drive efforts to reduce waste and encourage recycling and ethical sourcing. Based in Sweden, ReTuna Återbruksgalleria is the world’s first recycling mall where everything sold is recycled, reused, or organically and sustainably produced in a climate-smart way . Old items, too, are given new life through repair and upcycling. In 2018, the mall turned over €1.2million in recycled goods. Furthermore, ReTuna is more than just a marketplace and aims to be a public educator by organising events, workshops, lectures, theme days, and more-all with a focus on sustainability and community benefit.

The mall is owned and run by EMM, a municipalityowned company tasked with running competitive organisations in the energy and environmental sector, rather than a traditional retail landlord. However, with EEM’s ethos to deliver optimal

benefit to customers and residents, with minimal impact on the environment, this could be a good approach for local authorities that have been increasing their stakes in shopping centre assets in recent years.

Currently, these ambitious solutions are not suited to all retail environments. However, most retail places could do with incorporating some of the principals of Green Pea or ReTuna into their schemes, which will help improve sustainability goals, deliver on social value, and appeal to a growing body of ethical consumers.