Watch this space...the British Retail Consortium (the "BRC") will be publishing its long anticipated Retailer/Landlord Net Zero Protocol on the 23rd November 2021 as part of Pathway 2 of its Climate Action Roadmap.
The Climate Action Roadmap commits signatories to meeting the target of being net zero carbon by 2040, ten years earlier than the UK Government's own commitment. Signatories include household retail names, from various sectors, such as Asos, Decathlon, Dunelm and Tesco.
The new Protocol is designed to help retailers and landlords work together to improve building energy efficiency and to bring building emissions to net zero across retail estates. As currently drafted, the Protocol covers two main goals:
- Improving energy efficiency
- Moving to renewable energy
Improving energy efficiency
Improving energy efficiency often requires sophisticated data collection and the installation of new technology in order to agree and monitor achievable energy targets. The sharing of data between landlord and tenant has historically often been a point of contention. However, if both parties are to achieve their own Environmental, Social and Governmental (ESG) goals, transparency and communication between parties is essential. The BRC's Protocol not only sets out methods for improving the energy efficiency of a building (such as LED lighting, removing gas powered heating and insulation) but seeks to promote landlord-tenant collaboration through methods such as Building Management Systems, data sharing platforms and incentivisation schemes.
Moving to renewable energy
In addition to improving energy efficiency, the Protocol encourages both landlord and tenant to commit to exploring the possibility and feasibility of both the onsite generation and the offsite procurement of renewable energy. The Protocol sets out examples of how such goals may be implemented. For example, by way of drafting contracts which include the agreement on renewable energy sourcing control, mapping out likely energy demands for the duration of the lease term, considering electric vehicle charging needs, back-up generation or methods for sharing heat or cooling opportunities with neighbouring premises. Alternatives also include, exploring the scope for integrating biodiverse features within a building including the consideration of green/biodiverse/blue roofs and green walls.
Obstacles in the sector
For many retail tenants, it is often difficult to align their own ESG policies with those of the landlord. In a survey completed during a recent webinar by attendee retailers and led by Dominic Curran, Property Advisor at the BRC, the "top two" obstacles identified preventing the realisation of sustainability goals were financial barriers (such as pay back times for renewable energy and costs incurred with fit-out works) and more notably a lack of engagement from the other party. The Protocol seeks to address this obstacle by encouraging landlord and tenant to work together to positively consider the costs and benefits of implementing ESG aligned initiatives whilst taking into consideration the challenges which this may bring in relation to dilapidation calculations, rent review and service charge provisions.
The key takeaway...to achieve the target of being net zero carbon by 2040, collaboration is crucial.
“Climate change is the greatest threat we face, one that none of us can afford to ignore. The BRC Climate Action Roadmap is a clear and decisive statement that the retail industry is ready to take on this challenge"