Preserve will enable the consistent assessment and measurement of climate transition impacts in real estate investment models
As part of its C Change program, ULI Europe, together with sustainability analytics specialist Synergetic, are commencing the development of a new interactive tool that will enable the real estate industry to integrate climate transition into the financial models at the heart of investment decision making.
The free-to-use ULI “Preserve” tool will deliver a key aspect of ULI Europe’s ongoing C Change program to mobilize the European real estate industry to urgently speed up decarbonization, seeking to understand and eliminate the barriers.
The aim of this new tool is to allow the previously published ULI C Change Transition Risk Assessment Guidelines to be adopted at scale in the industry. Preserve will enable real estate companies to quantify the financial impacts of the opportunities and risks associated with the net zero transition. This would allow for risks, such as future energy costs and demands, potential rent increases, carbon pricing, and capital expenditure, to be consistently and uniformly integrated into investment decision making.
ULI and Synergetic are working in close collaboration with Mott MacDonald and CBRE UK Valuations Advisory to develop this easy-to-use and scalable tool. To ensure that Preserve is representative of broad industry requirements, the tool will draw upon the insights of the C Change partners, ULI members, and a range of key stakeholders from across the value chain.
Sophie Chick, vice president, ULI Europe, comments, “There is a lack of consistency in the way that transition risks and opportunities are being integrated into business plans across the industry. The Preserve tool aims to create a level playing field for all, helping to facilitate and champion the wide adoption of transition risk assessments across all players and avoid the risk of any disadvantages. We see Preserve as providing an essential resource for everyone to implement the transition risk guidelines in a practical way.”
Derek Wilson, CEO of Synergetic, notes that, “The industry is at a crossroads and needs to balance the dual objectives of financial performance and climate action. Doing so successfully requires data-driven insight into the financial risks – and just as importantly, opportunities – of the net zero transition. We are proud to be working with ULI and our partners at Mott Macdonald and CBRE to build a tool that will make this insight available to the industry, and thereby drive robust climate action that is resilient because it makes commercial sense.”
Lisette van Doorn, CEO, ULI Europe, concludes, “We all appreciate that real estate is a significant contributor to global carbon emissions, and the Paris Agreement is clear on where we need to get to by 2050. Integrating upside and downside transition risks into investment decision making offers the industry a vital step towards speeding up decarbonization of the built environment. However, currently these impacts are not reflected in real estate investment appraisals as the regulation to achieve net zero for the built environment is still lacking. The Transition Risk Assessment Guidelines have been designed to assist the industry in building the business case for decarbonization, and they are as much about value preservation and potential uplift as they are about capital expenditure.”
“Preserve is the natural evolution of this process, with the guidelines essentially forming the tool’s technical brief. We believe that this will enable the industry to drive real transformation and create lasting industry-wide change in addressing decarbonization, all facilitated by an intuitive, easy-to-operate, interactive tool.”
Preserve will be developed across several phases, with the initial phase focusing on the tool’s technical specification before proceeding to development and testing and then finally piloting and case studies. The tool will be launched as a publicly available, free-to-use resource.
To ensure that the tool will add value for the industry, ULI and the development partners will actively seek input and feedback from ULI’s membership and the wider industry. A C Change roundtable will be held at the forthcoming ULI Europe Conference in Milan (10-13 June, 2024) where registered participants will have the chance to provide input into the user specifications of the tool. There will be further opportunities for industry players to contribute their expertise to the development phase of ULI Preserve and participate in piloting the tool during the later phases as part of the wider C Change program.
The C Change program is sponsored by the following organizations: Catella, Hines, IPUT Real Estate, Longevity Partners, Patrizia, PIMCO, Redevco, Savills Investment Management, Schroders Capital, Sonae Sierra, and Urban Partners.
Contact Sophie Chick at [email protected] if you’re interested in supporting the development of Preserve or would like to find out more about the tool and opportunities for piloting and/or sponsorship.
