Investing in sustainable real estate

Sustainable buildings

Sustainable building certificates enable us to show where we are in terms of sustainability at asset level and how far we still have to go. We use internationally accepted sustainability certificates to measure and assess the overall sustainability of our assets. Benchmarks help us to make informed business decisions to mitigate environmental, social and governance risks and enhance our long-term returns. Certificates such as GPR Building measure criteria that go beyond legislative requirements and provide us with instruments to encourage more responsible tenant behaviour, such as cutting waste and reducing energy consumption.

The Fund uses GPR Building software to measure and assess the overall sustainability of its buildings. The GPR reports on five performance indicators: Energy, Environment, Health, Quality of Use and Future value, and assigns a score for each performance indicator on a scale of 1 to 10. When used on existing buildings, GPR makes it very easy to identify potential quality improvements following sustainability-related measures. This in turn makes it very easy to compare various scenarios and the outcome of any measures, which enables us to choose the most (cost) effective measures, both in terms of sustainability and the long-term return on investment.

By year-end 2019, over 100% of the portfolio had received a GPR label with an average score of 6.4.

One example of our commitment to improving the sustainability of our portfolio was the opportunity we took to raise the sustainability standards of a project we were acquiring in Haarlemmermeer during the renegotiation of the contract. These homes were already highly sustainable, but once we were back at the negotiating table – prompted by the sharp rise in the land price – we decided to make them even more energy efficient. Now they will be among the most carbon neutral homes in our portfolio.

GPR scores (% of lettable floor space)

Climate resilient buildings

The impact of climate change is becoming ever more visible. Physical risks are increasing, but so are the transition risks resulting from the additional measures governments are taking to put a brake on global climate change. This demands more attention for the effects of climate change.

The Fund has started to identify the climate risk exposure of its buildings, by combining climate data with other sources of building data to create a so-called climate stress test. This looks at the likes of hindrance or damage due to flooding, heat stress inside and outside buildings and subsidence due to drought and drops in ground water levels. The aim of this exercise is to ascertain whether current and future investments are climate proof, both in the short term and around 2050, and what measures the Fund needs to take to prevent damage to the buildings and to guarantee the safety and well-being of users. This is how we are working to create a climate-proof portfolio.

Reduction of environmental impact

Monitoring performance

Monitoring environmental performance data (energy and water consumption, greenhouse gas emissions and waste) is an important part of managing sustainability issues. The Fund tracks and aims to improve the environmental performance of its managed real estate assets: those properties for which the Fund is responsible for purchasing and managing energy consumption. The Fund reports on energy consumption (electricity, heating and gas: the energy components) for apartment buildings, which translates to greenhouse gas emissions.

In 2019, the Fund raised its targets for the reduction of its environmental impact in the period 2020-2022:

• Renewable energy: increase percentage of renewable energy

• Energy: average annual reduction to 5% in 2021 from 2% in 2019 

• GHG emissions: average annual reduction to 5% in 2021 from 2% in 2019 

• Water: average annual reduction 2%

• Waste: Increase recycling percentage

Renewable energy production

The Fund has steadily increased the generation of solar power, both for new properties and existing apartments and family homes. We have already achieved our goal for 2020 and we have included more ambitious goals in our Fund Plan for 2020-2022. From this moment on, we will fit all existing apartment buildings and family homes with solar power. We are also considering pilot projects for the storage of solar power in batteries. In 2019, we made 120 homes near carbon-neutral-ready by supplying air-source heat pumps to drastically reduce natural gas consumption.

We also raised the target for renewable energy generated by solar panels to 12,000 kWp by the end of 2022. The target for energy reduction is now 5% per year to put the target in line with (international) climate goals (reduction of 95% of CO₂ in 2050 compared to 1990). We have also redefined the target for the zero-to-the-meter housing projects to bring this more in line with current developments: in the period 2020-2022, 70% of newly-signed acquisitions (€) will be near ‘energy neutral’ projects (‘BENG’-proof).

Energy consumption and GHG emissions

By selecting and focusing on the top 50 largest energy consuming assets and installing LED lighting and relocation sensors, the Fund is on track to meet our environmental target. 

In 2019, the Fund managed to cut electricity consumption by 5.7% (2018: 1.8%) and total energy consumption by 2.2% (2018: 1.7%), both on a like-for-like basis. GHG emissions increased by 10.3% caused by higher use of gas. The Fund purchases renewable electricity for common areas, while property managers are required to deliver energy efficient alternatives for repairs and replacements based on the Total Cost of Ownership (TCO).

Water consumption

The Fund’s standard programme of requirements includes water-saving fittings, and we are also investigating the potential use of water buffering and partly recycled (non-drinking) water, for instance for the maintenance of green areas. When we replace a bathroom, toilet or kitchen, we always include the installation of water-efficient sanitary. We take a strategic approach to water management because this enhances the efficiency, resilience and long-term value of our investments. The Fund is committed to reducing water consumption, maximising the reuse of water and preventing water pollution and flooding.

Waste

The Fund aims to manage waste streams for which it is directly responsible in a responsible manner. We encourage our tenants to minimise and recycle waste. We provide recycling bins and encourage the reuse of plastics, metal and other materials.

Green portfolio

The Fund met its target related to sustainability at asset level in 2019, and had a 100% green portfolio, as all assets had received EPC labels A, B or C. The distribution of energy labels in the portfolio is shown below. Investment properties under construction are excluded from this overview. The Fund expects all these properties to receive an energy label A upon delivery. 

On top of this, last year the Fund acquired a total of 297 homes that will have an energy index of zero upon completion. This will improve the average energy index of our total portfolio. This will put the Fund among the most sustainable residential funds in the Netherlands.

Distribution of energy labels by floor space (m²) in %

The Fund redefined these targets in the Fund Plan 2020-2022 to the effect that we are now aiming to receive Energy label A for at least 65% of the portfolio (energy-index <1.2). All new-build properties we acquire will have to have a minimum energy index level of 0.2 (BENG-proof) and a GPR score of 8.0. We will also continue to invest in our standing portfolio to reduce energy index levels to a minimum of 1.15 and achieve a minimum GPR score of 6.6 in 2022.