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Report of Executive Board of Directors

Sustainability and climate change

Before 2050, all retail buildings will have to be made sustainable one way or another to convert them to low (or even net-zero) carbon emissions. This pertains largely to existing buildings, as new development projects will have to be close to energy neutral from 2020 onwards.

In early 2021, local governments will come up with plans for the energy transition and map out the availability of sustainable heating at district level. In the same period of time asset owners are expected to have plans in place to make assets ‘Paris proof’. The challenge for landlords is to find the right balance in collaborating with tenants to address and stimulate sustainability measures on building level in order to make private (green) agreements on the split incentive (investments versus profit), which is still a challenge.

Retailers have more awareness of their (supply chain) responsibility and are becoming more transparent about their impact on planet, people and animals. Ethical brand rating systems, like Good On You, are providing landlords with more insight into the impact of their tenants and are increasingly being challenged by their stakeholders to incorporate this in decision making.

Well-being and health is an emerging theme for retail consumers. In the retail sector, this theme is more a driver for products and channels. A healthy building is generally related to material use, design, safety, indoor air quality, thermal comfort, daylighting, freedom from noise and user experience, factors that have been partly incorporated in existing sustainability labels and certifications.

In addition, climate change is already happening and buildings need to be resilient to physical climate impact. Monitoring physical climate risks (like extreme weather events) really took off in 2019 and is expected to become more important in the years ahead.

Numerous institutions are currently developing methods to measure circularity and developers are experimenting with circular building and demolition projects. Retail companies are primarily focused on integrating circularity in their products and supply chain. For the retail real estate sector, this could translate into different types of contract, both with suppliers and with tenants, construction & fit-out requirements or as-a-service concepts.

In 2019, construction projects and real estate markets were hampered by changes in rulings related to nitrogen emissions and PFAS levels (chemical substances) in the Netherlands. In late 2019, the government introduced new legislation for PFAS levels and temporary legal exemptions for nitrogen emissions to prevent all construction projects grinding to a halt. The political and environmental debate on how to solve the nitrogen problem are still ongoing, as it is clear a more sustainable approach is needed. Additional legislation is expected in 2020, including the 'Clean Air Agreement', which will affect future construction projects.

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