Embedding ESG into real estate assets

Aviva Investors Sustainability Standards

Global

The transition to a low carbon economy and the evolution of a sustainable built environment offers a particular challenge for organisations. Especially those with investments in a multitude of properties around the world.

Aviva Investors (AI) is the investment arm of Aviva plc, a large financial services company that provides a range of insurance and investments. It offers finance in the form of equity and loans to a range of assets, including more than 400 buildings in which they hold equity, with £350 billion of assets under management of which approximately £45 billion are invested in real estate.

Buro Happold has been appointed by Aviva Investors to help embed ESG (environmental, social and governance) and sustainability standards throughout its development portfolio and help the organisation achieve its own ambition of becoming net zero carbon by 2040.

Challenge

In September 2019, Aviva Investors became a signatory of the Better Buildings Partnership (BBP) Climate Change Commitment. This means the organisation has committed to decarbonising its clients’ equity assets to net zero emissions by 2040. As part of its commitment, its real estate funds set a net zero pathway in 2020, which involves targeting the acquisition of sustainable buildings, developing new low-carbon assets, and renovating existing building stock in the portfolio.

The Better Buildings Partnership’s Climate Change Commitment, signed by 23 of its members, including Aviva Investors, will see 1.2 million tonnes of carbon emissions per annum reduced to net zero by 2050.

In November 2019, parent company Aviva plc joined the United Nation’s Net Zero Asset Owners Alliance. The Alliance brings together the world’s biggest pension funds and insurers to commit to net zero emissions in their investment portfolios by 2050. Aviva plans to align its investment portfolios with the 1.5°C target set out in 2015 at the COP 21 summit in Paris.

At the beginning of 2021, Buro Happold was commissioned to advise the organisation on making its transition to a low carbon economy. The brief includes ensuring all new acquisitions and developments meet BREEAM “Excellent” standards and can show a route to reaching “Outstanding”. The standards include operational energy targets, including in-use energy of 100kWh/m², fossil fuel free and meeting EPC A standards.

There has also been a drive to ensure the organisation fully understands the embodied carbon within its portfolio. With standards determining that the group should work towards achieving embodied carbon of less than 600kgCO2/m².

In terms of wellbeing and social standards, the portfolio also needs to report against Aviva social value metrics and reference the WELL Standard. The objective is to maximise sustainability by embedding robust systems of ESG. This promotes investing in assets that support the transition to a carbon free economy.

The transition to a low carbon economy and the evolution of a sustainable built environment offers a particular challenge for organisations. Especially those with multi-asset strategies and with a multitude of properties across sectors and locations. Aviva is rising to this challenge setting market leading standards and influencing the industry.

Trevor Keeling, Associate Director, Buro Happold.

There are three core objectives for real estate at Aviva Investors: 1) Reduce carbon emissions by 30% by 2025; 2) Reduce energy intensity by 10% by 2025; 3) Create healthy, safe, fair and accessible employment for customers, suppliers and communities. As there are multiple versions for what constitutes a ‘green’ building, this increases the risk of “greenwashing” accusations for an organisation. Therefore, standards played a vital role. In terms of achieving BREEAM excellent standards and other relevant standards, Aviva Investors needed to ensure it was equipped to adapt – to redevelop or reconsider in terms of what needed to change organisation-wide to achieve benchmarks and certifications. Equally, it would need to consider how the global approach to fossil fuel free buildings is becoming more nuanced.

Solution

We have helped Aviva Investors navigate emerging standards around embodied carbon, social value and biodiversity. We worked closely with the organisation to fully understand the embodied carbon within its portfolio. In terms of wellbeing and social standards, we integrated requirements into the Sustainable Design Brief and developed design guides for the design teams.

Stakeholder engagement was a critical part of the process. Working with multiple Aviva stakeholders at multiple different levels of knowledge and ensuring the standards were accessible to a range of people. Buro Happold’s Sustainability Associate Director, Trevor Keeling, was seconded to Aviva for the project duration.

By acting client-side, we have been able to ensure that developments (new build, refurb and key capex projects) are fully aligned with the Sustainable Design Brief. A major area of focus was around NABERS Design for Performance – exploring energy consumption and advanced energy modelling with additional safeguards across construction. The focus was on designing performance, system certification, and around embodied carbon to show how Aviva was achieving its vision to move towards energy efficient buildings with additional safeguards throughout the construction and handover process.

Value

Buro Happold’s work is helping Aviva Investors transition its portfolio of investments in the built environment. This helps the organisation attract investors interested in climate change. It also helps the organisation to increase its resilience to the expected impact of climate change over the next 30 years.

We chose Buro Happold due to the breadth of expertise that was available behind the proposed project team. While you need the technical expertise, you also need the people skills to give stakeholders the space and time to come along with you on the journey. The Buro Happold team has been good at all of those things.

Edward Dixon, Head of Responsible Investment, Aviva.