How to engage tenants to share utilities data

Our industry is engaged in an important dialogue to improve sustainability through ESG transparency and industry collaboration. This article is a contribution to this larger conversation and does not necessarily reflect GRESB’s position.

Every year, come GRESB submission season, sustainability managers are faced with the challenge of comprehensive energy consumption data. Simultaneously, inboxes fill with requests from investors and superiors demanding updates on efficiency initiatives and Green Lease Agreements. Understandably, tenants often hesitate to sign these leases and share their data. They question the direct benefit for them and the reasoning behind the added bureaucracy. This friction highlights a pressing pain point: while real estate owners depend on transparent utility information, occupants lack motivation to supply it.

Investors particularly seem to increasingly focus on robust reportings: 95% of investors use ESG data for their decision-making. Simultaneously, 87% of investors believe that they are being greenwashed. Deloitte found that executives overwhelmingly view improving data quality as a top challenge. With leased spaces accounting for up to 80% of building energy use, tenant utility information represents a major blind spot. The need for transparent utilities data is evident, so where does the process falter?

Meanwhile the facilities coordinator over at the tenant’s office starts the day handling complaints about rising energy costs. With no access to usage data or control of building systems, they have limited options to cut consumption across leased locations. Even when manual monitoring is well scheduled, it is not always reliable, secure or frequent enough to fulfill ESG needs. Just imagine the property manager being sick during metering-week or forgetting the outside parking meter near the water well. Understandably, the latest requests flooding into landlord inboxes to share this hard gathered utility information just adds to the pile of bureaucracy.

Both sides struggle with this energy data dilemma. Property owners need insights to drive efficiency, meet tightening regulations, and satisfy shareholders. Tenants want autonomy, are slow to trust, and see little upside to engagement. However, to reach the ultimate goal, net zero, collaboration through aligned interests is essential.

Left unaddressed, this dilemma limits tenants’ ability to improve energy efficiency. However, through purposeful communication and individualized technical solutions, owners can align tenant interests with ESG objectives to unlock the full potential of water and energy data.

The tenant dilemma has become more pressing as regulatory requirements for benchmarking and disclosure tighten. Regional policies mandating regular energy audits, transparency, and performance standards necessitate comprehensive consumption data.

Despite the fact that most multi-site businesses understand the need for transparency in utilities data, many are unaware of the rising regulatory pressure. In Germany, the recent “Energieverordnung 2032” has set a new timeline for smart meter rollout, requiring increased submetering and tenant data sharing.

By 2025, all consumers between 6,000 and 100,000 kWh per year and system operators between 7 and 100 kW installed capacity will need intelligent metering systems. At least 20% must have smart meters by end of 2025, 50% by 2028, and 95% by 2030. This regulation will make submetering at the tenant level essential to providing building owners the requisite insights for compliance. Similar policies focus on energy benchmarking and auditing. Performance standards are increasing the need for comprehensive tenant utility data across Europe. As regulations tighten, tenant participation and advanced submetering will become critical for owners in all countries to meet mandatory transparency requirements.

Traditional utility set-ups provide only aggregated consumption for the whole building. Retrieving granular insights on tenant consumption requires the active participation of tenants through monitoring access. This represents an added burden tenants are rarely inclined to accept as a result of data security and exploitation concerns. Tenants worry landlords will misuse insights to increase rent or invalidate leases. Some even fear behavior or business activity tracking. While these risks appear minimal, the perceived lack of benefits limits tenant engagement.

Thus, progress is contingent on reshaping the tenant perspective. As such, communicating the mutual benefits of energy initiatives is key. With transparent consumption insights, tenants can better manage their own consumption. Simultaneously, efficiency upgrades lead to reduced costs for HVAC and lighting.

Ultimately, tenant participation enables sustainability targets to be reached more quickly and more easily, in turn benefiting the environment and community. Optimizing energy efficiency without compromising on comfort generates lower operating expenses.

Occupants willing to share consumption data with owners build crucial trust in the process. This spirit of collaboration lays the foundation for an impactful sustainability approach.

Smart submetering is a technological breakthrough for aligning tenant and owner interests because it provides granular consumption tracking in real-time. As neutral intermediates, smart submetering providers increase the visibility into consumption patterns for both tenants and landlords.

Empowered with this knowledge, occupants can tailor their habits for conservation, and owners gain critical data to optimize the sustainability rankings of their assets while simultaneously respecting the autonomy of the tenant. Integrating submetered insights across a portfolio enables robust benchmarking and presents opportunities for cost saving.

Beyond metering technology, engagement is imperative for owner-tenant energy programs. Many occupants are simply unaware of benchmarking benefits or lack the expertise to interpret granular usage data.

However, both tenants and owners bear the responsibility for progress. Through forums, webinars, and one-on-one guidance, real estate companies and occupants should engage in conversation to embrace energy tracking as an asset rather than a security risk. Moreover, energy management platforms ensure that both parties gain access to transparent and granular consumption data fostering a relationship of open communication and energy efficiency.

With climate stakes rising, the tenant dilemma intensifies. However, proactive solutions do exist. To lead the pack, real estate owners must act now to earn tenant trust and data participation through transparency, smart metering tools, and strategic rewards.

The path ahead may be rocky, but first movers will gain an advantage in the game. Companies investing early in advanced energy management systems and tenant engagement will accelerate their performance while competitors play catch-up. A transparent roadmap and technology pave the path toward consumption transparency.

As legislation continues to promote the attainment of net-zero targets, comprehensive energy data and insights will become non-negotiable. Real estate laggards relying on invoices and extrapolations alone will hit a ceiling. Besides, error-margins in consumption estimations are carried over every year, causing calculations to consistently stray further from reality. In the worst case scenario, stranded assets and risks remain hidden behind the curtain of data secrecy. The need to shed light on portfolios through accurate, real-time utility data is urgent and inevitable.

Leading organizations recognize data is the compass guiding sustainable business practices. They are taking matters into their own hands, implementing integrated energy platforms to optimize assets and demonstrate commitment to tenants with fair and transparent agreements.

The time is now: as ESG standards continue to rise across different sectors, could elevating the mutual sustainability efforts for owners and tenants be the competitive edge you need?

Join nanoGrid’s webinar on December 8 to learn more about tenant data sharing.

Why should tenants share energy data with building owners?

• Consumption insights: with transparent consumption information, tenants can better understand and manage their own energy usage
• Regulatory pressure: mandatory benchmarking policies and submetering requirements are making utility data sharing an imperative rather than an option
• Lower costs: data helps owners identify efficiency opportunities that may lead to reduced operating expenses passed through to tenants
• Collective goals: sharing data enables achieving shared sustainability targets that benefit the community

Why do tenants refrain from sharing energy data?

• Data security: tenants worry about exploitation of insights to reveal behaviors, business activities or sensitive information
• Lack of control: tenants want full control over how their data is accessed, used and shared
• Added bureaucracy: tenants often don’t see a clear advantage or incentive to participate

How can building owners address tenant concerns?

• Consent: owners should be transparent about data usage and provide consent forms detailing authorized access via NDAs
• Data protection: following best practices for data privacy and anonymization protects sensitive information
• Anonymization: aggregating or anonymizing data helps protect shared data
• Access and control: providing tenants visibility into their own usage data enables them to monitor, benchmark and manage consumption
• Regulatory pressure: staying informed about the pressure and guidelines for smart metering and data transparency is a necessity rather than an option

How are smart meters improving data access?

• Granular tracking: smart submeters provide real-time usage data at the tenant level
• Mutual visibility: owners gain portfolio insights while tenants can better manage individual usage
• User portals: online dashboards drive tenant engagement by making data easy to access and understand
• Automated monitoring: smart systems require no manual data gathering by owners and tenants

This article was written by Vishal Arora, Sales Director, at nanoGrid.

References

Deloitte, “The future of ESG data and technology,” Deloitte Insights, 2022.

ULI Greenprint Center for Building Performance, “Tenant engagement,” ULI Greenprint, 2019.

Heemeyer, J., “Why Commercial Tenants Should Care About Building Energy Performance Standards,” Building Innovation Hub, 2022.

Germany Trade & Invest, “The Smart Meter Rollout in Germany and Europe,” Germany Trade & Invest, 2022.

Federal Ministry for Economic Affairs and Climate Action, “Energieverordnung 2032 in Kraft,” Federal Ministry for Economic Affairs and Climate Action, 2022.

PricewaterhouseCoopers, “Global Investor Survey 2022, The ESG execution gap: What investors think of companies’ sustainability efforts,” PWC, 2022.

Capital Group, “ESG Global Study, 2022,” Capital Group, 2022.