Three years ago, a major target was set on a global scale.
During the Paris climate conference (COP21) in December 2015, 195 countries adopted the first-ever universal, legally-binding climate deal. The overarching agreement set out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C and pursuing efforts to restrict it even further to 1.5°C level. The EU’s nationally determined contribution under the Paris Agreement is to reduce greenhouse gas (GHG) emissions by at least 40% by 2030 compared to 1990, under its wider 2030 climate and energy framework.
As it is almost becoming secondary knowledge that the world’s building stock now accounts for approximately 40% of carbon emissions generated globally (making them one of the most significant contributors to our carbon footprint) it is no wonder that various targets are being set at global, national and local levels to attempt to counteract the impact which our buildings (and other forms of emitting sources) currently have on the environment. In 2016, the World Green Building Council (World GBC) issued an ‘Advancing Net Zero’ project (figure 1) which is a step in the right direction to gain commitment and intent from the industry to tackle our new & existing buildings worldwide.
Fundamentally, targets are depicted as a point of reference for an entity to aim for with the purpose of successfully achieving a certain level of performance. The following piece of text looks to simplify the reasoning for how and why targets are influential, with a particular focus on the built environment.
Variation of form
It is not uncommon to associate targets with Key Performance Indicators (KPIs). KPIs represent a measurable value that demonstrates how well an organization is achieving key objectives. Science-based metrics and other variables are often used as a basis for performance measurement in the built sector. Targets can be both qualitative and quantitative, examples of which can include, but are not limited to; finance (% Return on investment, GDP), emissions reductions (GHG’s), consumption data (energy intensity, water usage, waste disposal/recycling).
KPIs offer organizations the opportunity to draw comparisons over time (week, month, year), and between other organizations. However, an absolute number doesn’t always often much insight without context. Therefore, often the metric will be normalized, such as by revenue, output, or floor size. For example, kWh of energy use per sqft is usually more useful than simply the total energy usage.
In their efforts to address the set targets, organizations may experience opposing outcomes i.e. numerical net increase or decrease. Both of these outcomes can feasibly be positive depending on what the individual target aims to achieve. For example; the exceedance of recycling rates annually, or the reduction of energy consumption.
When determining what a target or relevant indicator may look like, the SMART acronym is the typical approach used to define the scope of the desired outcome. In order to ensure that goals are clear and realistic, each one should be; Specific, Measurable, Attainable, Relevant, Time-bound. Simple evaluation models can subsequently be applied when assessing to see if targets have been achieved (or not) and how to dictate the re-adjustment of targets for the future.
What is the point of setting targets?
Implementing (sustainability) targets and producing outputs to meet demand by investors, customers and stakeholders arguably can increase asset value. Assets that are designed, constructed and managed in line with the viewpoint of a sustainable business perspective from the outset can benefit from enhanced occupier and investor demand and should remain current and attractive for longer.
Performance targets hold importance for many reasons:
- Cost savings
- Alignment with forecasts
- Shaping future mitigation goals
- Drive for transparency and accountability
- Building resilience and decreasing vulnerability
- Combatting operational emissions via identifying reduction opportunities
Real life application
With a view from a top-down approach, many organizations across the world are now explicitly referencing the United Nations: Sustainable Development Goals (SDGs) within corporate climate initiatives. SDG 13 (Climate Action) and SDG 7 (Affordable & Clean Energy) are two which maintain prominence (figure 2). The improvement of output performance and other associated co-benefits will only help to reach these common goals, especially if organizations can find collective ways to administer tangible targets throughout operational policies and procedures.
The built sector has seen a movement towards a more environmental-centric agenda and in some cases, it has been driven to the forefront of decision-making, especially amongst commercial real estate. When considering applications of target-setting, a growing area of influence is in sustainability reporting and adoption of ESG (Environment, Social, Governance) principles during portfolio and asset management. Based on recent research, 84% of asset owners are at least “actively considering” ESG integration if not fully implementing the principles within the investment process. 60% of these have only begun doing so within the last four years and 37% within the last two
There are many tools, platforms, and initiatives currently available which enable users to measure, track and evaluate asset performance. For example, GRESB, the Global Real Estate Sustainability Benchmark, is an effective way of allowing for a universal measure of comparison for whole portfolios; harnessing the ability to determine where participants sit against their peers.
Furthermore, an additional measure of ESG performance in the real estate industry can be found when you look to green building certification schemes such as BREEAM, Green Star & LEED. There has been a positive shift towards uptake and disclosure of environmental building certification observed across the world. These types of methodologies aim to establish the sustainability performance of the design, construction and/or ongoing operations throughout a building’s natural lifecycle by offering assessment against a holistic range of environmental categories. Standards can provide added value for a building owner & associated stakeholders through independent recognition of performance, whilst also aiding the identification of potential areas for improvement. The cyclical nature of existing building schemes such as the BREEAM In-Use International allows users to understand the areas of low performance and consequently use this information to formulate targets/KPIs.
The adoption of realistic performance targets can act as a powerful tool to drive positive change and when utilized properly can play a significant role in business and society. To gain the most insight from performance targets, metrics need to be consistently measured respectively to enable comparisons over time, particularly after significant alterations to sustainability strategies or actions. In addition to this, such targets should be integrated into business strategy and reviewed sufficiently to invite improvement and encourage best practice.
Overall, targets and other versions of tracking performance are already in existence in many business sectors in day to day life. In the real estate industry and built environment as a whole, it is increasingly important to mitigate our impact on the world of today and for generations to come. Performance driven targets offer a way of understanding where we are and identifying where we can improve going forward.