Buildings account for
approximately a third of the world's energy
consumption and are a high-impact sector
for urgent mitigation action on climate
change
Retrofitting buildings
with energy efficient equipment can deliver
long term returns on investment
New York/Geneva, 26
February 2014 - Energy efficient buildings
can deliver up to 20 per cent reductions
in energy consumption and provide an overall
better market value for investors, says
a new report by the United Nations Environment
Programme's (UNEP) Finance Initiative.
Buildings account for
approximately a third of the world's energy
consumption and global greenhouse gas emissions,
and are a high-impact sector for urgent
mitigation action on climate change.
Investments in overhauling
the energy infrastructure of buildings with
energy efficient equipment can pay back
quickly, depreciate slowly and deliver returns
for decades. Combined with the risk of deepening
regulatory requirements and volatile energy
prices, the business case for investing
in energy efficient retrofits becomes straightforward.
According to the US
Energy Information Administration, commercial
buildings account for nearly 20 per cent
of US energy consumption and 12 per cent
of the nation's greenhouse gas emissions.
However, the financial
community needs more information to price
accurately the risks and rewards of energy
efficient retrofit projects, says the report.
The report encourages
investors to consider the economic rationale
of investments in energy efficient buildings
for their own portfolios. Best practices
from leading global real estate investors
are summed up in a seven-step process:
Ensure executive awareness
of the business case;
Measure and benchmark building energy performance;
Set portfolio energy-efficiency targets;
Link asset manager compensation to energy
performance;
Align lease clauses to enable retrofits
(green leases);
Include impact on asset value in investment
analysis;
Take a portfolio approach to determining
next steps.
"We believe real estate investment
managers can incorporate much of the seven-step
process outlined in this report to develop
robust energy efficiency strategies and
action plans," said Laurie Weir, Senior
Portfolio Manager at California Public Employees'
Retirement System.
"As building owners
and operators, real estate professionals
have an opportunity to reduce energy consumption
and greenhouse gas emissions while increasing
the value of their real estate assets,"
said Charles Anderson, Director, UNEP Finance
Initiative. "The paper strives to show
investors that there are options available
for all property mixes, and that possessing
and managing the right information is crucial
to unlocking the energy efficiency retrofit
potential."
UNEP FI's work on energy
efficiency and engagement with investor
networks contributes the private sector's
viewpoint to UNEP's Sustainable Energy for
All (SE4All) Initiative, which aims to double
the global rate of improvement in energy
efficiency.
Note to editors:
The PDF version of the
UNEP FI Investor Briefing Commercial Real
Estate: Unlocking the energy efficiency
retrofit investment opportunity will be
available to download from 1800 CET on 26
February onwards at http://bit.ly/1cGRmxC
About UNEP Finance Initiative
(UNEP FI)
The United Nations Environment
Programme Finance Initiative (UNEP FI) was
established in 1992 as a partnership between
policy makers and financial intermediaries.
With over 200 members representing banks,
insurers, and investors from around the
world, UNEP FI contributes the perspectives
of financial institutions to the United
Nations and global activities on sustainable
finance. UNEP FI's mission is to bring about
systemic change in finance to support a
sustainable world by 'Changing finance,
financing change'.
