In December 2019, Icebreaker One was presented at COP25 in Madrid. In the four years since then, we’ve undertaken projects spanning the fields of energy, finance and water, maintaining one common and integral thread, that the discovery, access and use of data can markedly accelerate our journey to net zero.
Now, in the lead-up to COP28, with a climate emergency on our hands, we want to reinforce this common thread, highlighting why our work is more pertinent than it has ever been. In order to achieve this, we’ll be revisiting past use cases. These demonstrate our action-led work, showing the potential impact better access to data can have, and its critical role in keeping us within the boundaries of the Paris Agreement.
Impact investment & the built environment
For this programme, our focus was the development and improvement of data infrastructure and practices for the sharing of impact investment data. Impact investments are defined here as ‘investments made to generate positive social and environmental impact alongside financial return’. We therefore needed a use case that would hold significant environmental weight, while also providing a financial impetus for investors. And, given the breadth of impact investment, we also wanted to refine the focus of our use case, looking to the built environment as a suitable lens for doing so.
Europe’s building sector alone is responsible for 40% of energy consumption, more energy than any other sector. It also accounts for 36% of the EU’s GHG emissions. This of course is not isolated to Europe, the same can be seen in the United States where buildings are the single largest energy user, responsible for a third of national GHG emissions. To meet the EU’s 2030 climate target, €3.5 trillion of total investment will be needed this decade to decarbonise Europe’s buildings through renovation. Based on Member States’ current plans, the investment gap to 2030 is estimated at €2.75 trillion.
Icebreaker One’s role
Icebreaker One, set about finding a point of leverage that would help plug this investment gap, mobilising finance while moving the built environment closer to net zero. We focused on long-term risk data as a way of homing in on a particular data point in the sector. Long-term risk data is a crucial component in the sustainability and resilience of the built environment as it includes data on environmental risks such as climate change exposure as well as operational risk relating to an asset’s performance. Investors need to know the long-term risk associated with an asset in order to make more well-informed decisions. With this front of mind, we arrived at our use case question: How do organisations and investors currently access reliable, standardised long-term risk data for the built environment, globally?
Data granularity
Part of the information used to evaluate long-term risks is asset-level data. We discovered that access to granular asset-level data is proving to be a serious issue for the industry, with the data that is available, mostly regionalised. Not only this, but our research uncovered a fundamental disconnect between the increasing demands of regulators and investors for more detailed asset-level data when it comes to ESG reporting and the data that is actually available to satisfy these demands.
José Cordovilla, Director of Infrastructure Advisory at Typsa, echoed the challenge of accessing granular asset-level data. He cited flood risk data as widely available in Europe and the US but scarce in other countries, highlighting a significant issue in the industry’s data flows. According to José, a lot of building pre-design data is government-owned, not public and can only be accessed once an organisation has won a building contract.
The lack of data granularity can be damaging for the industry, leading to inaccurate asset valuations and potentially deterring investment. But, if improvements can be made in accessing more granular asset-level data, investors can more accurately assess the performance and energy consumption of their assets. This could save investors money while ensuring they’re aligned with ESG reporting standards.
Standardisation
Many ESG reporting frameworks are not mandatory however, and those that are, lack standardisation. This leads to inconsistencies and difficulties in comparing organisations. Having a standardised method of ESG reporting that provides guidelines or best practices for reporting could lead to improved data quality and better long-term risk assessment. Standardisation has the potential to create consistency in the market. This increased consistency could make it easier to assess and compare the long-term risks associated with assets, a powerful tool for investors. One existing solution for comparing organisations is the free-to-access Built Environment Carbon Database, designed to become the main source of carbon estimating and benchmarking for the industry.
Retrofitting & whole-life carbon assessment
Retrofitting is one example of how access to reliable long-term risk data can be used to provide value for investors and the planet. By retrofitting an asset, asset owners can align themselves with ESG regulations as well as enhancing the long-term value of the asset. On top of this, long-term risk data can provide a more accurate cost-benefit analysis, helping to justify investment in retrofitting efforts by demonstrating the potential long-term savings.
‘ESG initiatives present an opportunity for investors, owners and occupiers to focus on value creation and mitigation of risks. Much of this opportunity is centred around the management, retrofit and refurbishment of existing real estate assets.’ (Carl Brooks Global Head of ESG, Property Management, CBRE).
Long-term risk data can also help to provide a comprehensive whole-life carbon assessment (WLCA) of a building. Conducting a thorough WLCA can provide a more accurate figure on the carbon emissions of an asset and is a crucial step in reducing GHG emissions in the built environment. In turn, a WLCA can help investors set more accurate emissions targets and help them comply with government regulations.
Industry challenges
Despite deep-rooted challenges, regulatory hurdles and a tension between financial growth and sustainability, we believe that improving access to reliable and standardised long-term risk data in the built environment could act as a driving force for decarbonising the industry while mobilising finance. This can best be seen through the potential benefits that retrofitting and a WLCA of a building can have.