As a potential solution to this, the report acknowledges the value of Perseus. Recognising the project’s value in offering a reliable model for data sharing, the report views Perseus as a potential bridge for the property sector’s data gap. What’s more, with the Perseus pilot fast approaching, the project serves as an inspiring example, holding the potential to accelerate decarbonisation in the property sector and beyond.

The energy data deficit

The property sector’s data deficit is nuanced. While owner-occupiers are able to access energy consumption data with relative ease, the same can not be said for tenant and landlord, where the sharing of data is far more restricted. According to the report, this is due to privacy laws that limit data-sharing capabilities and make it difficult for landlords to gather and track energy usage effectively. The issue becomes especially problematic when considering that over half of UK commercial real estate and one third of the residential sector are tenanted.

The report explains that “within the energy sector, Ofgem has identified licensees who are subject to data sharing regulations, which does not typically include property owners. This results in a situation where there is currently no legislation requiring the exchange of energy consumption data between property owners and occupiers.”

Perseus

With this in mind, the report indicates the need for a framework that facilitates data sharing, looking to Perseus as a prime example. If Perseus’s model of facilitating data sharing between SME and bank could be applied to the real estate sector, then data from tenants could be securely shared with landlords, ensuring energy consumption is monitored and decarbonisation efforts are tracked.

“(Perseus) demonstrates that setting up a governance framework and automated processes to build trust between stakeholders and to facilitate data sharing is possible from the perspective of the finance and banking industry. A similar framework could also be applied to the real estate sector to facilitate data sharing between tenants and their landlords, while ensuring that the data will be shared securely and used for the sole intended purpose of enabling the net zero transition.”

Aligned with our ethos of collaboration: ‘to go far, we go together’, they contribute to our mission of making data work harder to reach net zero. Now we want to highlight some of the important work they do for both people and the planet.

This week, I’m joined by Jose Cordovilla and Deepika Swamy, TYPSA. who have participated in our Impact Investing project and NIMBUS project, respectively. Jose is the Director of TYPSA’s Infrastructure Advisory and Deepika is the Head of Environment and Sustainability, UK. 

In this Q&A we touch on some of the inefficiencies surrounding the infrastructure industry, and how less data friction could open up the industry, inviting opportunities and disruptors, ultimately creating more business.

Ross: Thank you both for taking the time to talk with me. Could you start by giving me an overview of TYPSA?

Jose: Thanks for having us! Of course. TYPSA is a consulting firm and we cover most of the spectrum in engineering, with around 90 percent of work we do being on the technical side. A lot of work in my division is around financing and managing infrastructure assets, feasibility, planning and setting up long term contact for the government. Most of the work we do is for the private sector, but around 75% of projects in my sector involve helping developers bid for PFIs (Private Finance Initiatives) and PPPs (Public Private Partnerships).

Asset management is where my particular interest in working with IB1 lies. To capture the knowledge of assets, we have our own equipment for scanning, and have systems for monitoring asset performance, so that clients can plan operation and maintenance. We focus mainly on the life-cycle analysis cost side, and how you build into life-cycle expenditure.

Ross: Are you working on any interesting projects at the moment?

Deepika: Here in the UK, we have the High Speed 2 (HS2) project, which we have worked on for the past 8 years. HS2 is quite high on the government’s decarbonisation agenda, and there’s a public commitment to reduce carbon impact by 50%. That is no mean feat!

For HS2, we generate the data ourselves, using technology such as BIM (Building Information Modelling). Everything we do is digitised and all the models we design get fed into a BIM model, this model then gives us an output in terms of data, quantities and materials. Using that, we extract what’s relevant to us, and if data isn’t available, we use an EPD (Environmental Product Declaration) from suppliers. With this we can process the data and find hot spots to identify where we can further reduce carbon impact. We’ve been able to consistently reduce carbon but whether we can achieve 50% reduction at this stage in the project, we’re unsure but I do think it’s a huge undertaking from the government. 

Ross: What data-related challenges have you faced on this project and more generally in your industry?

Deepika: We do have minor challenges with data but the majority of the problems are actually down to the sheer size and scale of the projects we work on. Again, if data isn’t available we tend to use benchmark data. 

Jose: In a more general sense, our sector is very contract-centric, and very opaque. There’s a lot of advantages to possessing privileged or granular data, particularly when it comes to price. I think this is why a lot of the focus of open data standards should be on procurement and looking at how a project is conceived. There’s a plethora of contracts in which, having less data friction would open up a lot of opportunities and business. 

There’s also a lot of inefficiencies in the industry. In fact, the construction industry is the least efficient of all sectors, and it’s been like this for years. In some countries like the USA, productivity is actually decreasing. Compare this to sectors like telecoms, which has seen an incredible increase in efficiency, logistics too. But this has yet to happen in the construction industry. There’s a lot of trapped value. And, when we look at having better data on supply chains, there’s a whole ecosystem there and I think there will be a lot of disruption in this space. 

Ross: How do you think the industry can unlock this trapped value? Where do you see incentives coming from?

Jose: If I had to name one, it would be contracting and procurement. Improving the accessibility, openness and granularity of contracting data would unleash everything else. The fact of the matter is, there is no real transparency. When the data is made available, it’s not really accessible, unless you’re a heavily qualified developer. The second one would be the circular economy. This is one issue on top of the list for contractors. Having traceability of materials, and their origin. 

Deepika: There are certainly procurement issues. For example, we found using reused steel has the lowest environmental impact, even when compared to timber. There is availability of this reused steel but sometimes the client becomes nervous to mandate this because there’s an uncertainty around procurement. It’s complex doing it at a large scale but on smaller projects it might be more easily achieved. 

Ross: Does the government feed into these inefficiencies? 

Jose: This is a subject you could write books about! The contracts we deal with are really large, and these carry a lot of interest along with the potential for corruption, and information asymmetry. Also looking at our industry, the way the brains of engineers are built, they’re systematic and this makes it hard to change the way things are done. Its multidisciplinary work and so integrating all the dimensions of sustainability can take time. But I am positive, because the gap here is so big compared to other industries, so there’s a lot to gain. But I know some of the traditional engineering companies will be driven out of the market. 

Deepika: I think this is a journey, and an unprecedented one. We’ve all committed, both governments and projects, to attain net zero but we don’t really know what that looks like. There’s plenty to learn from each other along the way. 

Aligned with our ethos of collaboration: ‘to go far, we go together’, they contribute to our mission of making data work harder to reach net zero. Now we want to highlight some of the important work they do for both people and the planet. 

In this conversation, I speak to Gerrit Sinderman, who has recently taken on the role of Executive Director at Green Digital Finance Alliance (GDFA). Our discussion looks into GDFA’s initiatives on developing novel business models and financing approaches for sustainable circular cities and helping the financial sector to integrate biodiversity risks for oceans into investment decisions.

Ross: Congratulations on moving into your new role as Executive Director at Green Digital Finance Alliance (GDFA), can you give an idea of how the role’s going and your background that led to this point? 

Gerrit: Thank you! I transitioned into the climate space around three years ago, after more than 20 years in Banking and Fintech. I was raised in an environmentally conscious household and having followed climate and environmental debate closely for a longer time, this felt like an overdue and relieving move. I had long wondered how I could leverage my financial sector and entrepreneurial experiences to be more impactful. There had been a few touch-points with environmental topics during my earlier career. For instance, as an equity analyst, I got the opportunity to initiate our bank’s renewable energy coverage. Or working for a Telco, I had investigated potential energy efficiency offerings for the retail customer segment. Over the years, my sustainability-related values and concerns started to influence the way I evaluated personal and professional choices.

The real shift started happening shortly after I had assumed the country manager role for a Fintech and Insurtech accelerator. At the same time, the Swiss government had announced its ambition to make sustainable finance a core pillar of the Swiss financial centre. It was here that things suddenly fell into place. We entered a collaboration with a US renewable energy accelerator and started recruiting Climate Fintechs in preparation for a fully dedicated Climate Fintech programme. At that time, team and corporate partners got less excited about the prospect of dedicating a significant share of our time to a climate-focused program. That was when I made the full-hearted decision to ‘change sides’ and shift from a fintech-focused entrepreneurial career to a climate-focused one, in the wider sustainable finance space.

My new responsibility of leading GDFA hasn’t been a sudden change but rather a slowly evolving and now formalised change. During my two years with GDFA, I led our foundation early on, ad interim, when my boss decided to leave a couple of months after I joined. When my new boss joined a few months later, I worked closely with her, jointly managing the operations of our organisation. And so, when my boss decided to transition into an advisory role for GDFA, I was relatively well prepared to continue the transformation of our organisation. Of course, on some matters, I still needed to craft, formulate and convey to our board my own vision and plan of approach.

Ross: Can you describe the kind of work that GDFA does? 

Gerrit: GDFA acts as a catalyst for green and blue digital finance innovations. We design and test the ways in which digital data and digitally enabled business models can facilitate the green transition of the financial sector. Equally, we explore how to support the financial sector and more effectively fund the mitigation of climate change. Thematically, we focus on how digital finance and data-driven business models can accelerate the development of sustainable circular cities and of a sustainable blue economy. We have worked globally over the last seven years, but currently have a strong focus on Europe and Southeast Asia.

Ross: Can you tell me more about your work on Oceans?

Gerrit: Leading a consortium with WWF, HUB Ocean and Copenhagen Business School, we investigated how ocean biodiversity risks could be made accessible and actionable to investors of the so-called blue economy in the Nordics. Prioritising industries according to their relevance in terms of investor and asset manager portfolio exposure and impact on ocean biodiversity, we chose the shipping industry as a first research object. We developed a prototype of a geospatial risk metric that leveraged the geolocation data of shipping assets (i.e. vessels), linking those to mapping data of marine protected areas, to determine the degree to which shipping companies were adhering to such protection areas. We also involved major ESG data providers to validate our work, and identify their needs to maximise chances of a broad industry adoption.

In the next phase of this research we will further deepen our work on the shipping industry, and expand to further blue economy industries, as well as intensify the engagement with ESG data providers and financial institutions. Beyond that, I would like to explore other ways we could accelerate investments in a sustainable blue economy, such as through blue digital bonds.

Ross: You participated in our Impact Investing & ESG advisory group last year, have you seen any recent developments in standards and regulations that might impact your business?

Gerrit: Less in standards and regulations themselves, more in the resulting challenges of the different stakeholders dealing with them. In the last few years, regulation has started catching up more and more with climate and nature-related matters. Intergovernmental agreements and commitments were followed by voluntary pledges that struggled to build the momentum required to tackle global human and economic challenges – the much quoted tragedy of horizons and tragedy of commons. The markets, however, have failed to address these challenges. Now, industries are being shaken by a still growing regulatory tsunami, and struggling to keep up with the pace of expanding obligations.

Businesses, for a long time, have been built with predominantly economic ambitions. Now they need to catch up on their accountability and responsibility towards society, as well as being re-designed, re-built and operated in a very different manner. Businesses will need to collaborate with different stakeholder groups and leverage technology-induced sustainability leaps. And they will need large amounts of funding to do this.

Our work in initiating and driving collaboration on digitally enabled green finance, across industries, disciplines and regions, will hopefully be an essential contribution to address these challenges in a scarily shortening time window.

Ross: What’s coming up in 2024 for GDFA?

Gerrit: In 2024, we will be concentrating our efforts on expanding and intensifying our work especially within our thematic focus on sustainable circular cities and the blue economy, always leveraging insights on data-driven digital financial solutions and business models in very different contexts. Furthermore, we will aim to expand some of our recent work, started in Europe, to Southeast Asia, building on strong and ambitious partners we have there.

Starting is, as it always is, the most important part of the journey and this helped us steer clear of decision inertia. And so, with our advisory group members as our guides, we began to refine the focus of our work, finding a point of leverage that would provide both environmental and financial impact.

The Global Impact Investing Network (GIIN), estimates the size of the impact investing market to be around $1.164 trillion in assets under management. This underscores just how substantial the market is and how instrumental it could be in mobilising finance towards net-zero. 

Now, with our Impact Investing project drawing to a close, we have drafted our recommendations for COP28. Looking at how to develop environmental data in ESG to better enable impact investment decisions in the commercial built environment.

Our recommendations: 

1. Organisations must produce discoverable and usable digital environmental ESG reports of their transition to net zero.
2. Organisations must publish the data behind environmental ESG reports in machine-readable formats.
3. The granularity of environmental data in ESG reports must be improved.
4. Organisations must demand data-backed standardised environmental reporting from their supply chains.
5. Regulators and reporting bodies must mandate and finance a trusted data sharing ecosystem.

These recommendations have been shaped and refined through collaborative efforts with our advisory group members. The outcome is five data-centred points of leverage that we believe could accelerate the impact investing market’s transition to net-zero. 

Now, as we look to the future, governments and regulators will undoubtedly play a central role, with uncertainties looming up ahead in the form of a new election cycle in the UK. Equally, there is promising legislation on the horizon with the Corporate Sustainability Reporting Directive (CSRD) creating a common framework for sustainability reporting. Either way, we have, and will continue to encounter tough terrain on this journey. But, with data as our rope and harness, our sights are fixed firmly on the summit that is 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. 

Insurance

Data lies at the heart of the insurance industry because insurance is at its core, a business of risk management. With data playing a central part in assessing, pricing, and managing this risk. But, data in the insurance industry is often siloed or isolated to bilateral contracts between the insurance company and the policyholder. What’s more, in order to share data, stakeholders in the insurance industry need to navigate issues of trust regarding how their data will be used as well as issues of commercial sensitivity. All this, while operating within the labyrinth of regulations that underpin the industry. Our work with the Standard for Environment, Risk and Insurance (SERI) programme, aimed to bridge these gaps and siloes by establishing a foundation for net-zero underwriting, aligning insurance practices with sustainable objectives.

Building a case for retrofitting

The energy consumption of existing buildings accounts for around 34% of the UK’s annual carbon emissions. What’s more, 80% of buildings in use today will still be in use by 2050, the same year we have pledged to reach our net zero emissions target. Even if we focus on residential housing, of the 28 million homes in the UK, only 40% of these have an EPC rating of C or higher. There is a stark need to retrofit our existing buildings, in order to improve their energy efficiency, decarbonise and reach our net-zero targets.

In the context of insurance for the built environment, data capture often focuses on assessing a building’s resilience to current and future climate risks. In fact, insurers have a very solid understanding of the risks associated with climate change and how those risks can impact buildings and infrastructure. They do this by evaluating how well a building can withstand or adapt to extreme weather events, rising sea levels, increased temperatures, and other consequences of climate change. 

And yet, current short term insurance risk transfer measures are not capable of covering large scale risks caused by long term climate change, in short, the insurance industry lacks a focus on climate change mitigation. And, to adopt this focus, the systemic risks posed by climate change needs be taken into consideration during policy making. This should ensure the industry takes the route of net zero underwriting which, in turn, should incentivise net-zero behaviours from their customers through rewarding better building efficiency and performance. Reciprocally, if policyholders then share data relating to their retrofitting efforts, this information can then be used in underwriting to determine more accurate risk profiles and potential premium reductions. 

A climate-ready building passport

The key outputs of our SERI programme were the creation of an insurance product that would provide value across the insurance ecosystem, helping it factor in climate change mitigation. The insurance product created was a climate-ready building passport (C-RBP). It was designed to address industry shortcomings, paving a way for insurers to bring net zero underwriting into their repertoire and ultimately incentivise net zero behaviours like retrofitting. 

The C-RBP pools together the physical, environmental, financial, risk and regulatory data of a building in digital form. But more than this, it incorporates data points not widely used in building insurance or in pricing risk. These include the likes of Building Information Modelling (BIM) data, Building Renovation Passport (BRP) data including logbook & roadmap (e.g. retrofitting records) and Energy Performance Certificates. 

Merging the untapped data from the C-RBP with existing data, has the potential to give insurers a more well-rounded, accurate and timely view of risk, leading to improved risk pricing. They can, in turn, incentivise net-zero behaviours from their customers by rewarding climate change mitigation efforts like retrofitting. What’s more, building owners can use the C-RBP to gain access to open exposure data and, in turn, better understand their assets’ climate risks and greenhouse gas emissions. 

Finally, the C-RBP also has far reaching benefits when it comes to regulation and standard setting. Using a C-RBP could aid regulators in examining a company’s environmental impact by creating a more structured and efficient disclosure process with standardised data up-front. Companies can use the passport in their ESG disclosures for example, in order to demonstrate that it has accurately incorporated climate risks into its business strategy. 

Future of the industry 

Data could provide key solutions for the insurance industry, especially in the face of challenges it has encountered since our SERI project in 2021. In June this year, the Net-Zero Insurance Alliance (NZIA) – created to reduce greenhouse gas emissions in the industry – saw seven of its members leave. This was amidst growing political opposition from a group of Republicans in the United States who claimed the group might be violating antitrust laws by working together. 

The potential benefits of our Climate-Ready Building Passport (C-RBP) could serve as a beacon in these dark times, illustrating how the strategic use of data can significantly advance our mission toward net-zero objectives. By equipping insurers with a comprehensive understanding of risk, the passport becomes a valuable tool for integrating climate change mitigation efforts within the industry. Having said this, these efforts alone may not be enough. Combining government subsidies, green financing, insurance rebates, and retrofitting roadmaps with net-zero building insurance strengthens the case.

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. 

Reflections 

Prior to the feedback session on Open Net Zero, the group reflected on some key areas of discussion from our previous advisory group meeting. One issue that was still front of mind was the lack of asset level data in the built environment and how the absence of this was leading to a disconnect between ESG reporting requirements and the data needed to effectively comply with these. 

For an investor, understanding whether an asset aligns with climate policy or with their ESG strategy is vital. Having a granular analysis of a building can therefore prove crucial as it helps to identify the risks associated with the asset. This also holds true when it comes to red flag assessments of buildings. Here stakeholders rely on red flag assessments to make informed decisions about purchasing or investing in a property.

We also dedicated some time looking back at methods to improve Open Net Zero from our previous advisory group, with suggestions including:

• More relevant (to the use case) categorisation for filtering
• Geography
• Timeliness
• More datasets
• Curation/grouping of datasets for a purpose
• Displaying example data
• UX improvements, including search prompts

Focus group insights

During our feedback session, our members offered suggestions for new data categories, including:

• Tagging data by building ownership type eg: tenant, commercial, cooperative ownership. 
• Data in the context of the life cycle of a building: What data is most relevant during the construction, operation and maintenance of a building and where in the life cycle of the building is the data coming from?
• Building use: Recognising that a building’s energy profile varies based on its current usage, prompting a need for data that reflects these variations. Related to this is industry type. Refining the industry in which the building is being used can also help provide an idea of its current usage. For example, building a warehouse for a retailer vs an IT company. 
• Data on procurement: Moving beyond technical data and looking at data on legislation requirements, contracts and corruption indices. 
• Data Paths: Considering the data path that relates to a specific investment decision and the data requirements along this path.

Looking ahead

Our Open Net Zero: Impact Investing project has now advanced into the ‘COP28 recommendations and future planning’ phase. In this phase we’ll be producing a list of recommendations to take to COP28, using our fourth and final advisory group meeting on November 9th to validate these recommendations. The meeting will also include a summary that encapsulates our work and progress to date. 

Icebreaker One is working on a 10-month programme, funded by Tipping Point Fund on Impact Investing (TPF), to support our Open Net Zero (ONZ) service, putting net zero data at everyone’s fingertips. This project is dedicated to enhancing data infrastructure and practices in sharing impact investment data*. Our chosen use case for the programme is focused on the built environment.

Within the vast Environmental, Social and Governance (ESG) Ecosystem our primary focus has been aligned with our mission as a company, as we focus on the environmental component of ESG. And, through our research, we have been confronted with challenges in the access to, quality, comparability, transparency and therefore trust of environmental data within ESG disclosures. Our research is focussed on the measurable and quantifiable ‘E’ of ESG data.

Problem statement & use case

The following problem statement is a method of framing our efforts around the ways leveraging environmental data can aid organisations’ transition to net zero. From this, our Impact Investing Advisory Group prioritised two use cases that support our initial problem statement.

How can improving the data sharing infrastructure of a company’s energy and water use impact data (scopes 1-3), increase trust and data validation, including by rating agencies.

Primary use case: ‘Increased transparency and comparability of the Environmental data in ESG disclosures is needed in supply chains to better enable impact investment decisions in the commercial built environment.

The use case:

• serves as the basis/the starter for subsequent ESG use cases from different sectors within the UK, EU and USA.
• enables us to leverage our existing networks from previous IB1 projects which are centred around water and energy. 
• determines the initial requirements for an online Icebreaker One – Open Net Zero demonstrator
• enables improved impact investment decisions through the use of trusted and comparable ESG data.
• is of relevance for all ESG AG members and the sectors they work in.
• ensures scope 1-3 environmental data is intrinsic.  

Rationale for choosing the built environment

• The Impact Investing AG felt the built environment was an important industry to focus on, unsurprisingly as the EU’s Built Environment has the largest climate investment gap of any sector –  ‘Europe’s building sector is responsible for 40% of energy consumption, more energy than any other sector, and accounts for 36% of the EU’s energy-related GHG emissions[¹] 
• 97% of Europe’s buildings – as many as 215 million – will require some level of renovation before 2050 (²)
• With pandemic recovery investments and climate at the top of the EU’s agenda, now is a unique opportunity and crucial moment to mobilise private finance and investment in renovation (³).
• Today’s choices in the building sector will impact emissions for decades. Companies in the buildings sector are failing to take responsibility for reducing the in-use emissions from the operations of buildings. The longevity of buildings means that making the wrong design, construction, and renovation decisions today will have a lasting impact on society’s ability to decarbonise. 
• The built environment sector must fully embrace sustainable development. Interventions in the built environment should avoid short term objectives that may compromise the resilience of future generations. The built environment sector must ensure interventions unlock more value from existing infrastructure (⁴). 
• The building sector is also heavily reliant on its value chain to decarbonise. It’s here that we focus on the scope 3 emissions from our problem statement.

The outcome from our first use case will support our second use case: How to access reliable, standardised long-term risk data for the built environment globally.

Use Case Prioritisation

Icebreaker One defines a use case as outlining the tools (such as data) that a specific stakeholder (the primary actor) will need to achieve a specific, focused goal, and what needs to happen for the primary actor to achieve their goal.

Combining the input from our AG members as well as our own in-depth research interviews we produced a longlist of 16 use cases. A central theme ran throughout these use cases – the need to increase the transparency of company ESG data in order to improve impact investment decision making. And, using our 7 point assessment criteria, we then scored the use cases, arriving at our Primary Use Case.

Retrofit or construction?

According to the Institute for Market Transformation, the commercial real estate market tends to favour new and cutting-edge architecture, but which is better from a carbon reduction perspective—retrofits or new construction? Since the majority of a building’s embodied carbon is accounted for by the foundation, structure, and envelope, it typically makes sense to reuse these parts of a building rather than to demolish (which also emits carbon and air pollution) and rebuild. The carbon payback of new construction and retrofits can vary greatly depending on building type, location, climate, and grid mix but retrofitting a building generally saves 50 to 75 % of embodied carbon. 

New buildings that are designed to be more efficient are attractive assets—however, the energy, water, and related carbon savings achieved once a new building is occupied can take a long time to reach the level of embodied carbon that was emitted during construction. A report by the Preservation Green Lab, Skanska, and other partner organisations found that new buildings can take anywhere between 10 to 80 years to pay back the emissions generated from the construction process, even if the new buildings are 30 percent more efficient than average. 

One step many businesses can take to achieve net zero is to retrofit their building. The initial scope of this use case is as follows:

Commercial retrofit

Given the importance of retrofitting buildings to reduce carbon emissions, we have narrowed the scope of our use case even further to focus on commercial retrofit buildings. 

“Over 85% of the EU existing buildings will still be in use in 2050. Renovating the existing building stock is an essential action to meet Paris Agreement goals. To ensure assets remain desirable in the future, owners need to plan on the renovation of their assets. Renovation will reduce the carbon emissions of their properties and will enhance the quality of life for occupants.” Ludovic Chambe Head of ESG & Sustainability Services, CBRE, Continental Europe.

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)

PAS2080 updates to include retrofit:

The emphasis on retrofitting is further bolstered by the updates to PAS2080 ( in April this year) the world’s first specification for managing whole-life carbon in infrastructure. The British Standards Institute (BSI), with sponsorship from the Institute of Civil Engineers (ICE) and the Green Construction Board (GCB) has revised and updated the standard to accelerate the ambition and outcomes for decarbonisation. Three of the five new themes from the update relate to the value of retrofitting and also the need to consider the entire value chain and area as follows:

• An integrated approach to the built environment- widening the scope of PAS2080 beyond infrastructure to the built environment.
• Taking a whole-life view – addressing the urgent need to retrofit existing stock and balance capital carbon investment with operational and user benefit.
• Collaboration – highlighting the importance of working together across the entire value chain. 

Scope 3

One particular area of contention within our problem statement was Scope 3 emissions with many organisations finding it challenging to quantify and report on Scope 3 emissions. This voluntary disclosure includes waste generation (by source), water (consumption and treatment), business travel, staff commuting, product or service use, leased assets and outsourced operations.  It also includes the emissions from mining, extraction, and processing of the raw materials used, as well as those arising from the use and disposal of products produced and sold by the organisation. 

As outlined by the World Benchmarking Alliance, the building sector is heavily reliant on its value chain to decarbonise. As a result, it is critically important for companies within the Buildings Benchmark to engage not only with each other but with their suppliers, customers and other external actors in order to achieve emissions reductions. 

Research has shown us that within the impact investing field, there are issues with access to, quality and trust of environmental data. According to a global survey from CBRE in November 2022, companies are favouring environmental, social and corporate-governance (ESG) factors more heavily when making decisions on which buildings to lease or buy. What’s more, many are prioritising green-building certifications and features that reduce energy consumption or generate renewable energy, as demonstrated below:

Figure 2: How do you use sustainability certification programs (eg: LEED, BREEAM, NABERS) in your decisions? 

Source: CBRE Global ESG Survey, November 2022

Figure 3: How environmental building features impact a Real Estate transaction

Source: CBRE Global ESG Survey, November 2022

Investors and occupiers are more likely to pay a premium for buildings with on-site renewable energy generation and/or smart technology to monitor and adjust energy usage. Enabling investors, occupiers and owners to easily access this information in a transparent and trustworthy manner is the objective of the demonstrator that Icebreaker One is preparing for COP28, November 2023. 

Investment & policy gaps

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[⁵].

The 2022 UN Environment Programme (UNEP) Emissions Gap Report states ‘at the current rate of emissions, we are heading towards a 2.8C warmer world by the end of the century – even with the implementation of the Nationally Determined Contributions under the Paris Agreement. The report also highlights the gaps in several policy scenarios and ways to deliver the emissions cuts of many gigatons of GHGs required. This carbon gap makes the urgency for implementation of meaningful decarbonisation even more compelling, particularly for the built environment sector.’

Open Consultation

We are currently running an open consultation and gathering further input from our Impact Investment Advisory Group. The aim is to identify the data required to ensure essential environmental information is gathered at the earliest phase of decision making in retrofitting a commercial building. If you or someone in your network has knowledge in this field and would like to be part of our September focus group, please get in touch via: icebreaking@ib1.org

*The programme is using Global Impact Investing Network’s definition of impact investing: “Impact investments are investments made with the intention to generate positive, measurable, social and environmental impact alongside a financial return.

Stepping away from silos also encapsulates our approach to data – connecting not collecting. And, in the context of the built environment, a more joined up, accessible approach to data is crucial to bridge the burgeoning €2.75 trillion investment gap needed to decarbonise Europe’s buildings through renovation.

As many as 215 million buildings within Europe will require some level of renovation before 2050. It’s therefore evident that the longevity of existing assets through retrofitting is critical if we’re to remain within the boundaries of the Paris Agreement. This sentiment was shared by the advisory group, who dug deeper into our two use cases:

Whole life-cycle carbon

One approach when looking to reduce emissions in the built environment is to consider the whole life-cycle carbon of a building. This goes beyond Scope 1 & 2 emissions and into examining the embodied carbon of a building. These Scope 3 emissions relate to materials used in construction as well as the emissions relating to the end-of-life process or demolition. The latter contributes to embodied carbon emissions when the materials are broken down or discarded.

One member of the advisory group went further, discussing the importance of the more nascent Scope 4 emissions, or ‘avoided emissions’. The WBCSD defines these as the ‘positive impact on society when comparing the GHG impact of a solution to an alternative reference scenario where the solution would not be used’. Avoided emissions could therefore provide a useful way of framing the emissions savings resulting from retrofit efforts.

Positive developments

Promising updates have been seen from standards like PAS 2080, which recognises the importance of decarbonising buildings. The standard recently broadened its scope beyond infrastructure to the built environment, with an emphasis on whole life-cycle carbon.

There have also been some important developments from RICs (Royal Institution of Chartered Surveyors). After recognising the lack of good-quality data and lack of transparency around data sources, RICs have designed a Built Environment Carbon Database. The database allows data to be reported, stored and used to inform future carbon assessments and policy.

Accessing data for impact investing decisions

Accessing good-quality data represented a significant headache for one member of our advisory group, who noted the abundance of regional level data but lack of granular asset-level data. The benefits of asset-level data for impact investors could be far reaching, allowing investors to verify the performance of an asset and reduce energy consumption. It could also ensure the investors is aligned with regulations or ESG reporting standards. What’s more, this level of transparency could also generate further financial benefits by building trust among stakeholders.

Open Net Zero

The underlying need for better access to reliable data is also why the latter half of our advisory group meeting involved members using our Open Net Zero (ONZ) service. We believe the ONZ tool can assist investors in accessing relevant data for mobilising impact investments related to the built environment.

The advisory group provided live feedback on the tool, suggesting improvements such as refining search options, including data update timestamps, and providing user feedback functions to help others find relevant datasets.

We now extend an invitation to those with experience in the built environment sector to use our Open Net Zero service and provide feedback on how we can enhance it. Please share your feedback using this sheet. If you’d like to contact us about our impact investing data research or Open Net Zero, please reach out via opennetzero@ib1.org 

After carefully considering the blockers and opportunities, greenhouse gas impact, financial needs and stakeholders involved, we arrived at a use case centred around the built environment, a sector responsible for around 40% of global greenhouse gas emissions.

Use case 1: Increased transparency and comparability of the environmental data in ESG disclosures is needed in supply chains to better enable impact investment decisions in the commercial built environment.

First impressions

While the chosen use case received widespread support from the Advisory Group members, its broad and wide reaching nature indicated the need for further exploration. Indeed, being specific about the data, stakeholders, investment type and underlying standards and regulatory requirements would help us identify what was needed to unlock the use case while also preventing mission creep.

Decision makers & Investment types

Identifying the key decision makers in our selected use case would enable a more targeted approach, with insurers, banks and investors all emerging as crucial players capable of driving real impact in this space.

For example, if there was widespread recognition in the insurance industry that more sustainable buildings present a lower risk, this could subsequently reduce insurance payouts, and be reflected in reduced rates. Banks, on the other hand, have the ability to offer preferential financing or incentives for building projects that prioritise sustainability.

However, in order to identify a key decision maker, we felt it important to first narrow down the type of investment we want to focus on. This came in the form of three viable investment types: debt instruments, project financing and lending. Green bonds, for example, are a debt instrument that offer a targeted way to raise funds specifically for projects or initiatives that have environmental benefits.

Benchmarking & Regulation

One member of our AG highlighted the prominence of our chosen use case on the EU’s agenda and its high demand at conferences. Unpacking this, we can see the importance of frameworks like the EU Taxonomy Regulation and its focus on helping investors allocate capital toward sustainable activities. Growing pressure from the EU Taxonomy means that investments that are more aligned with net-zero will be favoured by banks and investors. In the context of the built environment, banks may offer favourable financing terms or incentives for projects that align with the EU Taxonomy’s criteria.

Elsewhere, organisations like GRESB (Global Real Estate Sustainability Benchmark) enable investors and real estate companies to measure, benchmark and improve their ESG performance over time. And, although participation in GRESB is voluntary, there is a belief that a wider adoption of these benchmarking tools will encourage more consistent reporting in the future.

Further thoughts and considerations

• Accessing accurate energy and water data from building occupants is an ongoing challenge
• We have to ensure the data involved in the use case is accessible, compatible and machine readable
• In cases where the building is leased, the energy usage data may be dispersed among multiple tenants, making it difficult to gather a complete picture
• Important to identify one piece of data that’s integral for investment decision-making
• Questions were raised about the roles and organisations involved, the gathering and validation of data, risk assessment, and monitoring impact expectations throughout the investment’s lifetime

Looking ahead, our chosen use case helps us to determine the initial requirements for an online Icebreaker One demonstrator that can improve the data sharing and infrastructure of company impact data. It also provides scope for future iterations of the use case, potentially helping to solve cross-industry problems.

Our next advisory group meeting takes place on July 27th at 10-11:30am (BST), if you’re part of the ESG ecosystem or have experience in the built environment sector we would value your input and participation. Learn more and sign up here.