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. 

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.

Where: Register here for the live webinar

About this webinar: As part of our Open Net Zero work, Icebreaker One is convening stakeholders across the ESG ecosystem, providing valuable insights on how more transparent, comparable and standardised environmental data can benefit both the planet and business. 

We’ll hear from our researchers; Sheree Hellier and Emmanuel Coker, who are working to uncover the gaps in ESG data, as well as defining the requirements for a framework for easily discoverable and accessible net zero data. 

And, as we approach one year since mandatory TCFD (Task Force on Climate-Related Financial Disclosures) regulations were put in place, we’ll see to what extent environmental data is becoming available and how this can be put to use in the financial economy. 

Please join us at 2pm on the 28th March 2023 to gain greater knowledge of the ESG data landscape.

What we’ll cover:

• Defining the ESG ecosystem and the goals of Open Net Zero
• The differing levels of accessibility in ESG data
• The key issues in access and comparability of ESG data
• The role of ESG data in providing a more complete view of climate risk

Who:
Gavin Starks, Founder, Icebreaker One
Sheree Hellier, Researcher, Icebreaker One
Emmanuel Coker, Business Data Analyst, Icebreaker One

If you think a colleague or sector expert would be interested in joining this event, please share it with them.