The real test is Paris proof

Bouwinvest is doing everything it can to make its entire portfolio Paris Proof by 2045. That means harnessing renewable energy sources and aiming for a high level of energy efficiency. The technical implementation requires meticulous planning and several hurdles need to be overcome in the process. “We are now making a very precise schedule to create the technical conditions that will enable us to meet the requirements,” said Maya Savelkoul, Paris Proof Project Manager at Bouwinvest.

How can Bouwinvest make an apartment complex energy-efficient if the energy consumption of its tenants is known? The dilemma the company faces is that privacy rules mean it can only collect data from tenants who have consented to do so, she explained: “That is one of the issues we face in making our properties more sustainable and which is why we need to educate our tenants to work together with us towards a mutual goal.”

The year 2045 may still be quite a way down the track but such challenges mean Bouwinvest has no time to lose. The real estate investor recently created roadmaps for all five of its Dutch funds which outline the path that must be taken for each property to make the entire portfolio Paris Proof. “We want to be compliant with the Paris targets five years ahead of the official deadline. That means our properties must use primarily renewable energy alternatives to natural gas by 2045. Energy consumption must also be reduced significantly as the volume of renewable energy will be lower than the current supply from fossil fuels.”

Bouwinvest is meanwhile mapping out the requirements that each individual property must meet to be Paris Proof by 2045, Savelkoul said: “We are working on a very precise schedule to create the technical conditions that will enable us to meet these requirements. As for actual energy consumption, that is partly down to our tenants but we have a responsibility to make it clear to them that we have a mutual interest.”

Bouwinvest aims to implement the sustainability measures for individual properties at a ‘logical’ moment, according to Eric-Jan Dekkers, Manager Technical Management at Bouwinvest’s Dutch Residential Fund. “From a circularity perspective, it’s not sustainable to replace components that can last several more years. It’s not in the interest of the tenants either, especially in the case of residential properties.” An obvious time to cover the roof of a building with sedum or solar panels is when it is actually due for replacement, he added. “The temporary vacancy of a home also offers an opportunity to replace an old central heating boiler with a heat pump, to install new windows and insulating glass.”

One of the obstacles to reducing energy consumption in commercial buildings is that tenants often own the equipment themselves. That is the case for the retail properties leased by Bouwinvest’s Dutch Retail Fund, for example, explained Gert de Vos, Project Manager Sustainability. “Tenants are responsible for the heating and cooling of their buildings and Bouwinvest has very little influence. We are, however, trying to expand our role by co-investing in new, more sustainable energy equipment or solar panel installations. That would cut our tenants’ energy costs and we would aim to partially recoup our expenses through higher rents.”

During a sustainability project for 700 rental homes in Diemen, Bouwinvest opted to pay for all the costs itself. “We made a large investment through the installation of hybrid heat pumps aimed at significantly reducing the consumption of natural gas,” Dekkers said. “Our tenants now receive a lower energy bill, but we haven’t asked for anything in return. We view this as an experiment that we can learn from and expect that the value of these homes will rise in the future.”

As stated previously, privacy rules are also an issue: Bouwinvest is not permitted to monitor the energy consumption of individual tenants. Dekkers: “We can only do that if we have their consent. We can, however, obtain that data relatively easy from our commercial tenants and expect 80 to 90 percent of them to make their consumption data available to us from next year. Residential tenants are more reluctant due to privacy issues and that is a challenge for us in our drive to improve sustainability.”

Large investors such as Bouwinvest must, in the meantime, comply with a whole array of benchmarks such as GPR, GRESB and BREEAM, including related mandatory energy labels as well as Paris Proof criteria set by the Dutch Green Building Council (DGBC). "There is some overlap between the labels, but they all add value," De Vos said. "For instance, GPR and BREEAM also cover topics such as circularity, which is a key goal for us in addition to making our buildings Paris Proof and climate-adaptive. Circularity is on top of our agenda for new developments or acquisitions of existing properties, albeit that the main principles are still evolving."

Savelkoul is somewhat less enthusiastic about the mandatory energy labels. "Energy labels indicate the potential energy efficiency of a building based on a theoretical model. Paris Proof criteria, by contrast, look at actual energy consumption in practice, which is an incentive for us to motivate our tenants to use energy efficiently. For us, being Paris Proof is equivalent to an A+++ label."

It would help the real estate sector if labels were more standardised and thus more comparable, Savelkoul added. "Bouwinvest strongly supports this as it means everybody would be on the same page when we are actually Paris Proof in 2045." The government should take the lead to create a level playing field, she concluded: "If we as society really want to emit less greenhouse gases, then it is our collective responsibility to monitor actual consumption."

For more information
For more information about Bouwinvest and its Paris Proof goals, please visit bouwinvest.nl/real-value-for-life/paris-proof. Find out more here about our Paris Proof Position Paper, the latest news on this topic and inspirational case studies. Please feel free to contact us if you would like to discuss this subject further.