Union Investment provides visibility into the sustainability of its properties
Union Investment teamed up with atmosgrad° to develop “atmosphere”, a new sustainability label that allows tenants, investors and other market players to see the sustainability performance of a property at a glance.
“atmosphere” – the new sustainability label
Union Investment’s Real Estate segment first embedded sustainability into its business strategy more than ten years ago. Over the intervening period, we have been measuring, analysing, planning and improving, steadily moving closer to the German government’s declared goal of making the nation’s building stock virtually climate-neutral by 2050. We have now taken a major step forward with our new sustainability label “atmosphere”, which captures the environmental pathways of our properties and renders the sustainability of buildings visible.
In future, a key performance indicator will allow tenants, investors, managers and other market players to see how a building or portfolio has been assessed against specific sustainability criteria. This score also shows what proportion of the “Manage to green” strategy has already been implemented. Union Investment created the “Manage to green” strategy in 2018 to help it systematically achieve the goal of making its building stock climate-neutral by 2050.
Why create a sustainability label for buildings and portfolios?
Rationale and challenges
The sustainability label is underpinned by our “Manage to green” strategy. The key performance indicator on the label shows the extent to which the sustainability criteria have already been met.
- 40% of the achievement target consists of the results of the Sustainable Investment Check (SI Check). This evaluation system was introduced back in 2010 and covers a number of categories, including data related to building structure, in-use measures and user comfort.
- A further 40% relates to energy and water consumption, waste and CO2 emissions. It is therefore possible to see exactly how the building measures up in terms of environmental performance.
- 20% relates to governance factors at company and portfolio level (e.g. strategy or green building certificates).
The underlying calculation method allows the sustainability label to be awarded not only at property level, but also at fund level by aggregating all properties. This provides transparency for tenants and investors alike, and also supports management control.
For new build projects, legal requirements are already in place to ensure certain energy performance levels are met. However, there are no benchmarks for existing properties. The new label makes a comparison possible for the first time and enables us to define property-specific strategies for achieving climate targets.
From shopping centres and hotels to logistics properties and offices – different use types call for different approaches. Our sustainability label differentiates between each category, but always with the environmental pathway as a consistent criterion.
The label is updated annually across properties in order to document the progress achieved.
The criteria developed for the label are deliberately designed to be broad enough to accommodate the requirements arising from the EU Action Plan. They can also be modified if tougher regulations are put in place.
To provide transparency for investors and the market, an industry-wide standard would be required. The “atmosphere” label could serve as a template.
The label in practice
A sustainability score is calculated for each property in the portfolio. The buildings are given an electronic label, wherever possible. The Holzmarkt 1 pilot property in Cologne is a particularly sustainable building and one of the first to display the label on a digital pillar.
The seven-storey and approx. 19,000m² office building was acquired by Union Investment in 2015 on completion. The special sustainability features of the property include an energy-optimized perforated facade, green spaces on the roof and in the courtyard, disability access to all floors, the use of district heating and much more.
Opinions on the sustainability label
“We at atmosgrad° leveraged our extensive expertise to develop assessment criteria and indicators for the new ‘atmosphere’ label that make it possible to classify the buildings in the Union Investment portfolio with regard to the environmental pathway.”
Ralf F. Bode, Managing Partner, atmosgrad°
“As a fund manager, I believe it is important to start laying the foundations for a climate-neutral portfolio today. With the ‘atmosphere’ label, I can ensure the portfolio is well positioned for a sustainable future.”
Thomas Röhrs, Fund Manager, Union Investment Real Estate GmbH
“The new ‘atmosphere’ label not only delivers transparency, it also provides me with a tool I can use to identify the appropriate upgrades for my building from across the entire sustainability spectrum.”
Christian Gerresheim, Asset Manager Germany, Union Investment Real Estate GmbH
“Union Investment is leading the way with this new label; ‘atmosphere’ enables us to translate the environmental pathway into a key performance indicator for the first time. Ideally, this will form the basis for an industry-wide standard.”
Jan von Mallinckrodt, Head of Sustainability, Union Investment Real Estate GmbH