Portfolio Manager
• 市場觀點
The decarbonization of property is accelerating
The property sector is crucial to efforts to decarbonize the global economy, but while progress is being made, the effort and achievement is uneven so far.
作者
Portfolio Manager
Research Analyst
概要
- The top 200 largest listed real estate companies decreased carbon emissions by 4.7% in 2021, but cross-sector variance is significant.
- Real estate companies improved carbon emissions disclosure and target setting in 2021, particularly with regards to scope 3 emissions.
- Future regulations are anticipated to focus not only on overall carbon emissions, but also energy intensity of individual assets.
Decarbonization in real estate is a race against time. Governments have set the path for reduced emissions, with the goal of transitioning to a low-carbon or even carbon-neutral future. The property sector plays a significant role in this decarbonization journey, as it accounts for approximately 40% of annual global greenhouse gas (GHG) emissions1. The sector is making big strides toward decarbonization, but are we close to where we need to be?
In this insight, we analyze data from companies invested in the Robeco Sustainable Property strategy and the top 200 largest listed real estate companies. For the first time, our analysis encompasses a wider range of metrics, now including scope 3 target setting, embodied carbon, and green leases2, as more companies have started disclosing information on these topics.
It is reassuring to see that in 2021, real estate companies in our sample, which account for 87% of the weight in the S&P Global Developed Property Index, and around 1.9 trillion USD in terms of market cap, have improving GHG emissions disclosure and targets, especially for scope 3.
Table 1 | Disclosure of environmental performance, targets, and use of tools to manage GHG emissions
Source: Corporate reports, Robeco.
Based on the environmental performance and Scope 1 & 2 emissions reduction targets of the companies, we project the decarbonization pathway of the benchmark and Robeco Sustainable Property strategy for the coming years.
As shown in Figure 1, by employing proprietary RobecoSAM sustainability criteria in our stock selection, the strategy’s holdings had a 35% lower weighted carbon intensity (4.72) in 2021 than the S&P Developed Property Index (7.30), demonstrating that the strategy is already better positioned for decarbonization. In 2030, the strategy‘s holdings are expected to decrease their carbon intensity even further, reaching 2.79, compared to 4.56 for the index. While the strategy’s holdings are better prepared for future regulations, the overall reduction of emissions in the property sector has to accelerate to meet Paris agreement targets.
Figure 1 | Decarbonization pathways for the S&P Developed Property Index and Sustainable Property strategy
Source: Trucost, Corporate reports, Robeco.3
2021 progress
Our analysis reveals that companies in our sample decreased their carbon emissions by 4.7%4 over 2021. From a subsector perspective, the operations of some REITs that were hit hard in 2020, namely, Diversified, Hotel & Resort, and Residential, began to recover gradually when lockdowns were lifted, benefiting from rising vaccination rates and stimulus plans. As a result, we observed an increase in absolute emissions in these sectors in 2021. On the other hand, Specialized REITs where data centers constitute a significant part, have seen a decrease in emissions. With persistent robust demand for cloud computing and data storage, it is likely that the decrease has been driven by a reduction in carbon intensity rather than a decrease in operations.
Figure 2 | Absolute carbon emissions (scope 1 & 2) per segment, 2021 versus 2020
Source: Trucost, Corporate reports, Robeco.
Energy intensity as another key factor in decarbonization
Reducing carbon emissions and improving energy efficiency are like two sides of a coin as illustrated in Figure 3. As the IEA emphasizes, “energy efficiency is one of the key ways the world can meet energy service demand with lower energy use, which is crucial in most of the IPCC GHG emissions pathways limiting global warming to 1.5oC”. 5
Figure 3 | Correlation between energy intensity and carbon intensity
Source: Corporate reports, Robeco.
Table 2 presents that, in 2021, 157 companies in our sample, representing 82% of the benchmark weight, reported their energy usage, and 71 companies, representing 31% of the benchmark weight, set energy targets. However, a geographical analysis of the data (Figure 4) reveals notable variations, with Hong Kong (100%, 83%)6 and Singapore (100%, 50%) displaying higher levels of both energy use disclosure and energy intensity targets setting. Conversely, the United States (68%, 30%) and Australia/New Zealand (75%, 17%) appear to be lagging behind.
Table 2 | Disclosure of energy consumption and targets
Source: Corporate reports, Robeco.
Figure 4 | Energy use disclosure and target setting by geography
Source: Corporate reports, Robeco.
Energy consumption reporting and target setting is crucial. In the future, we expect binding minimum requirements of energy intensity per building to be set, with properties that fail to meet specific energy intensity levels no longer being able to be rented out, which will require large investments in retrofitting programs. While these requirements have yet to be formally imposed, related discussions are ongoing, and in some cases, energy ratings are already a prerequisite for leasing or building transactions.
Footnotes
1 IEA data
2 Typically a green lease incorporates clauses obliging owner and the lessor to undertake actions and maintain standards with regards to subjects including energy efficiency measures, waste management or disposal, and resource-use efficiency.
3 A few assumptions are made in our calculation for the sake of comparability:
Assumption 1: If the emission targets disclosed in corporate reports are on an absolute amount basis rather than an intensity basis, it is assumed that the total floor area of the companies remains the same and the targets are treated as intensity targets.
Assumption 2: The base year and target year are uniformly set as 2021 and 2030 respectively for all companies. If a company has a target year close enough to 2030 (≤5 years), then that target is used as the 2030 target. Otherwise, the 2030 target is extrapolated by using the annual reduction rate.
Assumption 3: Carbon targets are only obtained for the companies in our sample, representing 84% of the weight in the S&P Developed Property Index, while the remaining 16% companies in the benchmark are treated to be decarbonizing in line with the rest of the sample. It is a conservative assumption, as smaller companies are generally at the very beginning of their decarbonization journey or have not yet started the process at all, therefore are less likely to have carbon disclosure or targets in place.
4 This number is derived from the analysis of scope 1 & 2 emissions of companies that have disclosure for both the years 2020 and 2021
5 IEA (2019), Multiple Benefits of Energy Efficiency.
6 The figures enclosed in brackets indicate the percentage of companies in the geography that reported their energy usage (first number) and set energy intensity targets (second number).
重要資料
本網站僅供《證券及期貨條例》（香港法例第571章）及其附屬法例所界定之專業投資者瀏覽及使用。 投資涉及風險。過往表現並不代表未來表現。本網站所載資料僅供參考之用，並不構成任何投資建議，亦非作出買賣任何證券或採納任何投資策略之要約或招攬。投資者不應僅憑本網站提供之資料作出投資決定，在作出任何投資決定前，應徵詢獨立意見（包括有關稅務影響之意見）。投資者應確保完全理解投資產品的相關風險，亦應考量自身投資目標及風險承受水平。投資乃閣下之個人決定。除非銷售投資產品的中介人已向閣下告知該投資產品適合閣下，並已解釋其符合閣下投資目標之原因，否則閣下不應投資。請參閱相關發售文件或其他法律文件，以獲取包括風險因素在內的進一步詳情。 本網站由荷寶投資管理香港有限公司發布，該公司受香港證券及期貨事務監察委員會（「證監會」）規管（中央編號：APU851）。本網站未經證監會審閱。 無法保證任何投資產品可實現其投資目標。概不就任何投資產品之表現或投資回報作任何聲明或承諾。投資的價值或會波動。本網站所載過往表現、推算或預測，均不應視作未來表現之保證或指標，且概不提供任何明示或暗示之保證。本網站內容建基於相信為可靠之來源，惟因應資料傳遞技術特性及須採用多項數據來源（包括第三方內容），故概不保證其準確性。所述觀點僅乃截至上述日期，或會隨市況變化而改變，可予更改而毋須另行通知。該等意見可能有別於其他荷寶投資專業人士之意見。因使用本材料或當中所載任何評論、意見或估算而引致之直接、間接或相應損失，荷寶概不承擔法律責任。荷寶並無責任更新本網站或任何網站內容。未經荷寶事先書面許可，不得複製、分發或刊發本網站任何材料。 除非另有說明，資料來源:荷寶。
