How will the UK Net Zero Building Standard impact the retail sector?
By Olivier Garnier, principal sustainability consultant, Savills Property Management, and Yorgos Koronaios, associate, Savills Earth Sustainable Design team
Until recently, the UK lacked a unified standard to define net zero carbon and relied on various methodologies based on different scopes, such as the UK Green Building Council (UKGBC)’s Net Zero Carbon Buildings Framework or London Energy Transformation Initiative (LETI)’s Climate Emergency Design Guide. This absence has caused concerns over greenwashing and misunderstanding, as landlords and investors struggle to find a consistent approach to align their assets with net zero targets. This inconsistency has also impacted investment decisions by hindering benchmarking and comparability.
Accounting for different sub sectors
In the retail sector, this issue is particularly pronounced. The most common method for assessing an asset’s alignment to net zero has been the Carbon Risk Real Estate Monitor (CRREM) trajectories for energy and carbon. CRREM’s methodology is relatively easy to understand, and its output is clear and visual, with the concept of ‘stranded assets’ being particularly helpful. However, CRREM offers little flexibility for different sub sectors, such as retail centres with diverse mixes of retail sub types and landlord areas.
Landlords face challenges quantifying net zero, understanding contributions, prioritising interventions, and distinguishing actions between landlord and tenant-controlled areas, making net zero alignment complex.
Creating a level playing field
This is why the new UK Net Zero Carbon Building Standard (NZCBS) can be a game changer for the retail industry. Crucially, it provides the property sector with consistent rules to create a level playing field and a robust framework for demonstrating compliance with net zero targets. This entails adhering to limits on embodied carbon, operational energy, fuel sources, refrigerant gases and heating demand. There are also targets for renewable energy generation, which vary for newly built or existing assets and for different asset sectors.
More specifically, for the retail sector, the NZCBS introduces distinct energy performance targets for various sub sectors, including supermarkets, high street retail, department stores, food and beverage (F&B) without catering, F&B with catering, retail warehouses and landlord areas. Acknowledging that each building type has different operational and energy requirements, the targets are tailored to address this and provide a realistic pathway for each case.
For example, the new builds 2025 operational energy target for ‘high street retail’ is 70 kWh/m2, while that of ‘food and beverage with catering’ is 380 kWh/m2 and ‘food and beverage without catering’ is 215 kWh/m2. This nuanced approach helps landlords identify challenges in aligning assets with net zero, determine which tenants contribute most to emissions, prioritise actions, and form lease agreements ensuring compliance. This sets their assets on the path to Net Zero.
Who is it for?
The standard is not just about providing a net zero badge for buildings in operation. It is designed for anyone funding, procuring, designing, or specifying a net zero carbon building, and for those wishing to demonstrate unambiguously and comparably that their building is net zero carbon aligned.
What are the benefits?
For landlords and investors future proofing portfolios and making informed investment decisions, this standard offers a robust, welcome framework. It enables them to reshape retail real estate in line with national net zero aspirations, with greater certainty, accountability, and credibility. Currently in its first iteration and still being refined, it is already a useful tool for real estate professionals implementing net zero aspirations.