- DWS has set a clear goal for itself of reducing CO2 emissions from its portfolios of European office properties.
- The aim is to halve carbon dioxide emissions by 2030 from 2017 levels.
- DWS also plans to introduce similar goals in other real estate sectors.
With global temperatures rising and a marked increase in natural catastrophes, counteracting climate change is becoming increasingly urgent. Throughout Europe, countries have started to put in place comprehensive plans for reducing CO2 emissions.
DWS is pursuing its commitment to climate protection through new plans for its real estate business. The company recently committed to reducing the CO2 emissions from its portfolio of European office real estate by 50 percent by 2030.
"As one of the leading property fund managers, we want to make a contribution to combating climate change in the real estate sector," says Clemens Schäfer, head of real estate Europe at DWS.
The real estate sector is regarded as crucial in climate protection. Together with the construction industry, real estate accounts for around 40 percent of carbon dioxide emissions worldwide. In Germany, buildings are responsible for about one third of CO2 emissions.
At the same time, investment in refurbishing buildings to make them energy-efficient is one of the most effective ways of increasing energy efficiency and reducing our carbon footprint. This also allows building owners to reduce maintenance costs while offering their tenants a more energy-efficient space.
An annual reduction in CO2 consumption of 61,000 tonnes is equivalent to the carbon dioxide absorbed by almost five million beech trees.
Modern buildings often use considerably less CO2 than old ones. Tighter regulatory requirements in Europe should ensure that this is ever more the case in future.
DWS is one of the largest owners of commercial real estate in Europe. About half of its portfolio is office real estate, corresponding to around 1.7 million square metres of office space. The planned CO2 saving is equally large: about 61,000 tonnes a year from 2030 compared with 2017. To put this in context, it takes a beech tree 80 years of growth to compensate for one tonne of CO2. Five million beech trees would be needed each year to compensate for the amount of carbon dioxide DWS will save.
ESG compliance can increase risk-adjusted returns
For DWS, systematic reduction in CO2 emissions from the buildings in its portfolio is an important part of its comprehensive ESG (environmental, social and governance) strategy in the real estate sector. DWS's ESG strategy aims to improve risk-adjusted returns with measures that minimise environmental risks, reduce operating costs and provide tenants with efficient, modern spaces.
"We believe that high ESG standards can have a positive impact on our investors' returns because they enable us to provide our tenants and investors with attractive, high-quality buildings," says Schäfer. "Reducing CO2 by 50 percent in all our European office properties is a challenging goal, but we have a clear plan as to how we will achieve this."
The target of reducing CO2 by 50 percent has two elements. First, energy consumption in buildings is to be reduced by at least 30 percent. The remaining reduction is to be achieved by using renewable energy for the electricity supply. The Company will also review the energy efficiency of acquisitions and its existing portfolio with a view to investing in energy-efficient buildings and retrofitting older, less efficient properties.
The example of the KupkA building in Paris shows just how much targeted modernisation can save. Since 2018, the 17,000 square metre office property, which is part of DWS‘s real estate portfolio, has been completely renovated and brought up to the latest technical standards. High-performance facades in some areas and new cooling ceilings that meet contemporary technical standards not only ensure optimum thermal comfort and sound insulation, but also reduce energy consumption. The entire building is fitted with efficient LED lighting, automatic ventilation systems and efficient filters. Smart technology also ensures better capacity utilisation and optimum interaction between all sources of consumption. Together, these measures should allow the KupkA building’s energy consumption to be reduced by 40 percent.
DWS also furthers its goal by concentrating on energy-efficient real estate when purchasing. An example is the recently acquired Stratford S9 office building on the former site of the 2012 Olympic Games in London, which meets high standards of environmental friendliness and sustainability. For example, the façade is designed to make optimum use of natural light, and little energy is required for heating and cooling. The building is expected to be awarded a "BREEAM Excellent" sustainability certificate, which is the highest category in the UK’s renowned sustainable construction certification system.
The Carbon Intensity performance indicator ensures transparency and comparability
“To achieve our ambitious goal, we need to be in a position to measure our CO2 emissions and communicate them to our internal and external stakeholders in an understandable and standardised way," says Jessica Elengical, head of ESG strategy for alternatives.
The key indicator here is "carbon intensity". It corresponds to the portfolio’s CO2 consumption divided by the total area of its real estate. In future, data on this will be collected biannually.
"Carbon Intensity is a transparent indicator that our investors and the general public can easily use to track our progress in reducing CO2 emissions with immediate effect," says Jessica Elengical.
DWS is also considering extending these targets to other types of property and regions. "We want to be a leader in the ESG market,” says Asoka Wöhrmann, DWS’s CEO. “That is why we consistently place sustainability at the heart of our activities.”