Tackling the Climate Impact of Commercial Property

davidclamp
Jun 17, 2021
10 min read

How can IoT help commercial building owners and insurers understand and manage their carbon footprint?

There's a growing opinion about the transformative power of IoT data in commercial properties and industrial sites - not only to help mitigate risk but also to drive real change toward sustainable behaviours in the built environment.

Not only is it vital to understand how to use the data from IoT sensors in multiple ways, but real action is needed now to drive change. This cannot be done alone by any single organisation. Collaborating across a range of stakeholders and actors is critical. The insurance industry plays a pivotal role. But how do we bring all the key stakeholders together? Is the pace of change fast enough?

Our recent Sense webinar explored this hugely relevant topic with a fantastic line-up of panellists.

Q1. Why are we talking about this topic in commercial property? Why is it important?

"Climate change, sustainability and ESG are each complex and interconnected aspects that are relevant to the conversation on Iot data. The built environment accounts for 34% of UK emissions, so it's key that the insurance industry focuses on this area. It’s also important to be mindful that not only do buildings need to be fit for purpose they also need to be resilient throughout their lifespan. They must be built to last and be adaptable to future needs, so it's important to have a holistic approach, and not just look at the narrow targets."

"We're bringing together public policy and science along with the change that is needed to evolve. There are very high expectations of sustainability that management teams and boards need to deal with. We’re also at the point of moving from corporate social responsibility to ESG – and whilst those two are companions, we're seeing the requirements becoming increasingly sophisticated."

"I think when you look at the drivers behind the insurance industry and what we do as a sector, it's all about identifying risk. What we've seen in both our work with clients but also on a wider basis, is that those risk events lend themselves to waste - either from an energy perspective or in the way in which the building is run and operated. If you're identifying risk (and risk mitigation) at the front end as insurers, and helping clients to deliver on that perspective, you can use that data to deliver on the ESG drivers. IoT data and information is readily available within a lot of the buildings, even in the older ones in the various estates that we are operating. So, even though the work we do is from an insurance perspective, we see the opportunity to use the data for multiple benefits, based around a wider sense of drivers, such as climate, sustainability and ESG."

"We're in the middle of a transition right now - from an unjust, extractive economy to an equitable, regenerative economy, and it can be hard for us to see that because we're right in the middle of it. The insurance and capital markets have up until now operated on an historical context - they like consistency and predictability of historical data. We’re now increasingly entering a world of complexity where we need to be predictive and make real time decisions. That's why this conversation on data is so important."

Q2. The UK was the first major economy to pass a net zero emissions law. What does this mean for commercial property owners and the risk management community?

“There is increasing pressure to move from voluntary disclosure to mandatory reporting driven through law and regulation. This brings the need to capture, measure and report on the use of all forms of energy carbon, and everything around the way in which buildings are managed, whether it's the people and the operations around that, or other factors. Ironically enough, the building industry is leading a lot of the reporting. I think a lot of grassroots awareness has been in existence in organisations in the tactical facilities management, but it hasn't, until relatively recently, had visibility at a strategic level. Certainly, when you're looking at regulatory reporting that is going to be a key area.”

Q3. How can you link IoT and other such sensor data to using it to solve for other drivers such as sustainability, climate and ESG. Is it a big leap?

"There is data in the building management systems for a lot of the buildings (even buildings that are 25-30 years old) that is available to use for better decision making. There is a huge opportunity to capture that data and use it, possibly also combining with other data where there are gaps, to feed both the insurance risk agenda as well as the broader agenda on climate and decarbonisation. This could be mitigating losses and understanding in real time the risk events from an insurance perspective, but also using that same data to report against the various drivers on sustainability, climate and ESG."

"I really appreciate the focus on the insurance industry in this discussion, but far too often, we focus only using the data for risk reduction or risk mitigation. Using the data for ESG is important in this conversation – and certainly in my role as an architect and a planner - because it's going to be the language between the insurance companies, the investment industry and developers. We can design systems that are going to help us in how we plan for and design the built environment. We can then ask and answer the questions on: Are we accomplishing our goals on ESG? What is it that we can measure and manage in this data to understand how we are achieving the goals toward societal benefits - Rather than only reduce risk and aggregate wealth in the insurance complex?"

"Once people have IoT data in a format which is easy to digest, this leads to greater transparency which facilitates the whole sustainability discussion and enables effective and better informed decision-making. It provides more meaningful data rather than just looking at what we would traditionally assess within insurance, which in turn means we can be more innovative and provide that wider value into the industry."

Q4. Will measures coming from regulators have an impact and drive genuine change?

"I think they will set the direction. On some of the boards I sit on, the conversation is far advanced. What we really need to talk about is climate resiliency. We tend to default to power when we talk about this topic but we also need to separate out other aspects such as indoor air quality and safety using sensors, water detection in terms of usage and leakage, material use and recycling etc. If you roll all these up you can develop a common resiliency or common footprint, that we need to deal with in real time, using data."

"We’re at a point in addressing climate change where we are starting to rely on regulation and policy. We need to ask if that is what we want? I would just question our reliance or our belief that regulation and policy are going to save us. There are other drivers that will drive the change such as the economy and changes in the economy."

Q5. What does this mean for employees coming back to work in offices as part of Covid 19 return to the office plans?

"Understanding the indoor environment from air quality, water and resources is very important in our practice. We do a lot of work with Google and in our own space that we designed for ourselves. We've incorporated the RESET standard, which is the international benchmark for understanding indoor air quality as it compares to outdoor air quality. Covid is requiring us to rethink that in the ability to reduce our exposure to viral loading."

Q6. Can the same sensor data be used for both risk mitigation and reduction, as well as better management of properties in terms of environmental impact?

"Yes, it's the same data, but used in completely different ways, and combined with other data. You’re not just looking at one data point but a series of data points such as temperature, humidity, the room environment, the external environment, and the impact and the effect that people have on the environment and the operation of the building, and you’re making decisions in that context. I think this is where AI rules and the way in which you learn from what's going on from the data, and how the data is changing, enables you to do that."

Q7. A lot of data is in closed proprietary siloed systems, typically collected for other purposes. What is the built environment participant’s role in creating tech systems, standards and open data solutions that allow us to move forward toward regenerative ecosystems?

"I think these are bookends of two activities that really need to happen. On the IoT side this is collecting, measuring and reporting metrics that are relevant to business objectives. I also think the insurance industry plays a vital role and could really help advance governance and decision making around the circular economy. Boards need to understand and manage their ESG responsibilities and ensure that they have controls that are available to them. There is a role for the insurance industry - as a key stakeholder in the conversation - to help share information for organisations and best practices. There's an opportunity for the insurance industry to be a catalyst for change in this area."

"I agree that the insurance industry can be a catalyst and can help to drive the conversation. Within Zurich we are very close to this agenda, and try to take several different approaches, there is no silver bullet therefore there isn’t one solution. For example, we spend time lobbying the government on policy highlighting the requirement for resiliency in buildings. In 2020 we launched our Climate Advisory Services to support customers with assessment of their current and future risks – physical risks such as flooding, heat, wildfire risks and transition risk reviews."

Q8. What real world examples do you have that show how IoT data is being used to help drive the climate and sustainability agenda?

"We have done some work with a partner within the built environment looking at military accommodation to renew a very aged Ministry of Defence (MOD) estate, specifically around training camps that are intended to deliver net zero emissions including all the building materials. There is a sensor on every element of the mechanical and electrical equipment, there are solar panels fitted, air source heat pumps, rainwater harvesting in place etc. So they’ve thought about the issue from design to construction to once it's operational."

"One of the issues we need to deal with is the legacy buildings. We don’t have an answer right now for this, but we will solve the problem by using technology to build actional data on which to make decisions.

We are also working on a project in the Pacific National Exhibition, which is a big hardscape paved area, where we’re going to reintroduce streams that were paved over in the 70’s. This will be a public amenity but it will also help with still water management. We’re examining if we can put hydroelectric generation on our site. We’re being very creative about how we go about solving the problem."

"I was involved in a project for NASA at the Ames facility, which is also known as its Sustainability Base. It remains the most instrumented building in the world. The building was built on a government budget and finished under budget and ahead of time. It's a net zero building as well. The purpose of the building was to design automated and predictive controls for the lunar station on the way to Mars. But what the building also accomplished is it inspired the scientists that were there, so there was an intrinsic outcome, there that was even more important in some ways than the data. So that’s an example of data in action having a societal benefit towards the mission.

I’m also involved in a project in Portland, Oregon, where we are designing a project around circular economic principles. The data system is very much being integrated into the systems driven by a biomimetic model, patterned after nature. The data management is intended to drive mutual benefits and synergies to ensure that nothing goes to waste. Everything is harvested for the benefit of the project."

"We have IoT in our buildings and we’ve seen energy efficiency benefits. We’re also now able to provide insight to organisations on air quality which is proving to be a point

of interest for people returning to offices after lockdown. We've also had conversations with Real Estate Property Owners and Universities. The conversation is not only around IoT but also alternative power supplies such as solar panels and emerging technologies."

Q9. Why aren't we doing more with IoT data now? What are the challenges? How do we overcome them?

"One of the big problems is that you can't solve the problems in silos. The data is there but it's not aggregated or used in a joined-up fashion. I also think we need to see more client leadership to help make existing buildings perform better and operate better."

"There is a body called the Urban land Institute (ULI) Greenprint, which is a global network of cross-disciplinary real estate and land use experts in the world, dedicated to responsible land use and building thriving economies. In December and January, they signed a letter that committed themselves to requiring carbon data from their vendors from their supply chain, up and down. And they didn't stop there, they also said they are building towards a ‘multi-attribute data requirement’, because you can't just stop at carbon - you need to understand a multi-attributed data context. That includes material health, water, social concerns, safety etc. The ULI Greenprint is really defining the pathway for a demand engine for data to be incorporated into the delivery of, and the management of, the built environment."

"Communication and education is key. In Vancouver we’re intentionally building an education programme so that we can enable students and educators to engage with us. We’re looking at the IoT side, but it's not just about the results driven by the data around sustainability, it's also about communicating, letting others learn from where we’ve made mistakes, and also to celebrate our successes."

Q10. Is the pace of change moving fast enough?

"Probably not, there needs to be an aggressive push if it's going to be fast enough. This is a complex topic with no easy solution or simple pathway. It's not just the new buildings with new technology, but the older buildings need to be considered and we need to take a broad holistic view balancing building safety, resilience and sustainability.

"This is a really difficult question to answer. I look at my teenage daughter who makes decisions on what they do from organisations who pay attention. Capturing the data to prove organisations are paying attention will help."

"It will never be fast enough, but we can make it faster. The key stakeholders are the institutional investors and the pension funds who can prescribe their expectations and provide direction."