property carbon footprint

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By Paul Davies and Michael Green

dsc20050604_133440_3421In December 2015, world leaders met to negotiate the Paris Agreement. Setting aside whether the Paris Agreement goes too far, not far enough or is just right, one cannot dispute that government commitments to limit an increase in the global average temperature to well below two degrees Celsius will almost certainly impact private equity funds. In particular, regulatory and investor demand are likely to change the way climate-related risks are assessed. As Blackrock notes, “…carbon-heavy industries are not immune from disruption, nor are asset prices from regulatory efforts to mitigate climate change risk. We believe investors should thoughtfully consider these dynamics in order to build sustainable portfolios and take advantage of investment opportunities as we move towards a low-carbon economy”.

The private equity sector is in general paying closer attention to Environment, Social and Governance (ESG) issues throughout the investment cycle, whether voluntarily (for example, KKR’s Green Solutions Platform) or in response to investor pressure. French private equity firms Apax Partners, Ardian, Eurazeo, LBO France and PAI Partners committing to reducing greenhouse gas emissions Private equity goes green across their portfolio companies is perhaps the most recent illustration of this shift in focus.

By Paul Davies and Michael Green

Buildings account for 40 percent of energy consumption and 36 percent of CO2 emissions in Europe. With pressure mounting to enhance energy efficiency, the European Union is striving to achieve nearly zero-energy for all new buildings by 2020. Ramping up efforts to reduce the property carbon footprint, the UK Government put forward the Energy Efficiency (Private Rented Property (England and Wales)) Regulations in spring 2015. The regulations apply to both domestic and non-domestic premises and are indicative of the Energy Act 2011, which promised to introduce regulation to prevent inefficient properties from being let, coming into force.