Green is becoming an essential criterion for real estate investment in Europe. Investors from a dozen countries rely on the BBCA association to develop a European tool.

As Stéphane Villemain, vice president of CSR at Ivanhoe Cambridge, explains, the goal of this dozen European investors is to establish an indisputable method for proving the veracity of a real estate asset and to operate it in various markets in the European Union. This initiative will be announced tomorrow – Tuesday, March 15 – at the opening of MIPIM in Cannes. It brings together 9 founding members and is preparing to welcome new ones.

The founding members are BPI (Luxembourg, Belgium, Poland), NSI (Netherlands), WO2 and ICAMAP (Luxembourg, France and United Kingdom), Covivio, Ivanhoé Cambridge and Struan Robertson.

Technical support from the BBCA association

Initially, this new European low-carbon label will cover offices, hotels and multi-family housing. The French association BBCA is providing technical support to develop the label, which aims to promote the reduction of the carbon footprint of buildings over their entire life cycle. Stéphane Villemain explains that most of the world’s green building certifications – LEED, BREAM, HQE, … – have so far focused on the life of the building.

This new European label will be based on a life cycle analysis (LCA) of the buildings: construction, life in use, end of life and dismantling. A scientific commission has been set up by the BBCA association to ensure an independent approach. Co-piloted by Artelia and Elioth by Egis, this commission brings together experts in LCA and strategies for decarbonizing real estate.

The European methodology should be ready by summer 2022, allowing the first exemplary buildings in Europe to apply for the label by the end of the year. Admittedly, the BBCA association has a good track record in this area. Since its creation in 2016, more than 300 projects in France, covering a total of more than 2 million m² have obtained the BBCA label or have initiated the application for labeling.

Implementing best practices in terms of low-carbon construction and operation can reduce the carbon footprint of a building by 30 to 50%, depending on the level of the BBCA label obtained, compared to traditional construction methods. The BBCA label was also a precursor and contributed to the new RE2020 environmental regulation for new buildings in France.

A European Initiative

All real estate companies and investors are now obliged to aim for carbon neutrality in their building portfolios. At the same time, they did not really have an indisputable tool for evaluating the carbon footprint and the greenness of their buildings. For the past 7 years, Ivanhoë Cambridge has been using GRESB, a Dutch tool. This new label will provide them with a European evaluation tool at a time when all sorts of European (European Taxonomy) and national (RE2020; …) regulations are being introduced.

By anticipating the call, they are also trying to avoid the proliferation of national tools in Europe, based on different calculation methods. As a result, the participants in this initiative claim to be satisfied.

Christophe Kullmann, CEO of Covivio, says: “Aware of its impact on the environment and its role in the ecological transition, the sector is once again demonstrating its ability to unite on structuring issues. In line with its long-standing strategy on these issues, Covivio is delighted to join this pan-European initiative mobilizing partners with different profiles. This diversity is a real asset for the creation of this standard and thus to face the climate and energy challenges that we must all take up together.”

Olivier Terrenoire, Global Head of Asset, Property Management and Sustainable Investing at Generali Real Estate, said, “The decarbonization of the real estate portfolio is a key priority of Generali Real Estate’s ESG strategy. It is reflected in strong commitments by the Generali Group, in particular participation in the Net Zero Asset Owners Alliance convened by the UN. We are proud to work alongside key European players, with the technical support of BBCA and to be a founding partner of this important initiative, to address one of the most important topics for our industry, and to create new synergies on this challenging path.”

Stéphane Villemain, Vice President, Corporate Social Responsibility (CSR) at Ivanhoe Cambridge, said: “We are proud to support this European initiative, which represents a major step towards decarbonizing the real estate sector. It is necessary to take better account of the emissions levels of buildings throughout their life cycle, including during their construction. This initiative represents a real opportunity to expand low-carbon practices in our sector and position our portfolio favorably for the long term.”

Stanislas Pottier, senior advisor to Amundi’s executive management and chairman of the BBCA association said, “If we want to reach Net Zero by 2050, we need to get carbon right in the next 15 years and to do that, we need to change practices in the next 2 to 3 years. This means putting in place a real CO2 accounting and analysis framework for buildings, cities and portfolios. BBCA is pleased to support this European low carbon buildings initiative, bringing its technical expertise acquired over the last 6 years, to achieve European CO2 measurements and labels, in coordination with ongoing work at EU level (Green Taxonomy, CSRD, NFRD…) and beyond (ISSB: International Sustainability Standards Board ).”

Carbon neutrality by 2030

The International Energy Agency recently pointed out that to achieve carbon neutrality by 2050, building emissions will have to be reduced by 95%. This represents a considerable effort.

The goal of the various participants in the development of this new label is clearly to achieve carbon neutrality of their portfolio. They are considering three types of actions: selling the most carbon-intensive assets if they cannot be rehabilitated at a reasonable cost, investing in decarbonizing their existing portfolio and, as far as their new acquisitions are concerned, investing only in decarbonized projects.

At Ivanhoe Cambridge, Stéphane Villemain explains that it is not enough to simply comply with regulations. You have to go beyond their requirements. Ivanhoe Cambridge aims to make its global real estate portfolio carbon neutral by 2040.

To achieve this goal, the investor relies on all the existing local green labels around the world, but it also contracts the incentive to be green with the various property managers it relies on around the world. As Stéphane Villemain points out, all players must be encouraged to participate in the effort to decarbonize real estate.

Therefore, the more a property manager, partner of Ivanhoë Cambridge, succeeds in reducing energy and water consumption, waste production and carbon emissions, the more his remuneration will increase. Ivanhoe Cambridge applies the same type of financial incentive to itself. The investor has structured part of its debt with certain banks in such a way that the cost of its debt varies with the greenness of its fleet, in both directions: greener equals cheaper, less green leads to an increase in debt service.

Stéphane Villemain uses a Quebec expression to explain Ivanhoe Cambridge’s attitude: “the boots must follow the shoes”. In short, talk is not enough, action must follow. As of 2025, Ivanhoe Cambridge will only invest in “Net Zero Energy” projects.

Net Zero Energy is the expression used by the European Directive on Energy Efficiency in Buildings, which is currently being revised, and which France had unwisely translated into the more stringent requirement of BEPOS (Positive Energy Building), before discreetly abandoning it with the RE2020. Ivanhoë Cambridge, for its part, has just invested in an office building that aims for the Bepos Effinergie label.

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