26 February 2014: The UN Environment Programme (UNEP) Finance Initiative (FI) has released an Investor Briefing, titled ‘Commercial Real Estate: Unlocking the energy efficiency retrofit investment opportunity.’ The briefing makes the business case for efficiency investments and presents best practices from leading real estate investors.

UNEP notes that buildings account for approximately a third of the world’s energy consumption and are a high-impact sector for urgent climate change mitigation action. The briefing begins by noting that financially attractive efficiency investment options exist for all types of properties, and that in the US, commercial buildings account for nearly 20% of energy consumption and 12% of national greenhouse gas (GHG) emissions. It goes on to summarize financial arguments for investments in energy efficiency, including that: they can repay themselves quickly, depreciate slowly and deliver decades-long returns; efficient buildings, higher rents and higher sale price are correlated; considering energy performance is an important component of risk management and an investor’s fiduciary duty; and at a time when energy prices are becoming more and more volatile, efficiency investments represent a good hedging strategy.

The briefing continues by summarizing the results of UNEP’s investigation into best practices on energy efficiency investments as a seven-step process: ensuring executive awareness of the business case for efficiency investments; measuring and benchmarking building energy performance; setting portfolio energy-efficiency targets; linking asset manager compensation to energy performance; ensuring leases allow for building retrofitting (green leases); ensuring investment analyses include impacts on asset value; and taking a portfolio approach to determining next steps. [UNEP Press Release] [Publication: Commercial Real Estate: Unlocking the Energy Efficiency Retrofit Investment Opportunity]