Standards Development

Scope

Net Zero Standard for Real Assets for investors (Asset Owners (AO) and Asset Managers (AM)) covering all real assets – real estate and infrastructure, plus corporate operations – i.e. to provide the additional guidance needed for a validated investor / corporate level science based target to be set and monitored.

Proposed Table of Contents

1. Title: Net Zero Standard for Real Assets

2. Scope: Asset Owners (AO) and Asset Managers (AM) covering all real assets – real estate and infrastructure.

3. Definition of net zero – what does it mean to be net zero (i.e. transitional net zero, absolute net zero, abate/reduce as far as possible and then removal offsets for residual etc – with examples of what this means for real assets) (examples, case studies, resources, best practice, evidence base, examples etc hosted on a website)

4. Scope and boundary – what shall be included within scope to claim net zero. i.e. – across the full value chain, occupier emissions, global portfolios, directly vs indirectly owned/managed, credit etc (life cycle: i.e. Design, Construction (materials supply – embedded emissions), Operation, Decom etc. Key interfaces with stakeholders at each phase e.g. client in design phase especially if muni, EPC, O&M etc).

a. Ensure Alignment of Interest – between Asset Owners and Asset Managers, ensuring AM can fulfil AO wishes for existing mandates plus supporting AM to develop new funds which are aligned with transitional net zero, absolute net zero to attract AO reallocating commitments.  

5. Real Assets abatement target – defining the percentage of GHGs that must be abated and the percentage which can be considered ‘unfeasible’ to abate – i.e. the acceptable amount of ‘residual emissions’ for a Firm in the RA sector – this will likely come from SBTi sector guidance and will define what % reduction is necessary though actual reduction/efficiencies before credible removal offsetting is allowed to address the residual emissions.

6. Setting a net zero target – how to set and communicate a net zero target – a template that gives the options “we will be absolute net zero by 2040 or sooner in all direct aum” – template could clearly indicate % AUM covered by net zero target, geography, absolute or transitional (i.e. will they use compensation offsets until they fully abate etc).

a. stakeholder consultation (especially with AO if an AM) to make sure any commitment is aligned (see alignment of interest)

7. Reduction/Abatement – acceptable reduction/abetment options (green utility providers, onsite renewables, refurbs etc)

a. AO transition reallocate capital toward lower carbon AM / funds as part of their transition

b. AM transition (existing and new funds) to encourage that innovation etc in market supply / demand   

8. Management of Residual Emissions -  acceptable compensation/neutralisation offsets and residual offsets and when they can be used – an agreed approved list, what counts as residual offsets (biological vs technical etc)

9. Monitoring – how to measure/monitor GHGs --- emissions factor selection hierarchy, frequency, acceptable intensity ratios (how to handle data gaps etc) – i.e. consistent assumptions for extrapolation/estimate etc so we’re all like for like (using existing methodologies and reference best practice etc.)

10. Reporting & Assurance – what format to report in and frequency so that this can be assured by an auditor [level of assurance and integrating in existing annual audits for financial etc]

Purpose

This standard will enable consistency and credibility when setting out pathways toward the Net Zero commitment and communicating progress to Net Zero. This goal, and the publication of defined Net Zero pathways and Transition Plans, are a statutory requirement for the UK.  Hence there is a clear and urgent need for investors and their stakeholders to consolidate this practice around an agreed technical standard.  In addition, the standard supports and is aligned with the ‘Greener Buildings’ objectives of the UK’s ‘Ten Point Plan for a Green Industrial Revolution’¹ and the forthcoming Sustainability Disclosure Requirements² legislation, which will drive significant future regulatory requirements. These requirements will grow internationally in all markets.

Many (most) investors have Net Zero commitments, but with no credible or robust plan to implement these commitments. This Standard will be designed for institutional investors and asset managers (as such is not aimed at the asset-level). It is proposed as an umbrella / framework type standard with the potential for other asset-specific standards to be implemented underneath. This Standard will be focused on the UK market but could be developed into a full global ISO Standard in the longer-term.   This standard is not seeking to create new scientific methodologies, but to act as a signposting standard to facilitate consolidation, consistency, and comparability.