7 Steps to Manage Your Building Investments
Whatever their property mix, there are steps building owners and managers can take now to set themselves up for a successful return on their investments in retrofits, according to the United Nations Environment Programme Finance Initiative, 2014 report, “Commercial Buildings: Unlocking the energy efficiency retrofit investment opportunity”. The following guidelines will ensure asset owners and managers have the right information and incentives to manage their investments wisely:
1.
Ensure executive awareness of the business case. This will lead to an investment in consultants or internal staff time to carry out the next step.
2.
Measure and benchmark building energy performance. This requires competent staff or trusted consultants to manage a portfolio-level program and an allocation of funds to carry out the audits and put in place energy benchmarking software.
3.
Set portfolio energy-efficiency targets. Whether or not they are publicly disclosed, executives and key decision-makers need to know for what they are aiming.
4.
Link asset manager compensation to energy performance. Like any major corporate initiative, the surest path to progress is to pay people based on performance, in this case energy performance and some qualitative targets, such as certification.
5.
Align lease clauses to enable retrofits (green leases). Systematically introducing these clauses at lease creation and renewal enables energy-efficiency retrofit projects to become viable.
The last two steps will increase an investment manager’s chances of getting energy-efficiency retrofits approved and financed:
6.
Include impact on asset value in investment analysis. Enlarge the business case beyond the energy-efficiency project assessment level by accounting for impact on the financial performance of the investment.
7.
Take a portfolio approach to determine next steps. Map out your buildings according to four key variables (type of lease, lease duration, availability of capital, and relationship to property [owner, manager or tenant]), and determine next steps for a retrofit or creating the lease and financing conditions to enable one.