In its capacity as an investor, housebuilder and landlord, L&G has written an open letter to the UK government calling for further building regulations to avoid the “catastrophic and irreversible” effects of global warming
Earlier this week, Chancellor Rishi Sunak announced a £3bn green investment package as part of the country’s recovery from the Covid-19 crisis in order to create jobs and energy efficient homes. This included a £2bn Green Homes Grant allowing homeowners and landlords to apply for vouchers to increase the energy efficiency of their homes, and £1bn for improving the energy efficiency of public sector buildings – such as schools, hospitals and council buildings – as well as a £50m fund set up to pilot an effective approach to decarbonise social housing.
However, L&G said although these actions are welcomed the government needs to take further action in order to meet its target of net-zero emissions by 2050 and “economic disruption and human suffering on a scale even greater than the novel coronavirus pandemic” as climate change takes hold.
The letter, signed by CEO of L&G Capital Kerrigan Procter, head of LGIM Real Assets Bill Hughes and head of sustainability and responsible investment strategy Meryam Omi, said: “Buildings account for over a third of overall UK greenhouse gas emissions today, with heating and hot water constituting 20%. The UK government, which has committed to meeting net-zero emissions by 2050, recently announced a multibillion pound building and infrastructure package to fuel the country’s recovery following the pandemic.
“This ambition is welcome, particularly the introduction of measures such as the retrofit voucher scheme and investments to improve the energy efficiency of public buildings. But the recovery must be achieved without locking in high-emitting and inefficient buildings for decades to come. As the recovery gets underway, it is crucial the opportunity to ‘build back better’ is not lost.”
It added the government must urgently clear some of the existing policy barriers and introduce new regulation including:
- Reintroducing net zero-carbon standards for new homes.
- The start of a National Retrofit Strategy to fund the upgrading of existing homes.
- Implementing embodied carbon targets for new public buildings, large public renovations and infrastructure – with a clear trajectory towards net zero standards in the longer term.
- Raising Minimum Energy Efficiency Standards (MEES) for non-domestic lettings.
- Introducing urgent legislation to improve transparency on the operational energy performance for non-domestic buildings.
- Reducing the energy performance gap through transforming mainstream industry initiatives from Design for Compliance to a Design for Performance programme – a move towards measuring a building’s efficiency based upon actual energy use.
- Incentivising businesses to support their transition towards net zero – through the use of renewable energy on-site.
The group also said it is playing its own part in reducing emissions by doing the following:
– By 2030, all homes built by Legal & General’s housing businesses will be capable of operating at net zero carbon emissions, and the group will strive to understand, monitor and reduce the embodied carbon associated with the construction of our homes.
– LGIM Real Assets has set an ambitious commitment to achieving a net-zero emissions real estate portfolio by 2050. This is part of an industry collaboration of commercial property owners under the Better Buildings Partnership’s (BBP) Climate Change Commitment to tackle the growing risks of climate change through the delivery of net zero carbon real estate portfolios by 2050.
– LGIM’s Investment Stewardship team is expanding its flagship climate-related engagement, the Climate Impact Pledge, to the steel and cement sectors – two of the sectors most crucial in tackling the emissions embedded in building materials.
The letter concluded: “As the UK looks beyond Covid-19, it is faced with a deep economic recession coupled with a longstanding housing crisis. Whilst government may be focused on its ‘build, build, build’ agenda, it must not lose sight of how this – if not regulated appropriately – will have an irreversible impact on climate change.
“Due to the pandemic, global greenhouse gas emissions have hit a sudden plateau, and the world now has unexpected opportunity to continue to bend the curve. The UK’s net-zero target must be placed at the heart of the recovery.”