At Royal London Asset Management we are targeting achieving net zero carbon by 2030 for our directly managed assets and developments and 2040 for our indirectly managed assets*.
In setting these targets, we are responding to the demand we see from policymakers, investors and tenants to reimagine the future of the built environment as one that is positive for people and the planet.
Royal London Asset Management aims to achieve net zero carbon in advance of the deadline set through the Paris Climate Agreement. To demonstrate our commitment, we have signed up to the Net Zero Asset Managers Initiative, which is part of the United Nations-backed Race to Zero campaign.
In order to achieve this ambitious approach, we undertook to:
- We have evaluated the carbon in our portfolio at present
- Our emissions have been projected out to our target years to understand what reductions and interventions will be needed
- Target interventions have been identified for our embodied carbon impacts, operational energy for standing assets and new developments, increased on-site renewable energy capacity, off-site renewable energy procurement potential, and carbon offsetting strategy.
With the direction of travel outlined, we have developed a detailed delivery plan for achieving net zero carbon that has concrete actions for the short, medium, and long term.
Aligning with global initiatives and our approach to net zero carbon
We are proud to have become a signatory to the Better Buildings Partnership climate commitment. This is both comprehensive and ambitious requiring each signatory to publish their own Net Zero Carbon pathway, setting out how they will deliver against a net zero carbon target. The commitment also requires signatories to report annually against their pathways, ensuring transparency so that progress can be gauged over time.
At the end of 2015, the international community came together for the first time – after nearly two decades of deliberations – to sign the first international, legally binding agreement on climate change. This document – the Paris Climate Agreement – stated that the parties included agreed to limit global warming to well below 2°C and ideally below 1.5°C.
Of the countries that signed the Paris Climate Agreement, the United Kingdom was the first major economy to translate that commitment into a national legally binding target to achieve net zero carbon by 2050 at the latest. It is this national legislation that drives our agenda for the coming decades and guides Royal London Asset Management to play our part in contributing to that national and international goal.
In pursuit of this goal, Royal London Asset Management has signed up to the Net Zero Asset Managers Initiative. This initiative convenes an international group of asset managers who are committed to achieving net zero carbon by 2050 at the latest, which gives us a better chance of limiting average global warming to below 1.5°C, as well as supporting investment that is aligned with net zero carbon goals.
This global initiative – which is part of the UN-convened Race to Zero – commits organisations to:
- Work in partnership with asset owner clients on decarbonization goals that are consistent with an ambition to reach net zero emissions by 2050 or sooner across all assets under management.
- Set an interim target for the proportion of assets to be managed in line with the attainment of net zero emissions by 2050 or sooner.
- Review the interim target at least every five years, with a view to ratcheting up the proportion of AUM covered until 100% of assets are included.
The net zero carbon strategy that Royal London Asset Management has set out for its property assets aligns with these commitments and provides a roadmap for how it can be achieved ahead of 2050.
In alignment with the Net Zero Asset Managers Initiative, Royal London Asset Management has reviewed its carbon footprint and trajectory of our property portfolio for the coming decades. Based on this review, we have developed an informed roadmap to bring our portfolio to net zero carbon. This pathway is aligned with the latest guidance and principles for the built environment on how to reduce and compensate for our emissions meaningfully and accountably.
‘Transition to net zero carbon’ was identified as a material issue during the recent development of our Responsible Property Investment strategy. The issue will be managed in different ways across the four strategic focus areas of ‘Investing in a resilient portfolio’, ‘Developing for the future’, ‘Managing assets for positive impact’ and ‘Responsible decision making’. The selected interventions will depend on the focus area and the implementation of both the overarching RPI strategic roadmap and the subset of actions within the Royal London Asset Management net zero carbon pathway.
Why net zero carbon?
Climate change is the defining challenge of our time. The built environment is particularly suspectable to the effects of climate change. It affects the exposure of our assets to physical risks, such as flooding. It influences transitional risks, such as divestment away from high-risk assets. It contributes to urban heat islands and the health and wellbeing of occupants and local communities.
However, we are not only affected by climate change. The built environment globally is responsible for around 40% of all emissions. Our industry has immense power to positively influence the future and Royal London Asset Management will be one of the leaders in this journey.
Our pathway to net zero carbon
Royal London Asset Management has committed to achieving net zero carbon:
- By 2030 for directly managed assets and developments*
- By 2040 for indirectly managed assets*
To achieve these targets, we have developed a pathway structured along the following key steps:
- Understand the drivers for net zero carbon.
- Define the scope and boundaries.
- Identify carbon footprint and trajectory.
- Reduce embodied carbon.
- Increase operational efficiency.
- Increase renewable energy supply.
- Offset residual emissions.
* Directly managed assets are those over which Royal London Asset Management has complete operational control, greater that 50% equity share and joint ventures where they would cover the proportionate amount of emissions. Indirectly managed assets are managed wholly by the occupier. Developments are any new development or major refurbishment that comes online from 2030 onwards.
Responsible property investment
At Royal London Asset Management our long-term investment approach, coupled with a relentless focus on maximising value, means that Responsible Property Investment (RPI) has become integral to our mindset.