Our approach to EPCs

Energy Performance Certificates (EPCs) are one measure of the modelled energy efficiency of properties. British Land has a strong track record of improving actual operational efficiency and has set challenging targets to drive further progress.

In 2020, we launched our ambitious sustainability strategy, a central part of which is to build on the significant progress we’ve made in the previous decade and transition our portfolio to be net zero carbon by 2030. Reducing emissions from operational energy to be as low as possible is an important part of that plan. We have already reduced landlord energy intensity by 55% across our portfolio since 2009 and we aim to reduce whole building energy intensity by 25% by 2030, versus 2019.*

Our well-established efficiency programme not only advances progress towards our net zero carbon goal, but also futureproofs our portfolio, better positioning it for both the growing demand for more sustainable space and increasingly progressive climate regulations.

The Minimum Energy Efficiency Standards (MEES) have made it illegal to lease or renew leases for properties with EPC ratings below E since 2018 with few exceptions. In April 2023, requirements expanded to include all commercial leased properties, not just new leases and renewals. Additional changes are also proposed to strengthen MEES on a phased basis to 2030, with requirements projected to rise to EPC C or above from 2027 and to EPC B or above from 2030.

We support the strengthening of MEES requirements and, together with the industry, have provided detailed feedback on the proposed changes. We would welcome swift confirmation on the new regulations, so that we can accelerate action. We have significant expertise and experience in upgrading energy performance, which positions us well as the market evolves.

* 55% reduction in landlord energy intensity from 2009 to 2020, pre-pandemic.

Minimum Energy Efficiency Standards

Required for commercial leased properties in England and Wales, with limited exceptions.

Current
Since 1 April 2018

Current
From 1 April 2023

Proposed
From 1 April 2027

Proposed
From 1 April 2030

       

EPC ≥ E for all new leases and renewals

EPC ≥ E for all commercial leased properties

EPC ≥ C for all commercial leased properties

EPC ≥ B for all commercial leased properties

 

Excellent progress on EPC updates – on track to achieve 2030 target1

Across our managed portfolio, the majority of our assets have a net zero plan and 50% of our portfolio is now rated EPC A or B. This is up from 45% at FY23, and we expect to be around 60% at FY24.

Below, we provide more detail on EPCs across our portfolio and outline our plans to upgrade energy performance where appropriate.

1 Portfolio data is based on estimated rental value (ERV) as at September 2023. Data includes Retail assets located in Scotland which are not subject to 2023 MEES regulation.

Upgrading energy performance

To meet our 2030 objectives and comply with expected MEES legislation, we have a plan in place to improve the EPC ratings of our portfolio to A or B by 2030.

We estimate the total cost to improve the standing portfolio to EPC A or B to be around £100m, of which two thirds will be recovered through the service charge. By the end of FY24, we will have spent a total of £20m on these initiatives, 70% of which will be recovered via the service charge.

While we are making good progress on EPCs, we are primarily focused on improving energy efficiency and reducing carbon intensity. This is how we will deliver on our 2030 targets to improve whole building energy efficiency by 25% and reduce operational carbon intensity by 75%, both against a 2019 baseline.

To fund any outstanding costs relating to these interventions, we have established our Transition Vehicle, comprising ringfenced funds financed by our internal levy of £60 per tonne of embodied carbon in developments, supplemented by an annual internal float of £5m.

Interventions identified through net zero carbon audits of individual buildings include retrofitting air or water source heating and cooling pumps, installing the latest LED lighting and introducing CO2 controls. These interventions will accelerate progress towards net zero and, at the same time, drive EPC improvements. We are now working with customers to plan these interventions, producing detailed designs and incorporating them into business plans, to move assets out of risk before regulations come into effect.

Air source heating and cooling for our net zero future

Net zero carbon pathway at Exchange House

Interventions will be scheduled to coincide with lease events and planned plant replacement cycles where possible, to minimise disruption to occupiers and avoid unnecessary costs and embodied emissions resulting from replacing equipment before its end of life.

Preparing for MEES

Alongside net zero carbon audits, other workstreams to prepare for MEES include:

  • All new developments working towards EPC A, as set out in our Sustainability Brief.

  • Revising lease clauses to reflect the new MEES trajectory to ensure that customer fitouts do not negatively impact EPC ratings.

  • Resurveying older EPCs, where efficiency improvements have been implemented, to move out of risk now.

  • Applying for exemptions where it is not commercially or physically viable to improve EPCs to MEES requirements.

We will maintain our focus on improving actual energy efficiency, which is not always reflected in EPC modelling. In addition, we will continue to be mindful of whole life carbon, recognising that it is not always environmentally positive to replace a major plant, as the embodied carbon footprint can be greater than the operational efficiency savings. We are committed to achieving a net zero carbon portfolio by 2030.

Responsible consumption and production

50 %

Of our portfolio rated EPC A or B

Sustainability Progress Report 2023

Sustainability Report 2023

Sustainability Strategy 2030

Sustainability Strategy 2030

Pathway to Net Zero Carbon

net zero pathway

Carbon Offset Policy

Carbon Offset Policy

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