Highlights performance on sustainability 2020
Improved GRESB score by four points (total 88 points) and obtained a GRESB 5-star rating for the first time;
100% of investments have GPR Building certificates, with an average score of 6.5 for the total portfolio;
100% green label portfolio, with an average energy index of 1.08 (52.6% A label);
Total of approx. 13,726 kWp solar power installed;
4.3% like-for-like reduction in energy consumption; 16.7% decrease in GHG emissions;
1,575 (9.1%) rental contracts with a sustainability clause;
66.8% of construction sites are registered under the Considerate Constructors (Bewuste Bouwer) scheme;
156 homes acquired in the mid-rental segment (€ 737 - €1,000);
Coverage of 100% AEDs within six minutes walking distance;
Signed DGBC Paris Proof commitment to become net-zero carbon before 2045; implemented Paris Proof roadmap in 2020.
Focus on sustainability
The built environment consumes around 40% of the world’s energy and accounts for up to 30% of the world’s annual GHG emissions. Additionally, the building industry is a large user of raw materials. As a global real estate investor, we feel it is part of our responsibility to contribute to a CO2-neutral, sustainable, circular, resilient and healthy living environment, and to enhance stakeholder value by investing in sustainable real estate. We are convinced that our approach reduces risk, increases client returns and makes our real estate assets and portfolios more attractive.
Environmental, social and governance (ESG) factors will continue to play a major role in our investment strategy. We are targeting a net-zero carbon, nearly energy-neutral and resilient portfolio before 2045 (approx. 40 kWh/m GLA per year). This will include an analysis of asset-level climate risks, including a plan of how to mitigate these risks.
We have set out clear targets for the reduction of our environmental footprint and improving our positive social impact.
To make a start, we have formulated the following Paris Proof objectives for the mid term:
2021-2030: A year-on-year 5% reduction in GHG emissions for the total portfolio (general and tenant consumption)
2030: Our portfolio has an average energy label A (energy index <1.0)
2030: 50% of our homes are natural gas free
In addition, we devote attention to the Dutch policy position on transitioning towards a circular economy in 2050, with the focus on the use (and reuse) of resources. The real estate industry needs to be transformed into a circular ecosystem. We are committed to circular building projects.
The Fund supports the United Nations Sustainable Development Goals (SDGs). We actively support three SDGs, as presented below.
Highly sustainable Fund
For 2020, our goal was to continue to improve our sustainability performance and to improve our GRESB score to obtain a 5-star rating. We improved our GRESB rating to a GRESB 5-star rating, which is the highest rating and puts the Fund among the top 20% worldwide. We also increased our overall score by four points, taking our total score to 88 points from 84 points in 2019. This also resulted in a substantially better peer comparison position, to 4th out of 9 in 2020 from 6th out of 16 in 2019.
The higher GRESB score was primarily the result of improvements in three areas: Risk & Opportunities, Monitoring & EMS and Performance Indicators. To retain our GRESB 5-star rating, we will continue to increase our focus on Performance Indicators and maintain our focus on Policy & Disclosure, Stakeholder Engagement, Monitoring & EMS.
GRESB score 2020
In addition, Bouwinvest is a signatory to the UN PRI. In 2020, we scored an A+ on both the Strategy & Governance module and the Property module.
Investing in sustainable real estate
Sustainable buildings and investments
Sustainable building certificates show us where we are in terms of sustainability at asset level and how far we have yet to go. We use internationally accepted sustainability certificates to measure and assess the overall sustainability of our assets. Benchmarks help us to make informed business decisions to mitigate environmental, social and governance risks and enhance our long-term returns. Certificates such as GPR Building measure criteria that go beyond legislative requirements and provide us with instruments to encourage more responsible tenant behaviour, such as cutting waste and reducing energy consumption.
The Fund uses GPR Building software to measure and assess the overall sustainability of its buildings. The GPR reports on five performance indicators: Energy, Environment, Health, Quality of Use and Future value, and assigns a score for each performance indicator on a scale of 1 to 10. When used on existing buildings, GPR makes it very easy to identify potential quality improvements following sustainability-related measures. This in turn makes it very easy to compare various scenarios and the outcome of any measures, which enables us to choose the most (cost) effective measures, both in terms of sustainability and the long-term return on investment.
Our plan was to achieve an average GPR score of at least 6.6 (with a coverage of 100%) by the end of 2021. By year-end 2020, 100% of the portfolio had received a GPR label, with an average score of 6.5 (2019: 6.4), surpassing our 2021 target.
For the coming years, we will focus on improvements to get a higher average score related to the GPR labels and all new-build properties we acquire will have to have a minimum energy performance coefficient of 0.2 (BENG proof) and a GPR score of 8.0.
GPR scores (% of lettable floor space)
Our target was to have energy label A for 65% for the portfolio at the end of 2021. However, since the measurement has been changed from units to square meters, we redefined our target to 50%. The Fund met this target in 2020, and had a 100% green portfolio, as all assets had an energy label A, B or C. The distribution of energy labels in the portfolio is shown below. Investment properties under construction are excluded from this overview. The Fund expects all these properties to receive an energy label A upon delivery.
The Fund redefined its targets in the Fund Plan 2021-2023 to the effect that we were aiming to receive energy label A for at least 50% of the portfolio (energy-index <1.2), a target we had already achieved by year-end 2020 (52.6%). We will also continue to invest in our standing portfolio to reduce energy index levels to a minimum of 1.1 and achieve a minimum GPR score of 6.6 in 2022.
Distribution of energy labels by floor space (m2) in %
In 2020, Bouwinvest committed itself to the Paris Proof commitment of the DGBC. To become net-zero carbon (Paris Proof) before 2045, we drew up a roadmap for the Fund. In 2020, we implemented the technologies, measures and costs related to the implementation in our strategic maintenance plan for the coming years.
Energy consumption and GHG emissions
By selecting and focusing on the top 50 largest energy consuming assets and installing LED lighting and relocation sensors, the Fund is on track to meet our environmental targets.
In 2020, the Fund had to deal with the Covid-19 outbreak, which resulted in an increase in electricity consumption of 4.5% (2019: 5.7%) and 4.3% lower total energy consumption (2019: 2.2%), both on a like-for-like basis. GHG emissions declined by 16.7% due to the lower use of natural gas. Both the energy reductions and the lower GHG emissions are for common areas. The Fund purchases renewable electricity for common areas, while property managers are required to deliver energy-efficient alternatives for repairs and replacements based on the Total Cost of Ownership (TCO) approach.
The target for energy reduction is now 5% per year to bring the target into line with (international) climate goals (reduction of 95% in CO2 emissions in 2050 compared with 1990).
On-site solar panels (kWp)
Renewable energy production
The Fund has increased the generation of solar power, both for new properties and existing apartments and houses. We achieved our goal for 2020 and we have included more ambitious goals in our Fund Plan for 2021-2023. The goal in 2020 was to focus on the installation of more than 12,000 kWp of solar panels by the end of 2021. Starting last year, we are fitting all existing apartment buildings and houses with solar power.
We also raised the target for renewable energy generated by solar panels to 21,000 kWp by the end of 2023.
In 2020, the Fund raised its targets for the reduction of its environmental impact in the period 2021-2023 and so far we are right on track:
Renewable energy: increase of renewable energy by 49% to 13.7 MWp
Energy consumption: average annual reduction of 5% as from 2021
GHG emissions: average annual reduction of 5% as from 2021
Water use: average annual reduction 2%
Waste: Increase recycling percentage
Enhancing stakeholder value
Bouwinvest does its utmost to optimise long-term alliances with all our stakeholders. We have methods and means in place to understand, meet and respond to our stakeholders needs and to engage with the issues that our stakeholders find important. In addition to this, we take an active approach to raising environmental, social and governance awareness throughout the real estate industry, partly through membership of various real estate sector organisations, such as the Association of Institutional Property Investors in the Netherlands (IVBN) and the Dutch Green Building Council.
Improving client services and communications
Real estate markets are remarkably dynamic, so Bouwinvest has to be responsive to internal and external news, as well as trends, risks and developments that could influence investments in Real estate markets. We are clear on our investment strategies and are dedicated to demonstrating our ability to meet or exceed our clients’ expectations, by offering investment opportunities, services and market data related to existing and potential new investments.
In 2019, we conducted a stakeholder survey, asking our main stakeholders, including our investors, how they view us in terms of what we are getting right and where we could make improvements. This survey provided us with a lot of valuable feedback. The survey showed that we are on the right track on the ESG front, but we can improve how and how much we communicate with our investors on the progress we are making towards achieving our ESG ambitions. These and other, actions will contribute towards improving our client services and communications towards our clients. Our ultimate goal is to achieve a steady long-term client satisfaction score of above 7.5 (out of 10). We will repeat our stakeholder survey in late 2021 and the results will be available in early 2022.
We have made the satisfaction of our tenants a major priority for the coming years, as an integral part of our wider ambition: to be more client-centric in our approach to all our stakeholders. We want to further improve the quality and efficiency of our processes, to optimise our contacts with our tenants and to take a more proactive approach to how we provide our services.
In 2020, we devoted a great deal of attention to our customer journey, including how we engage and communicate with our tenants. Obviously, 2020 was a very difficult year for a lot of people following the Covid-19 outbreak, as this created an enormous amount of uncertainty, as did government restrictions introduced to combat the spread of the virus. On top of this, we were faced with rising unemployment and the prospect of a prolonged economic recession.
We responded immediately, stepping up our communications with our tenants and where necessary reaching payment arrangements (rent deferrals) with the relatively small number of those tenants who found themselves in financial difficulties. We also postponed our scheduled rent increase from July to October, waiving the increase for the intervening three months. We also continued to update tenants (and clients) on the unfolding situation and our response.
As part of our continuous efforts to improve our services, last year we optimised and digitalised our rental process, making it easy and simple for potential tenants to sign up online and sign their contracts digitally. We also rolled out our ‘Living with Bouwinvest’ tenant portal and a client monitoring system. Tenants will be able to use this portal for the likes of repair requests, online payments, changes in personal details and the filing of complaints, whenever and wherever they see fit. This means tenants now have a single access point for all their queries and comments.
Once the client monitoring system is fully up and running, this will give us a 360-degree client view, so we know what our tenants need and how we can optimise our services. This will enable us to monitor all interactions with our tenants, including those between tenants and our property managers. This will in turn give us the information we need to measure the performance of our property managers and agree new performance targets. It will also make it easier for us to measure the impact of any improvement measures we take based on the feedback from our tenant satisfaction surveys. On another front, the new system will also make it easier to track any payment arrangement we may reach with our tenants.
The automation of our processes had an immediate positive impact in 2020, as the Covid-19 pandemic restricted physical viewings of our (newly built) vacant properties. We saw a sharp increase in the number of virtual viewings and new tenants were able to read and sign their rental contracts online. Thanks to these automated processes, the Residential Fund saw virtually all properties added to the portfolio fully let either before completion or shortly thereafter.
Our tenants are one of our most important stakeholders and in recent years we have made a good deal of progress in terms of truly engaging and getting to know them. Our target for 2020 was to improve on the overall score of 7.2 we received in the 2019 survey and score higher than the industry benchmark. And once again the tenant satisfaction survey we conducted in 2020 showed clear signs that the actions we have taken are paying off. This covered topics such as the service level of the property managers, complaints and repair procedures, the quality of the properties and the living environment.
Last year, 2,349 tenants (38.6% of those asked to participate) responded to the survey. Once again, we improved our scores across the board, which resulted in an overall score from our tenants of 7.3. This put us 0.1 points above the IVBN benchmark on all the items included in the survey.
This survey provides us with insight into how satisfied our tenants are with items such as service costs, the level of services provided by our property managers, the friendliness of our service staff and how we handle repair requests and complaints. Last year, our tenants gave higher scores for every item in the survey. For instance, satisfaction with our service costs increased sharply to 6.7, from 6.1 in 2019. Tenants gave the friendliness of the service staff who carry out repairs a score of 8.0, up from 7.8 the previous year, while the score they gave to our property managers rose to 6.8 from 6.7 in 2019. Very importantly, we once again saw an improvement in the rating of our homes, as tenants gave these a score of 6.8, up from 6.7 in 2019.
Once again, we will use the results of the survey to draw up improvement plans. Our tenants had a number of suggestions for improvements, including our telephone service, the new tenant portal and how we deal with complaints. The score for this last item did improve slightly to 4.8 in 2020 from 4.6 in 2019.
As a result of this feedback, we have launched a new client contact centre, which will help to reduce waiting times for our telephone service and improve the quality of this service by providing the right answers immediately. In general, we want to improve our accessibility and our response times. And we will be doing our utmost to make sure we - and our suppliers - keep to the agreements we reach with tenants on complaints and repair requests, as we see this as the first rule of good service.
Green rental contracts
Following the residential team’s efforts to add a sustainable focus to the Fund’s standard lease contract in 2020, the team continued to roll out green rental contracts across the portfolio last year. As a part of our drive to continue to improve our current sustainability levels in the long term, we believe we need to address the ‘user effect’. By adding a separate appendix to the dos and don’ts for the use of our homes, we want to accelerate the realisation of our sustainability goals and ambitions. We strongly believe that engaging our tenants in our efforts to increase the sustainability of our portfolio will make us far more successful in the long run.
The target for 2021, is to have a sustainability clause included in 20% of all rental contracts. By the end of 2020, we were well on track, as almost 9% of all rental contract now has a sustainability clause.
We take an active approach to raising environmental, social and governance awareness throughout the real estate industry. We encourage our partners to enhance their sustainability performance. We focus on health & safety at construction sites, active participation (memberships) in industry associations and community programmes. To further improve the climate for real estate investments, we are an active member of boards and committees of sector, industry and cross-disciplinary networks such as NEPROM, IVBN, Holland Metropole, DGBC, INREV and the ULI.
Our target is to have more than 75% of the construction sites registered under the Considerate Constructors (Bewuste Bouwer) scheme by the end of 2021. At the end of 2020, we were right on track, as just over two-thirds (66.8%) of our construction sites were registered with the scheme. This ensures that contractors deal with the concerns of local residents and address safety and environmental issues during the construction phase.
% of construction sites registered under Considerate Construction Scheme
Bouwinvest was the first company in the Dutch real estate investment sector to contribute to the establishment of a national AED (automatic external defibrillator) network, which it is estimated could save up to 2,500 lives every year in the Netherlands. The use of an AED offers the highest probability of survival within the first six minutes after a heart attack. In 2020, we continued focusing on the installation of AED. Our target was for all our tenants and communities to have an AED available within six minutes walking distance by the end of 2021. We had already achieved this target by the end of 2020. Bouwinvest is also planning to install AEDs at all new assets it adds to its portfolio.
Being a responsible organisation
We believe that integrity, honesty and corporate responsibility are essential to ensuring we do our job properly and will, in turn, enable us to optimise returns for our clients. We are committed to upholding the highest ethical standards and compliance stewardship in all our business dealings and we avoid conflicting interests. To ensure accountability and transparency, we set targets, based on international sustainability standards, which allow us to monitor our progress.