28 März 2022
By Benjamin Watkins, Senior ESG Strategy and Reporting Consultant & Business Unit Lead
The need to identify, track and mitigate sustainability risks, from asset through the portfolio level, has continuously increased due to greater investor pressure and regulatory changes. There are multiple methods for monitoring these risks; one such method, which is third-party verified, is BREEAM IN-USE (BIU). BIU employs a holistic approach to evaluating asset level sustainability topics, which range from health and well-being through to resilience, across two parts: part one is based on asset performance and part two is based on asset management. So why and how should you utilize BIU to track and mitigate sustainability risks?
There are four key features of BIU which support the tracking and mitigation of sustainability risks:
1. Over 90 indicators related to sustainability are considered. As mentioned above, indicators include a wide range of factors, picking up on major risks such as climate change resilience, occupant health and well-being, and energy systems.
2. With such a wide range of indicators, the assessment can highlight gaps in processes and procedures, in terms of management, and will also support in optimizing asset performance. Providing such detail is vital for the prioritization of initiatives to mitigate risk.
3. The assessment is designed to be applicable at an asset level and is suitable for all asset classes. This strategy allows for benchmarking across the portfolio. Risks can be compared between assets and can also be aggregated to a portfolio level. This will support in the development of a risk management process from asset to portfolio level.
4. Assessments certified to the version v6 released two years ago will now be recertified every three years, providing a timeline to mitigate risks and optimize assets and procedures. On top of this, the new system will allow changes to the asset to be tracked on the portal, allowing for an interactive tool to understand what initiatives can be rolled out to reduce risks and improve sustainability performance.
Identifying sustainability risks during acquisition is key in order to track and mitigate them during the lifespan of the asset. Therefore, ensuring aspects of BIU are covered within the sustainable due diligence (SDD) are of considerable importance. Longevity Partners identified this need and has adapted its SDD procedure to include BIU metrics along with a wider set of indicators which are required for reporting, such as SFDR and GRESB.
Beyond the acquisition phase, it is then key for the BIU indicators and metrics to be integrated into operational risk management processes. The first step is to ensure the full portfolio is certified against BIU, enabling risks to be tracked as noted in point 3 above. The next step is integrating the key metrics and indicators from BIU into existing risk assessments. Operating on a three-year frequency for reviewing risks will also coincide with the recertification time frame, as noted in point 4. This allows for continuous monitoring of risks and improvements to the asset.
With the importance of sustainability risk management continuously increasing, BIU provides an important mechanism for supporting with the identification, tracking and mitigation of risks. The above steps have highlighted that integrating such a scheme into current risk management processes is not only simpler than first expected, but also provides further robustness to procedures. At Longevity, we are experienced in delivering BIU assessments and supporting clients in optimizing their assets to reduce sustainability risks.
Get in touch with our team today to begin your BIU journey.