Decarbonising the real estate sector: tackling the challenges



Blog 2 of 3 - access part 1 here

The latest Intergovernmental Panel on Climate Change (IPCC) report (AR6) finds that unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming close to 1.5°C or even 2°C will not be possible.[1] The science is clear, if we do not limit emissions and consequent warming, we will fail to mitigate the worst impacts of climate change, with devastating consequences for ecosystems and communities. It has never been more critical that we tackle the challenge head on, and as investment managers we have a duty to take practical steps to decarbonise and future proof the real estate portfolios under our care.

It is evident that some of the biggest challenges lie ahead in decarbonising existing building stock, in the UK, 80% of properties that will exist in 2050 have already been built[2]. In England, two thirds of non-domestic Energy Performance Certificates (EPCs) lodged in Q1 2020 were given a C or D rating,[3] with only 15% achieving EPC B or higher. In addition to this, research and modelling for the Climate Change Committee (CCC) has outlined that natural gas heating must all but be eliminated for the UK to meet its net zero carbon target by 2050.[4] Addressing the existing building stock, by improving efficiency with consideration for life cycle carbon, installing on site renewables, gathering quality ESG data, FRI lease terms and limited control are only a few of the challenges that Mayfair Capital and the real estate industry are collectively navigating.

The data challenge

One of the most pressing ESG challenges in the industry is data acquisition. Actual whole building energy data is fundamental to understanding energy performance and as a result transitional risk. Energy Performance Certificates (EPCs) are required by UK law, yet EPCs have their limitations, with a clear disconnect between the theoretical performance of the building (assessed at a point in time), and the actual performance. The performance can be heavily influenced by the way the tenant uses the building and if there is any additional plug-in equipment consuming energy.

Accessible, accurate and automated data is the goal, but this is seldom achieved at scale across a real estate portfolio, particularly where Funds comprise of a high percentage of FRI leased[5] assets, where procurement of utilities is the responsibility of the occupier and they do not have an obligation to share data. Without regulatory or contractual support, landlords can be limited in accessing data from their tenants.

Mayfair Capital’s PITCH Fund, deliberately structured as a leaner portfolio of assets, allows for close engagement with its occupiers. PITCH has built, and continues to build, strong relationships with its tenants which we believe is crucial to accessing this data, and jointly working towards our climate goals. We are also leveraging technology to support automation, benefiting both parties, including the roll out of a data management system and automated data extraction tools that obtain data directly from suppliers (subject to tenant permissions).

FRI leases and limited control

For portfolios with a high proportion of assets on FRI lease terms, the landlord will not only have limited access to data, but also limited control and ability to implement sustainability initiatives. Approximately 88% of the PTICH Fund is subject to FRI lease terms, and thus tenant engagement is vital to making progress, as well as implementing initiatives when one has an intervention point e.g. at acquisition, vacant possession, or when negotiating a lease extension.

Despite limitations in control, we are carefully reviewing each asset and believe this bottom-up planning across our investment process provides us with a clear understanding of our exposure to transition risk informing the next steps in our pathway to net zero carbon. Our acquisition process includes net-zero carbon assessments, all refurbishment projects follow our Sustainable Development & Refurbishment Guide to enhance efficiency, and for standing investments we routinely conduct technical assessments to identify practical carbon reduction strategies. Over time this builds a comprehensive picture of our portfolio, supporting our pathway to net zero and most importantly, ensuring our assets are appropriately futureproofed enabling us to implement targeted measures when an intervention point arises. We are also being approached by our tenants who want to engage on topics such as solar panel installations, with this collaboration vital to making progress.

Addressing costs and uncertainties

Building climate resilience and developing a clear pathway to net zero carbon is a primary focus for our parent company, Swiss Life Asset Managers and for Mayfair Capital. Swiss Life Asset Managers has committed to reduce the carbon intensity of its direct real estate portfolio by 20%, in line with the aims of the Paris Agreement[6]. The pathway analysis for the UK business is still underway, while we continue to progress our programme of asset and portfolio level net zero actions. By having a clear understanding of our pathway to net zero, we will be able to plan carefully, prioritise effectively, and utilise all the decarbonisation levers available, in order to make informed investment decisions.

At present there are uncertainties surrounding the scale of investment required to achieve net zero carbon, however we expect that the picture will become clearer as more case studies become available, improving the quality of cost data and allowing one to reduce the reliance on cost assumptions. As the industry makes progress on decarbonisation, and as technology advances, we also expect to see the cost of net zero carbon measures and technologies become increasingly competitive and readily available. It is a careful balancing act transitioning a portfolio to net zero with consideration for timing, resource use, cost benefit, reducing our climate impact, whilst trying to maintain sustainable returns.


As an industry we are collectively tackling these challenges with net zero carbon fundamental to mitigating climate change. The imperative to act has never been clearer than set out in the stark warning from the IPCC and as was evidenced in the conversations surrounding COP26 in Glasgow last year. As we navigate the next decade, collaboration, innovation and knowledge sharing are key. We hope that our series of blogs and white paper encourage discourse within the industry, and initiates collaboration and collective solutions that support advancement of the sector towards net zero carbon.

For the full Mayfair Capital Net Zero carbon white paper, please access this here


Christi Vosloo - Head of ESG, UK Mayfair Capital Investment Management



[1] IPCC 2021:
[2] UKGBC:
[3] Ministry of Housing, Communities and Local Government 2020:
[4] Climate Change Committee 2019:
[5] A Full Repairing and Insuring (FRI) lease is where the tenant is responsible for the cost of all the repairs and upkeep of the property and also the cost of building insurance.
[6] Against a 2019 baseline


James Lloyd
+44 20 7291 6664

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Further information

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