First Capital REIT, one of Canada’s largest real estate companies, has verified its greenhouse gas emissions reduction goal via the Science Based Targets initiative (SBTi) and led an inaugural climate forum for tenant and property owner engagement.
Toronto-based First Capital is an operator, owner and developer operating in 148 Canadian neighbourhoods totalling $10.2 billion in assets. Its portfolio is comprised largely of grocery retail and some mixed-used space.
Melissa Jacobs, senior director of ESG at First Capital, said the company pursued SBTi verification because, “We recognize the huge issue of climate change that is affecting our company, our country and the planet. To maintain our leadership and continue to lead in the ESG or sustainability space, we wanted to align our emissions reduction target with a third-party, best-in-class, and the Science Based Targets initiative is really seen as that.”
The SBTi is an organization comprised of the CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature. It analyzes and advises corporate greenhouse gas targets so they align with the Paris Agreement’s purpose of limiting global warming to 1.5C.
First Capital’s emissions
First Capital’s primary target is a 46 per cent reduction in Scope 1 and 2 emissions by 2030. For Scope 3 emissions, First Capital is aiming for a 28 per cent reduction by 2030. The goals culminate in a net-zero target by 2050.
A 2021 ESG report states First Capital emitted 9,170 tonnes of carbon dioxide equivalent (tCO2e) of Scope 1 emissions and 11,510 tCO2e of Scope 2 emissions.
From 2017 to 2021, First Capital reduced its greenhouse gas emissions by 3,450 tCO2e.
She also said at this point First Capital does not have “a good handle” on Scope 3 emissions, and “Our Scope 1 and 2 emissions are actually small compared to our Scope 3 emissions from tenant energy use.”
First Capital estimated its Scope 3 emissions from provincial building data and other building data that was applied across its portfolio.
Attaining its climate goals
Jacobs charted First Capital’s strategy to decarbonize its portfolio. First, the company embarked on high-level modelling of the portfolio to recognize the major steps to take.
First Capital will focus on operational efficiency because it "is going to be extremely important especially as we start to look at electrification and the impact that is going to have on the grid. That kind of energy reduction focus still remains top of mind for us,” she said.
Operational efficiency will come from engaging with property management on the basics of running buildings efficiently, like rooftop HVAC. The company is considering using AI to ensure rooftop units are operating efficiently and reducing energy use.
First Capital will also support retrofits, transitioning its technology to run from fossil fuels to electricity and enhancing its construction and low carbon development standards for new properties under development.
Jacobs suggested possibly switching to electric heat pumps from fossil fuel-based heating in provinces where the grid can support it, and is clean, as one possible technology transition. Its construction standards will look at embodied carbon, which will require more tenant engagement to address Scope 3 emissions.
To address its Scope 1 and 2 emissions, Jacobs said First Capital will look to procure renewable energy, particularly for its Alberta portfolio which creates most of its portfolio carbon footprint. It will also explore power purchase agreements.
Jacobs noted the company’s electric vehicle charging infrastructure on its properties, which numbers at over 250, and said it plans to install roughly 200 more in 2023.
The Collaboration for Climate Action forum
To offer further leadership in the Canadian real estate space, First Capital also organized the inaugural ‘Collaboration for Climate Action.’ It assembled retailers and retail property owners across Canada to discuss building decarbonization.
Names at the forum ranged from fellow owners Crombie REIT and CT REIT; retailers Canadian Tire, Dollarama, Loblaws, Longo's and Sobey's; and financial institutions Bank of Montreal, Royal Bank of Canada, Scotiabank and TD Canada Trust.
“The basis of the forum was to begin to have these more collaborative discussions and start to build these partnerships and change the conversation on the whole landlord-tenant conversation to one where it’s like, ‘Hey, we have these individual and shared goals when it comes to climate, so they do tend to be some barriers, so how do we overcome these, how do we start to work together?’" Jacobs explained.
Collaborations could range from data sharing, to understand building performance, to cost-sharing for a low-carbon retrofit so the costs and benefits of carbon emissions are being shared equitably by the landlord and tenant.
Recognizing Scope 3 emissions is a key part, she said, as well as building partnerships, fostering collaboration, pooling their knowledge and sharing technology to decarbonize.
The Collaboration for Climate Action will release a summary soon and will seek to maintain a formal network of landlords and tenants with working groups where solutions to typical barriers can be found.