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KingSett a GRESB global leader, still aims higher

Toronto-based investor's Canadian Real Estate Income Fund (CREIF) tops ESG Ratings

KingSett Capital aims for decarbonizing its building portfolio with short-term goals it says will help achieve "real results now," according to Theresa Warnaar, its senior vice president of retail and asset resilience. (Courtesy KingSett Capital)

Already recognized as a worldwide ESG leader by the Global Real Estate Sustainability Benchmark (GRESB), KingSett Capital plans to use that stature as a springboard for greater sustainability successes.

The Toronto-based private equity real estate investment firm was named a Global Sector Leader in the Diversified – Office/Residential sector, a Regional Sector Leader for the Diversified – Office/Residential sector, and a Regional Sector Leader – Non-listed for the Diversified - Office/Residential sector for its management of the Canadian Real Estate Income Fund (CREIF).

KingSett has $17 billion of assets under management in a $20 billion investment portfolio, and has two other offices in Vancouver and Montreal.

Theresa Warnaar, KingSett’s senior vice president of retail and asset resilience, called GRESB a “guiding light” since KingSett first submitted its results to the organization in 2015. She told SustainableBiz KingSett still aims higher in its own ESG commitments.

“Without groups like GRESB putting together these benchmarking programs, we really wouldn’t have a way forward. This challenges us all in the industry to be looking at how we’re going as we look forward and deal with climate change,” she said.

KingSett’s sustainability strategy

Unlike most companies and institutions that have set net-zero targets for 2050, KingSett is opting for shorter-term goals.

“We would rather set targets to fail high rather than succeed low, but our targets are really bottom-up targets to set carbon reduction goals. We’re looking for real results now, not setting these long-off targets that don’t really have a road map,” Warnaar said.

It is setting new greenhouse gas (GHG) emissions targets for its next three-year cycle, and is looking to align them with the Science-Based Targets initiative (SBTi). KingSett's three-phase strategy is documented in its 2021 ESG report.

Phase 1 will seek to decarbonize 40 per cent of the CREIF portfolio by 2027 – 5.8 million square feet of space or 72 per cent of the office portion of CREIF's holdings. KingSett aims to achieve this by eliminating 2.3 million cubic metres of natural gas and 30 million pounds of steam per year through deep retrofits and electrification.

In its ESG report, KingSett says this is equal to avoiding 7,700 tonnes of carbon dioxide emissions, or taking 1,700 cars off the road every year.

KingSett is hoping to eliminate over 70 per cent of its GHG emissions per asset on average.

All of its development projects will target a zero-carbon balance. In markets where decarbonization is not yet achievable, KingSett seeks to reduce emissions from electricity consumption using renewable energy credits.

Overall, the company has made a 32 per cent decrease in carbon emissions intensity since 2016. In 2021, the firm's emissions totalled 41,450 tonnes of carbon dioxide equivalent, KingSett reports.

KingSett says its investment in decarbonization is expected to produce long-term savings through both operational efficiencies and a reduction in exposure to carbon taxes.

Certifying its buildings

Warnaar said the company has a roadmap to receive zero-carbon certifications.

KingSett-owned 40 King St. West at Scotia Plaza in Toronto already has received such a certificate from the Canada Green Building Council (CaGBC). It also submitted a zero-carbon certification for consideration by the CaGBC for its 100 Yonge property and is working on certifying Arthur Erickson Place in Vancouver.

In addition to its office holdings, KingSett also has decarbonization strategies for other building categories.

“We really want to understand how we can decarbonize a multifamily building,” Warnaar said. There is also consideration for the challenges surrounding retail and industrial properties.

“The tenants are often responsible for their own use of energy and we have no control over that and we actually have no line of sight to it,” she explained. “So we can’t see what their energy consumption is. So we need to find a way as an industry to work together. Because if we don’t understand what the energy consumption is by the tenants, it makes it very difficult to come up with plans to improve that.”

Toward the future

KingSett also has its eyes set on better understanding climate risk. Warnaar said KingSett will perform resilience assessments in some of its buildings to understand these risks, including a pilot project in the first half of 2023.

“I think it’s important to say that the performance of our assets is tied to how resilient they are through various challenges in front of us,” she said. “Those challenges can be physical climate events, they can be emissions regulations, increasing operating costs that we’re all facing with evolving tenants needs, and how the performance of our buildings can also improve our tenants' well-being.”

As for its remaining two decarbonization phases, Phase 2 will expand on decarbonization strategies for its remaining office properties, developing and executing plans to decarbonize multiresidential properties, and pursuing deep retrofit and energy efficiency opportunities to reduce consumption.

Phase 3 will seek alternative energy solutions in Alberta and Saskatchewan and analyze direct investment opportunities in renewable energy projects.

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