Grosvenor’s net-zero pathway for its North American real estate portfolio prioritizes electrification in Canada and the long-term greening of its supply chain, according to its sustainability head Tanja Milosevic.

The company's newly published report, Our path to Net Zero in North America outlines its 2030 goal to cut carbon emissions by 42 per cent from a 2021 baseline, and to reach net-zero by 2050 by slashing Scope 1, 2 and 3 emissions 90 per cent.

The London, U.K.-headquartered property investor, manager and developer has an investment portfolio of 23 properties in Canada totalling over 1.5 million square feet, with a development pipeline of approximately 4.5 million square feet. The properties are concentrated largely in the Vancouver area, spanning retail, industrial, mixed-use, residential and office buildings.

Milosevic, Grosvenor's associate vice-president of sustainability in North America, said the climate targets embody a company that takes a long-term approach. The company has a history stretching back almost 350 years, and has operated in North America for over 70 years.

“It’s part of our ethos to make a positive impact, or at least reduce negative impact in all the communities in which we operate. Environmental components are a big part of that as a social benefit.”

Walking its pathway

The assembly of the net-zero pathway started from Grosvenor’s commitment to the World Green Building Council's Net Zero Carbon Buildings Commitment in 2019, according to Milosevic. Grosvenor built its pathway based on the WorldGBC pledge, publishing its first net-zero pathway in 2022.

The 2030 target means reaching net-zero for Scope 1 and 2 emissions and slashing its embodied carbon emissions by 40 per cent, Milosevic said. From emitting almost 70,000 tonnes of carbon dioxide equivalent in 2021, Grosvenor hopes to shrink its carbon footprint to 40,000 tonnes of carbon dioxide equivalent by 2030.

Energy audits were performed on most of its investment portfolio in 2023, supporting efforts to reach Grosvenor's 2030 targets.

“Our asset managers are now pulling together detailed net-zero asset plans to take us to 2030 and figure out what are the best areas where we can make meaningful reductions while still working as a business and making returns,” Milosevic said.

Those include:

• policy and guidance updates for sustainable development standards across materials (such as mass timber) and technology (building management systems for energy use);
• utilizing energy-efficient lighting, windows and HVAC systems;
• writing a tenant guide for sustainability;
• formalizing its supply chain principles; and
• incorporating climate resiliency requirements and net-zero planning into Grosvenor’s acquisition decisions.

Also critical is its search for on- and off-site renewable energy generation, such as installing solar arrays in its California properties or participating in utility green energy programs. But as B.C. produces much of its energy from renewable energy already, building electrification is the priority. Rather than including natural gas equipment in its properties, Grosvenor is opting for heat pumps and electric appliances.

An example of its strategy at work is the Brentwood Block project in Burnaby, B.C. that targets electrification for heating, cooling and appliances in its suites, complemented with 100 per cent electric vehicle capacity.

At Mayfair West in Vancouver, the planned 1.5-million-square-foot mixed-use community is aiming for LEED Gold certification, 100 per cent carbon-free homes and enhancing biodiversity within and beyond the site.

Looking into the ‘crystal ball’ of 2050

Milosevic said she was unable to detail Grosvenor’s strategy for its 2050 net-zero target in high fidelity, citing the extended time span and the regulations, building policies and technology that could change between now and mid-century.

But despite likening it to “pulling out a crystal ball,” she said Grosvenor will aim to keep up with technology, building regulations and incentives.

To date, Grosvenor is on track to meet its 2030 climate targets, Milosevic said, specifying decreases in energy usage and carbon intensity despite increased post-pandemic activity. The company plans to set specific energy use and carbon intensity targets for its projects.

But its top challenge, she noted, is tackling its greatest sources of emissions: the supply chain and embodied carbon.

“We’re starting to work with our suppliers. We’re working through what that means; what that looks like, what’s the best way to work with our suppliers, maintaining good relationships but really encouraging our suppliers, if they don’t have a target and aren’t working towards them, how can we get them to do that?”

Another obstacle Grosvenor is encountering is a challenging economic climate battered by high interest rates.

“It makes it a little bit tougher to make some of these sustainability efforts. There is sometimes an investment where the payback period isn’t as clear,” Milosevic said.

This emphasizes that being able to make a clear business case for sustainability measures is critical.

And sustainability does lead to returns, sometimes rapidly, she continued. Smart building technology combined with incentives and energy savings can pay back some investments in as little as six months to a year, Milosevic said. Regulations will also force companies to take heed, from carbon pricing to municipalities mandating stringent energy benchmarking.

“It’s going to get very expensive to not be moving toward net-zero.”