Energy Performance Certificates (EPCs) are one measure of the modelled energy efficiency of properties. British Land has a strong track record of improving actual operational efficiency and has set challenging targets to drive further progress. 

Our ambitious 2030 targets include reducing operational carbon intensity by 75% and improving whole building operational energy intensity by 25% versus 2019. We have already reduced operational carbon intensity by 39% across our portfolio and improved whole building energy intensity by 18% versus 2019.

Our well-established efficiency programme not only advances progress towards our net zero carbon goal, but also futureproofs our portfolio, better positioning it for both the growing demand for more sustainable space and increasingly progressive climate regulations.

The Minimum Energy Efficiency Standards (MEES) have made it illegal to lease or renew leases for properties with EPC ratings below E since 2018 with few exceptions. In April 2023, requirements expanded to include all commercial leased properties, not just new leases and renewals. Additional changes are also proposed to strengthen MEES on a phased basis to 2030, with requirements projected to rise to EPC C or above from 2027 and to EPC B or above from 2030.

We support the strengthening of MEES requirements and, together with the industry, provided detailed feedback on proposed changes. We have significant expertise and experience in upgrading energy performance, which positions us well as the market evolves.

Progress on EPC updates¹

Across our managed portfolio, the majority of our assets have a net zero plan and c.64% of our portfolio is now rated EPC A or B. This is up from 58% at FY24.

¹Portfolio data is based on estimated rental value (ERV). Data includes Retail assets located in Scotland which are not subject to MEES regulation.

* EPC is measured by ERV.

Upgrading energy performance

To meet our 2030 objectives and comply with expected MEES legislation, we have a plan in place to improve the EPC ratings of our portfolio to A or B by 2030.
We estimate the total cost to improve the standing portfolio to EPC A or B to be around £100m, of which two thirds will be recovered through the service charge. To date, we have spent a total of £18m on these initiatives, of which 63% has been recovered via the service charge.

While we are making good progress on EPCs, we are primarily focused on improving energy efficiency and reducing carbon intensity. This is how we will deliver on our 2030 targets to improve whole building energy efficiency by 25% and reduce operational carbon intensity by 75%, both against a 2019 baseline.
To finance any outstanding costs relating to these interventions, we established our Transition Vehicle in 2020. This is funded by our internal carbon levy, which we increased in 2024 from £60 per tonne to £90 per tonne of embodied carbon in developments, supplemented by an annual internal float of £5m.
Interventions identified through net zero carbon audits of individual buildings include retrofitting air or water source heating and cooling pumps, installing the latest LED lighting and introducing CO2 controls. These interventions will accelerate progress towards net zero and, at the same time, drive EPC improvements. We are now working with customers to plan these interventions, producing detailed designs and incorporating them into business plans, to move assets out of risk before regulations come into effect.

Interventions will be scheduled to coincide with lease events and planned plant replacement cycles where possible, to minimise disruption to occupiers and avoid unnecessary costs and embodied emissions resulting from replacing equipment before its end of life.

Preparing for MEES

Alongside net zero carbon audits, other workstreams to prepare for MEES include:
•    All new developments working towards EPC A, as set out in our Sustainability Brief.
•    Revising lease clauses to reflect the new MEES trajectory to ensure that customer fitouts do not negatively impact EPC ratings.
•    Resurveying older EPCs, where efficiency improvements have been implemented, to move out of risk now.
•    Applying for exemptions where it is not commercially or physically viable to improve EPCs to MEES requirements.
We will maintain our focus on improving actual energy efficiency, which is not always reflected in EPC modelling. In addition, we will continue to be mindful of whole life carbon, recognising that it is not always environmentally positive to replace a major plant, as the embodied carbon footprint can be greater than the operational efficiency savings.