University Estates and FE Colleges – the climate change challenge

In October, ahead of COP26, 140 universities backed a new set of commitments on climate action drawn up by Universities UK, including emissions reduction targets and a pledge to champion the UN Sustainable Development Goals Accord.

Universities have always been at the forefront of research into the causes and effects of climate change and they and other FE establishments have recognised that if they want to tackle the effects, they must lead by example in the way that they operate and develop their campuses with carbon usage linked explicitly to the estate and how it operates.

Environmentalism is no longer an ideology but part of everyday life and it is becoming clearer that the universities and FE Colleges (and indeed all other institutions) who put sustainability at the forefront of their strategy will perform better.

The development of a sustainable estate provides a unique opportunity for value creation and risk mitigation.

Investors choosing funds that look at ESG factors

Many investors are now choosing funds that look at ESG (environmental, social and governance) factors in their investment processes. A recent survey by the Investment Association found that 49% of total UK assets integrate ESG into the investment process, up from 37% in 2019.

The rise in popularity of sustainable funds is most likely due to the recognition that they now outperform more traditional investments and are often more resilient.

Studies have shown that institutions with good ESG management tend to be more profitable over the long term, and they are also better prepared for sudden crises than institutions that do not follow a sustainable governance approach.

Sustainable campuses

Many universities have already made changes to their estates to become more sustainable. For example, since moving to a completely new estate (the Waterside Campus), The University of Northampton has reduced its average emissions by nearly 36%, or 3,000 tonnes to a new baseline of 4,734 tonnes a year.

However, not every university or college can simply move to a new campus and start again, and most will have to work with what is already there by doing things like retrofitting buildings to reduce heat loss, switching to using energy efficient appliances, replacing gas heat sources with electric, establishing district heating networks and heat pump technology and improving and implementing sustainable transport networks within and to and from campuses.

Such fundamental changes to the infrastructure and operation of the estates will require funding beyond normal levels. It has been positive to see that the UK Infrastructure Bank (UKIB) made its first investment at the end of October towards the South Bank Quay development at Teesworks in Teesside.

The UKIB’s Policy Design is heavily focussed on net zero, with its initial mandate being to offer loans and investments focussed on clean energy, transport, digital, water and waste, as well as lending to universities (for revenue generating projects).

Governmental assistance will be key to the success of sustainable university and FE college estates

Less positive, however was the Chancellor’s Autumn Budget. Many commentators had hoped the Budget would include new details from the Treasury on how it planned to assist the UK’s environmental ambitions.

However, despite the Budget coming a week after the publication of the Government’s Net Zero Strategy and a week ahead of COP26, there was a distinct lack of commitment in relation to funding and stimulus for the net zero transition.

Details of any new governmental assistance are therefore still awaited and will undoubtedly be key to the success of many, if not most, sustainable university and FE college estates.

Victoria Rounding, Associate Solicitor – Real Estate, Irwin Mitchell