credit: SonaeSierra
credit: SonaeSierra

EVOLVING IN A CHANGING WORLD

Sonae Sierra accelerates the future-proofing of its real estate portfolio. Christine Hager, Sonae Sierra Director, responsible for property management in Germany, describes what being future proof means in today’s business world. There is one thing or particular note: Knowing how energy is being consumed is key to understanding and identifying where the most effective changes should be made.

by Christine Hager

With more than three decades of experience, Sonae Sierra maintains its resilience and focus on developing the cities of tomorrow by designing solutions that assure future human and business needs. With fast-paced changes to our lifestyle, it is fundamental to adopt current trends and create forward-looking concepts, while ensuring that properties remain attractive and valuable over time. Our team adds value to partners, investors, customers, and other stakeholders by providing unique know-how through the delivery of forward-looking concepts that cover the entire real estate lifecycle of outstanding projects. This makes us successful in multiple ways, for example, by reducing and avoiding costs, minimising business and environmental risks, and by making real estate more resilient and adaptable to new trends.

What does it mean to make real estate ‘fit for the future’?

The long-term success of real estate companies requires vision and the ability to adapt and evolve in a constantly changing world. Now, more than ever, applying a sustainability strategy throughout the lifecycle of assets, that is truly integrated into business activities, has gone from optional to essential.  Therefore, sustainable corporate management is the only way to be economically successful in the long term, while addressing global social challenges. Real estate assets that do not meet sustainability standards may become obsolete in terms of investments, or carry a low prospect of long-term profitability.

We, at Sonae Sierra recognised more than 20 years ago that sustainability, far from being merely a mainstream trend, is a necessary process. We embedded sustainability in our DNA, long before other companies in the sector and far before it became a requirement, making us industry pioneers. By leveraging ESG as a differentiating factor, we continue to deliver solutions with shared value for companies, the environment and society.

We have also set ourselves long-term objectives related to future-proofing the lived environment and around building a safe, healthy and engaged workforce, both being fundamental areas of our sustainability strategy.

Future-proofing the lived environment is a strategic priority serving the human and business needs of tomorrow’s cities, by future-proofing the built environment and operations through responsible investment criteria and sustainability solutions. For this we set four key vectors to help us: (i) Developing and refurbishing sustainable buildings, which includes measures such as increasing energy efficiency, levels of water consumption and ensuring that all wastewater discharges comply with Sonae Sierra’s standards of wastewater; (ii) Resilience to climate change, which includes measures such as ensuring energy and safe water supply, by reducing dependence on public services and implementing recycling and re-use of water and renewable energies; (iii) Circular economy, which encompasses measures such as increasing the amount of recycled, recovered, or reused waste; (iv) Impact on local communities, which includes the best sustainability-related community initiatives. As a result, not only have we consistently improved our environmental performance, but we have avoided over €14.5 million in costs in 2021 from eco-efficiency improvements in energy, water and waste introduced since 2002.

Regarding our safe, healthy and engaged workforce, we believe that when we put our people first, our employees are able to maximise their potential and adopt the best of health and wellbeing practices. That is the only way we can deliver superior services to our clients. With this strategic priority we ensure a diverse, inclusive, and engaged workforce by developing employees’ skills and productivity within a safe, healthy, and empowering culture. Our goals include the following actions: (i) Human capital management, making sure 50% of leadership positions are held by women, a 94% talent retention rate, and most employees recommending the company as a good employer; (ii) Healthy and safe employees, comprising measures to improve the health and well-being of our workforce to reduce the rate and severity of accidents at work and occupational diseases, with a view to zero accidents. Additionally, as of today, we are targeting further success with the formation of a training platform, Sierra Academy, that increases internal networking, knowledge sharing and fostering talent, and with the development of “Project Be Well”, a project that fosters several initiatives to improve employee wellbeing and promote resilience.

Recent urgencies are best met by a long track record

Energy use constitutes a major environmental and economic impact for real estate owners, investors, and managers – especially today. But for Sierra, this is not news. Since 2002, we have reduced our energy consumption by 66% until 2021-year end, and we plan to still go further. To date, we have achieved this by improving the carbon footprint of real estate through our energy program – Bright®.

Knowing how energy is being consumed is key to understanding and identifying where the most effective changes should be made. For that reason, in recent years, Sierra began looking for a tool that could explain the variation between an asset’s optimal energy consumption, and its actual consumption. Having found no sufficient solution on the market, we created our own tool. Under the name Bright®, this efficiency program allows us to analyse the energy consumption of real estate assets against a theoretical simulation, identifying technical improvements and enhancing management practices. Therefore, by implementing the Bright® program in our own properties or in those of our clients and partners, we can gain valuable data that can be used to inform and shape decision making, for greater asset efficiency. With Bright®, we have managed to improve energy efficiency and reduce costs by identifying over 700 improvement opportunities since 2012, which generate potential savings of more than €7 million per year. In 2021, Sierra avoided €12.3 million in energy costs. As a result, our Bright® Programme was recognised with the Silver Stevie® Award 2018 (“Energy Industry Innovation of the Year”) in the 15th Annual International Business Awards® and the EU Sustainable Energy Awards in 2017.

Measurable success in the business

Our numerous awards and certifications confirm our responsibility towards the environment, and recognise our pioneering commitment to sustainability. In particular, Sonae Sierra has been recognised by GRESB Real Estate Assessment with the Green Star for 13 consecutive years, achieving the highest possible rating of 5 Stars for both Sierra Prime and Iberia Coop funds in 2021. Sierra Prime hold the second place in the Southern Europe shopping center core category, with Iberia Coop coming third in the same core category.

This attests to our reputation as a leader in the management of sustainable assets and vehicles. Thanks to these impressive results, we are also succeeding in encouraging our business partners and customers to implement sustainable standards across their portfolios.

Our investment in the future is already being made today

Another step in Sierra’s sustainability strategy has placed us at the forefront of the real estate sector, in issuing sustainability-linked bonds, becoming the first in Portugal to do so. Sierra refinanced part of its corporate debt through the issuance of bonds linked to its sustainability performance, namely greenhouse gas emissions and the recycling rates of shopping centers managed and owned by the company, continuing to link the corporate debt to sustainability criteria. This was a natural path given our sustainability performance and very positive track result of long-term measurable results. As of 2021, we reduced our water consumption by 41% since 2003, lowered our greenhouse gas emissions by 84% since 2005, reduced our electricity consumption by 66% since 2002, and improved our recycling rate by 239% since 2002.

All these actions and results work hand-in-hand to consolidate our view of sustainability as an integrated part of our activities as a whole, leveraging ESG as a differentiating factor. We offer over 30 years of real estate expertise, which translates with equal results into our long-term approach to running a sustainable business. For this reason, we are committed to further improve our sustainability performance and play a key role in the necessary system change.

All this work is a way of reinforcing our alignment with a circular economy model, spearheading international best practices, as well as proving our commitment to carbon neutrality by 2040, which means bringing forward the European Commission’s target by 10 years. To achieve this, we have defined a set of measures that include approaches to reduce energy consumption in operating assets as well as optimising building materials by using less consumption-heavy equipment, to further improve our operational performance.

In all this, we continue to future-proof our portfolio, with technological and sustainable initiatives, so that our real estate assets as well as our clients’ will continue to be relevant for all stakeholders. We also aim to grow the portfolio we manage for third parties across different property types and offer property development and management services to investors, to shape the urban spaces of the future. In fact, since the beginning of the year, Sierra has been expanding its international portfolio with the growth of Property Management services being well reflected in diverse geographies across Europe and Morocco, signing 23 new contracts and attracting new clients in the first 9 months of 2022 alone.

We know that this is not enough and that we must not rest on our laurels. To secure our common future, it is essential that we set more ambitious goals for maintaining sustainable and resilient real estate in the industry. But we are not doing it alone. To pursue these goals consistently, we need the help of our clients, partners, tenants, and service providers. It is therefore clear that we will continue to walk the talk with the most pioneering sustainable operational practices, not just today, but consistently in the future.

Christine Hager
Christine Hager

Christine Hager, Sonae Sierra Director, is responsible for property management in Germany

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