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Kay Killmann Head of Europe at Green Business Certification Inc. Credit: TH Köln University

Surfing the “Renovation Wave”

“With trillions of euros to spend, the European Green Deal and Covid-19 recovery plan want to retrofit the continent’s building stock. Retail brands should get ready.”

By Kay Killmann

Europe’s “renovation wave” is coming. The European Commission’s Covid-19 recovery plan, ratified in July, and its guiding document, the European Green Deal tabled in January, are set to elevate the green economy and green building industry to historic levels. Details are still being debated, but, without a doubt, the force of their arrival will remake Europe – literally.

The buildings in Europe account for 40% of carbon dioxide emissions and 40% of energy demand, proportions unlike those on any other continent. Although the will to renovate has grown steadily with awareness of global heating, the effort to fund the wave has been middling. Now, at the crossroads of a pandemic and climate action, there is a real push for a tipping point, and a boon for retailers looking to enhance health and sustainability up and down their value chains.

The most sustainable building is, of course, the existing building – that is, if it performs well. Most do not. The Building Performance Institute Europe crunched the data and found less than 3% of the building stock in the EU met A-label qualifications. To reframe: 97% of all buildings will require upgrades.

Of course, the early adopters have been hard at work. Brands like Starbucks, Zara, and Nike have been integrating green building certifications into Europe’s retail value chains for about a decade. Many are turning to the LEED green building program developed more than 20 years ago by the U.S. Green Building Council (USGBC). LEED has become a global standard for defining what it means to design, construct, and operate a green building, including retail spaces. There are over 130 LEED certifications between these three companies alone. Prada and others are reaching further still, pioneering use of property technology platforms, or proptech, like Arc to monitor energy use, water consumption, and waste across a portfolio of real estate assets. Understanding the sustainability of existing assets and strategic opportunities for retrofitting is the most important way a brand can prepare for the coming flood of funding.

For real estate-heavy retail brands, the wins of the wave are obvious: Access to ample and affordable financing unlocks the operating efficiencies that come with updates to warehouses, manufacturing facilities, offices, and retail spaces. Less obvious benefits include improvements to consumer and investor relations. Consumers seek brands that deliver products ethically and sustainably, while investors seek green assets for their higher rental and resale value. Participating in a third-party certification program with heightened transparency requirements enhances connections on both sides.

Details of the “renovation wave” framework and rollout are expected in the fall. Priority sites – hospitals, schools, affordable housing, etc. – may be offered preference in the application queue, but significant trickledown to the private sector is expected. As the world’s largest government scales up sustainability in a quest to reach 2050 decarbonization targets and a climate-neutral, energy- and resource-efficient future, retail brands should be ready to make a splash.