Responsible business and real estate: carbon counting

In the spring briefing earlier this year, we explored a few sustainability trends and topics affecting businesses that own or occupy real estate. In this article, we take a deeper dive into the importance of data in helping decarbonise and modernise buildings, and how tracking this data helps corporates commit to their responsible business goals. 

Why carbon counts

The built environment accounts for almost 40% of global carbon emissions, but up to 26% of a building's energy usage can be saved through better control and management. 

For owners and occupiers of real estate, this isn’t just an ESG issue – it’s a commercial imperative at a time of economic uncertainty. Occupiers often spend nearly a third of their service charge on utilities, so improved energy efficiency can result in significant savings in operating costs. For owners, it can mean enhanced asset value and marketability, and improved rental income and rental viability.  

Data: the foundation for change

But what is key to improving a building's environmental performance? It's data. Good quality, transparent and accurate data is the cornerstone for an owner and occupier to:

• ascertain a building’s environmental performance, establish its baseline emissions and benchmark its operation;
• set realistic, detailed strategies, pathways and targets; and
• measure and assess performance progress against their responsible business targets.

Smart tech, smarter buildings

The development and uptake of technological solutions is key to improving energy performance in buildings. At present, it is still common to harvest the data manually, which brings a higher risk of incorrect or incomplete results or errors in interpretation. For example, setting incorrect parameters in collecting and assessing data can lead to misleading results (eg meter readings not aligning with floor area). 

Many businesses still rely on paper based records which are time consuming and impractical to collate, consolidate and analyse. Owners and occupiers are likely to find that time spent in digitalising – centralising the data into a single, accessible digital platform – can yield long-term benefits.

The market's growing reliance on smart meters and automated systems is significantly improving data reliability. These technologies allow for real-time and granular monitoring and smart assessment. Nevertheless, these technological solutions can be expensive, their installation can interfere with a building’s operation (eg requiring a power down) and their ongoing maintenance can be costly. Businesses should also be cautious about protecting against cyber security and data protection issues where they are expanding their use of smart tech in their buildings.

What kind of data matters?

Beyond energy usage stats, data on occupier behaviours and amenity use can inform smarter asset management. In each instance, businesses should comply with any relevant data protection requirements when gathering this data.

Ideally, data should be:

• Granular: detailed enough to develop detailed pathways; and
• Frequent: collected regularly to track in real time and identify trends and changes.  

However, less detailed and less frequently collected data can still be used for setting broader targets and strategies and in assessing performance, so any investment in data capture can be beneficial. 

Interestingly, there is growing recognition that climate risk data is just as critical to consider as energy efficiency data. Climate risk (eg physical risks such as heat stress and flooding, and transition risks such as complying with increasingly stringent energy efficiency regulation) can potentially affect a building's value and marketability in the longer term. We will be monitoring developments in this area.

The rise of AI and digital twins 

AI is increasingly being used to automate property management and development projects, such as forecasting and assessing performance. AI excels at analysing and interpreting complex data sets, and can therefore improve data-driven decision-making about buildings. 

Technologies like digital twins – virtual replicas of physical buildings – offer the possibility of transforming buildings into autonomous assets, where data is used to manage and optimise spaces within the building, particularly for energy performance. 

Navigating the market

Data collectors and aggregators can be invaluable in assisting with accessing and interpreting data. With a proliferation of different providers and tech solutions in the market, selecting the appropriate partner and approach is tricky. 

The inter-operability of different systems is also key. Owners and occupiers with multiple sites need standardised, consistent data to make informed decisions. 

However, the lack of standardisation has long been a barrier to benchmarking. The environmental software organisation GRESB has recently called for a standardisation of language used around data and reporting for global streamlining. For businesses considering new premises or upgrading existing commercial spaces, a consistent approach to data reporting will make it easier to ensure they are delivering on their responsible business practices and objectives. 

Wider knowledge and more inter-operability in market solutions will enable property owners and occupiers to choose the right option for their buildings. 

The missing link

Collaboration and data sharing between owner and occupier are essential to improve energy performance in buildings. Where buildings are leased, data access can be a challenge on both sides.

This conundrum was explored in the British Property Federation's research, Closing the Data Deficit, which we co-sponsored. The report identifies cultural, organisational and behavioural factors that can act as a barrier to data collection and analysis, including resourcing and human error, lack of trust between the parties, reputational concerns and a lack of environmental awareness. The report acknowledges the importance of data sharing provisions in leases, and recommends "green leases" and mandatory data sharing between owners and occupiers combined with setting joint low carbon strategies.

Bottom line?

For businesses that own or occupy property, whether they are driven by commercial pragmatism, regulatory compliance and sustainability reporting obligations or ESG objectives, data is the key to improve operational performance.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, October 2025