How Can the Care Home Market Meet ESG Requirements?
Posted by Colliers on 30th October 2023 -
It’s the question on the lips of many operators and potential investors, how can care homes become more energy efficient, achieve ESG targets and remain viable businesses?
Colliers recently hosted a Demystifying ESG conference with healthcare buying consortium Spectrum, alongside legal firm Bevan Brittan and Barclays bank, where panellists shared a range of tips to help care home owners and operators get started on their net zero carbon journeys. Sam Addison, Head of Project Management EMEA and Aaron Sheaf, Technical Director in Colliers Energy & Sustainability team, shared their experience working with clients in the sector. Below are some of the key takeaways from the event.
Start monitoring energy consumption and waste
One of the easiest things for operators and owners to start doing is monitoring their energy consumption in care homes, and the waste that’s produced. Once there is a clear picture of energy consumption it then becomes much easier to devise a plan on how to reduce usage, or prepare for capital expenditure which will improve energy efficiency such as replacing windows, heating systems, increasing insulation or changing energy providers to a renewable source.
Crucially it means focusing on the sustainable management of properties, as well as understanding the environmental impacts of the supply chain, and reducing consumption of resources.
As Sam Addison highlighted: “Writing down a plan and forming policies around it, are the first steps towards creating a net zero plan – it doesn’t have to be that complicated to start the journey, but it helps to build trust in your brand and your business, and reduces risk, so why wouldn’t you do it?”
Create green champions
The conference highlighted the need for engaging staff in a way which is not too onerous on their already demanding jobs; instead incorporating sustainability into their roles. As well as staff training, and supporting the development of sustainable transport plans for patients and staff, it was also suggested that homes could be incentivised to participate in environmental initiatives as well as creating “green champions” to enable faster implementation of change.
The panellists also highlighted how operators have a duty of care for their staff as well as their clients, and need to ensure that they’re providing wellbeing initiatives for their people to support them, which will also result in less turnover and stable management of homes.
Prepare for government regulations on energy efficiency
Aaron Sheaf observed: “Investment in net zero carbon is ahead of legislation at the moment – the Government is not clear about what assessment requirements they want. For EPC ratings it’s been proposed that buildings should be EPC rated B by 2030, but there’s no firm commitment currently. However decarbonisation is the key going forward.”
The panellists observed that the narrative around carbon emissions is likely to shift back to focusing on energy consumption and reducing our reliance on energy demand, which will ultimately lower bills for healthcare operators. Changing lighting to LEDs has already been done, the next big leap is likely to be the replacement of oil and gas boilers and whether air source heat pumps are the solution, or if other technology is needed, especially in older building stock.
Lenders are focused on longevity
The discussion also looked at the focus of bank lenders as well as investors. Banks traditionally are focused on the lifespan of a product they’re lending against, and within healthcare, the operation of a business is intrinsically linked. Investment in ESG has proven itself to secure the longevity of an asset and it has now become an expectation that regulations around energy efficiency are met by borrowers. Likewise, investors have got on board with this culture shift, and soon this will start to filter through to the smaller end of the market.
Green loans and bonds are particularly onerous in terms of data collection though, so the sooner providers begin to monitor their waste and energy consumption, the easier accessing any rewards for green loans can be achieved.
Many countries, including the UK, have set targets for reducing carbon emissions from 2030, so now is the opportune time to start measuring energy consumption, put processes in place, and prepare for any significant expenditure to support reducing carbon emissions from buildings – investments now will reap benefits not only for the environment sooner, but also benefits to long-term business viability.
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