Reduce

The reduce part of our approach refers to actions that can be taken to decrease GHG emissions where avoidance is not possible. For example, it might mean enhancing fuel efficiency in vehicles, or improving energy use in buildings. This aspect is crucial because, while not eliminating emissions entirely, it can buy time to enable the development of more sustainable solutions.

Brown to green

We employ a brown-to-green strategy: this means we aim to upgrade buildings to make them more energy-efficient. This includes the purchase of brown buildings and deep refurbishment, as well as purchasing and developing greener assets where we seek to outperform local sustainable design standards.

Curtain House

Specifications
EUI (kWh/m2)	127
EPC	A
Certification	BREEAM Excellent

The London Borough of Hackney has adopted its Climate Action Plan, prioritising retrofit to achieve a 45% reduction in emissions by 2030 and net zero by 2040. The fund’s investment aims to transform Curtain House, a Victorian warehouse, into a green building through deep retrofit, preserving historic elements while enhancing internal layouts and energy systems.

From the inception stage, the team engaged with external suppliers to optimise embodied and operational carbon. They collaborated with design teams to challenge the energy strategy, aiming to upgrade the Energy Performance Certificate rating from E to A. Key strategies include replacing the gas heating system with electric heat pumps, upgrading wall insulation and glazing, installing solar PV panels on the roof, and implementing rainwater harvesting in the basement.

During construction, we worked closely with partners to optimise materials and align with circular economy goals in our sustainable design brief. The project targets saving approximately 3,000 tCO2 from material retention, achieving high material efficiency with 215 kgCO2/m² upfront embodied carbon (LETI A+ rating), and an Energy Use Intensity of 127 kWh/m². The building will also feature 85 PV panels and aims for zero waste to landfill from demolition, with 99% of materials reused or recycled.

The aspiration is to create a best-in-class office space in Shoreditch that delivers attractive financial returns driven by high ESG credentials, surpassing those of a typical UK office complex. This green and efficient office building aims to set a benchmark in sustainability and energy performance, contributing significantly to Hackney’s climate goals.

Foz

Specifications
EUI (kWh/m2)	199
EPC	A++
Certification	BREEAM Excellent

The increase in corporate demand for offices aligning with low-carbon objectives and meeting employees’ sustainability expectations has created a shift towards prioritising ESG goals and well-being within office spaces in Amsterdam. In 2021, 70 percent of office real estate demand in Amsterdam was for buildings with energy label of A or better⁴. Across the Netherlands, studies have shown a rental premium of 10.3% on average can be achieved by office buildings with green certifications⁵.

The FOZ asset is comprised of grade A multi-let office space in the heart of Amsterdam. Ambitious sustainable credentials include a BREEAM Excellent certification and an EPC A rating. Energy on site is provided by a connection to the local district heat network, utilising thermal energy storage technology.

10.3%

of rental premium on average can be achieved by office buildings with green certifications²

This eliminates the need for fossil fuel usage on site and assists in moving some of the energy demand away from peak times, reducing the pressure on the local heat network.

Alongside a substantial metering and control strategy, FOZ is embarking upon an ambitious smart building optimisation programme supported by the Healthy Workers platform. This programme will assess and optimise the usage profile of energy and water onsite to drive sustainable performance in operation and enable the building to be operated at its full potential.

4 https//www.statista.com/statistics/1327499/energy-label-a-office-demand-netherlands-by-market/
5 https://www.emerald.com/insight/content/doi/10.1108/JERER-04-2023-0010/full/html#sec002

Assembly Park, Telford and Merchants Yard, Ipswich

Specifications
EUI (kWh/m2)	70
EPC	A
Certification	Home Quality Mark Four Star

The UK government has recently committed to a brownfield-first approach to housebuilding, prioritising funding to support the delivery of thousands of new homes and unlock abandoned and neglected sites. To accelerate housing development and support the national target of 1.5 million homes in five years, the fund has partnered with Packaged Living for the development of Assembly Park, a Build-to-Rent (BtR) scheme in Telford, which will include 195 single-family homes, with 143 planned for completion by Q4 2024. Another scheme, Merchants Yard in Ipswich, will see the construction of 163 single-family homes, with 40 planned for completion in 2024.

We engaged with Packaged Living to ensure high environmental credentials for these projects. All homes will be low carbon and have low running costs, providing heating and hot water through air source heat pumps, an alternative to gas boilers and fossil fuels.

Each home will have an EPC B rating and be Home Quality Mark certified with a minimum 3-Star rating. Energy efficiency will be enhanced through natural ventilation, optimised glazing, and each home will have an EV charging point and be connected to public infrastructure via pedestrian and cycle links.

Additionally, Aviva Investors has partnered with Utopi to equip all homes with smart sensors for energy monitoring and automation, promoting energy efficiency and reducing energy bills. This partnership aims to offer flexible and affordable rental solutions while avoiding future fossil fuel emissions, supporting Aviva Investors’ net zero 2040 targets. By securing EPC B ratings through efficient technologies, these homes will reduce carbon emissions and lower costs for occupants, creating future-proofed assets.

Build-to-Rent in Spain

Specifications
EUI (kWh/m2)	55.7
EPC	AA
Certification	BREEAM Excellent

In response to ongoing housing challenges, sustainable rental housing offers a solution in Spain’s underserved market. Spain faces a pressing need for over 700,000 new rental homes over the next decade to meet demand. Addressing this challenge requires effort from both the Spanish government and the private sector to prioritise affordable housing construction to solve the problem of housing accessibility across the country.

The Spanish build-to-rent (BTR) portfolio is a joint venture between the Climate Transition Fund and Aviva Investor’s Perpetual Capital Fund. The partnership with Layetana Living, a Spanish property developer encapsulates 88,470 square metres of prime residential property and provides 390 rental units across Barcelona, Madrid and most recently Palma.

Through engagement with our sustainability team, the portfolio has shown a marked increase in the quality of ESG outcomes, driving the performance of the assets and increasing the quality of rental product available in the market. By adhering to the Aviva Investors bespoke Spanish sustainable design brief, all sites use alternatives to fossil fuels, have an EPC rating of AA and are on track to achieve 10-20% reduction when compared to local energy regulations. Active engagement with our sustainability team has lifted the BREEAM sustainability rating from ‘Very Good’ to ‘Excellent’, reflecting the active management approach towards ESG in the portfolio. All residential units will play host to best-in-class energy metering and monitoring systems, enabling tenants to understand, manage and reduce their energy consumption.

Broadwood Capital

Engaging for sustainable design outcomes in later living

In 2024 the fund closed on a £25m cornerstone investment into the Broadwood Later Living Sustainable Construction Fund. The Fund is targeting an attractive risk-adjusted return of 12% from a portfolio of construction finance loans to developers of care homes and retirement living assets, as well as ensuring best-in-class sustainability standards in those developments in line with the fund’s objective to reach net zero by 2040. Throughout the origination period we engaged with Broadwood to discuss our priority goals for the underlying loans, focused on fossil fuel free development, delivering EPC ratings of A and minimising upfront embodied carbon intensity.

At close, a series of mandatory requirements were embedded in the terms of the deal which developers must achieve. For an additional layer of security for our sustainability requirements, we agreed with Broadwood that if achievement in a category would not be possible for characteristics unique to a proposed property or development, then any exception to the sustainability criteria and mandatory requirements would require the absolute approval or waiver of our investment advisory committee. The requirements agreed were energy use intensity of 250 kWh/m², EPC ratings of B, up-front embodied carbon of 600kg CO₂/m², fossil fuel free and low temperature heating and the installation of infrastructure to allow for EV charging.

Targets and outcomes are not guaranteed and may not be achieved.