Hello, and welcome to our sustainability event. I'm Joanna Waddingham from the British Land IR team. I'll shortly hand you over to Simon Carter, our CFO, and the sustainability team who will take you through our new strategy. If you're watching the webcast, feel free to log questions at any time. There'll be two opportunities to ask questions on the phone. Hope you enjoy the event. Over to Simon.
Thank you, Jo. Good afternoon, everyone. Thanks for joining us. At our results in May, we gave you the highlights of our 2030 sustainability commitments. Today, we'd like to give you more detail as to why we chose these stretching targets and what we'll need to do to deliver them. In particular, we'll need to build on past successes, innovate, and make sustainability business as usual. We'll provide some very practical examples of how we're doing this already. Here's the agenda. Shortly, I'll hand over to Juliette and Matt to talk about our environmental commitments. Cressida Curtis will explain our transition funds and how we think about the many sustainability indices. James Pinkstone will talk you through our new sustainable financing framework. Anna Devlet will set out our social commitments. Tim Downes will present a case study of One Triton Square. We've allowed plenty of time for questions.
You can also log these at any time on the website. Sustainability is not new to us at British Land. We produced our first corporate responsibility report back in 2002. In 2015, we embarked on a challenging five-year program designed to deliver a step change in our environmental performance and contribution to local communities. We've achieved many of the goals we set ourselves, reducing our carbon intensity by a massive 73%, our energy intensity by 55%, and we've supported more than 1,700 people into work. Some of the targets proved quite challenging, as you can see on the slide. By setting the bar high, we've made really good progress in these areas as well. A number of things have shaped our new strategy. First, we wanted to be ambitious. The urgency around delivering more sustainable places and making a positive contribution to society has clearly and rightly increased.
Second, we wanted the plan to be completely aligned with our corporate strategy, and we were conscious that to be successful, it needed to be business as usual. Third, our own experience shaped our thinking. Our 2020 strategy included a wide range of targets, arguably too many. This time we've chosen to focus our attention on two key areas where we can really make a difference. Achieving a net zero carbon portfolio and rolling out our successful place-based approach to social contribution. Finally, we looked at best in practice. We've been a signatory of the UN Compact since 2009, and our work supports 12 of the UN 17 Sustainable Development Goals. We've really focused on the three that are most relevant to us. For me, sustainability is an area where we should proactively share great ideas rather than regard them as intellectual property.
We have unashamedly incorporated elements of other leading companies' sustainability programs. This gives us confidence that our approach is best in class. On the environmental side, our key commitment is to be net zero carbon by 2030. The main elements of this are for all future developments to be net zero embodied carbon. Offsetting alone is not enough. By 2030, all developments will have 50% less embodied carbon. We'll also reduce our operational carbon by a further 75%. We're taking a whole life approach, which Matt and Juliet will explain. In summary, our overriding principles are to reuse, recycle, and resource sustainably. We'll only offset as a last resort. We've launched an innovative transition fund which incentivizes us to reduce embodied carbon while funneling resources to improve the efficiency of the standing portfolio. Cress will talk more about this.
On the social side, we're rolling out our place-based approach to community engagement. We'll work with our communities, local authorities, customers, and suppliers to tackle local issues such as education and employment. This strengthens relationships with our stakeholders and deepens connections with our places. We've got a good track record of doing this at Regent's Place and Fort Kinnaird. Ultimately, a more sustainable approach makes sense because our customers are asking for it. The number of companies in London who have signed up to science-based targets has doubled since 2010. For many companies, the easiest way to reduce their carbon footprint is through more sustainable real estate. We expect the demand for greener buildings to increase significantly. This is reflected in the conversations we're having. We're seeing more and more evidence that sustainable buildings generate higher rents and lease quicker.
JLL estimate that a BREEAM outstanding or excellent building achieves a 10% premium to other prime buildings without a rating. We're also seeing customers look beyond environmental criteria. The ability to make a positive contribution to local communities is increasingly important to their people. It's part of their brand, helping to attract and retain talent. It creates loyalty to the property. Our customers want to recommit. We've seen that at Regent's Place, for example, where Dentsu Aegis, an existing customer who are very active in our community program, have pre-let One Triton Square. At every level, doing this well is really additive to our business. On that note, I'll hand over to Matt and Juliette to talk about our environmental commitments. Matt's section is pre-recorded. Like a lot of us, he's juggling childcare with the day job.
His wife is also a key worker, which means he's on call for their two boys right now, but will join us live for questions later.
Thanks, Simon. Good afternoon, everyone. I'm Matt Webster. I'm probably trying to find an episode of Ninjago or make an after-school snack while you listen to this, but I look forward to joining you for the Q&A. My role at British Land as head of sustainable and smart buildings considers both the environmental design and performance of our assets, while also working in our Smart Places team, developing and deploying digital technologies to improve the experience and operation of our places. I'll introduce net zero carbon and consider operational carbon before Juliette looks at embodied carbon. There's a lot of noise around net zero carbon at present. I thought it would be useful to set out clearly the definitions and scope we have adopted at British Land. Our approach is based on whole life carbon.
That is accounting for and reducing carbon throughout the full life cycle of a property, from the building's design and development, through its operation, and all the way through to end of life. Firstly, embodied carbon. These are the emissions associated with the materials and components required to develop a building. Raw material extraction, processing those materials into usable building components, transporting those components to a development site, and then constructing those components into a tenant-ready building. There is also embodied carbon associated with operating buildings. When building components, be they air handling units, chillers, heat pumps, reception desks, or lighting, any component that requires replacement will have associated embodied emissions. It is also critical to consider how a building's emissions can be mitigated at the end of its useful life, either through recycling as much of the existing building as possible or by circulating materials back into the supply chain.
This impacts embodied carbon by extending the life of building components and reducing the footprint of projects where components can be used a second or third time. Secondly, operational emissions. The first step in reducing the amount of operational energy a building needs is to design it efficiently, so it requires less heating, cooling, or lighting to provide a comfortable and productive environment. It's also important to have the processes and the technology to track that performance and identify where improvements can be made, so there's a clear crossover with the work we're doing to make our buildings smarter. Of course, all buildings will require some energy. We then focus on how we can maximize the use of both on-site and off-site renewable energy.
When we've done everything we can to mitigate carbon emissions, to achieve net zero carbon, any unavoidable carbon, either embodied or operational, needs to be accounted for in a certified offset scheme, reducing or sequestering carbon outside of our footprint boundary. How are we performing today? It's worth highlighting the statistics Simon gave in his introduction. We've already decreased carbon emissions by 73% since 2009. Accounting, reporting, and reducing carbon isn't new at British Land. We've led the way in our approach to measuring, reporting, reducing embodied carbon in our developments, and we have a growing reputation for our progressive approach to managing energy more efficiently. For example, Meadowhall has decreased its operational energy use by 51%. Smart metering, LED lighting throughout, rooftop solar, and natural ventilation strategies have all helped.
Looking forward, some of the buildings we're developing and delivering today are already in line with the carbon and energy targets we're proposing for 2030. At 100 Liverpool Street, for example, we've managed to retain most of the foundations and existing steel structure, allowing us to achieve an industry-leading result on embodied carbon. Our new strategy sets some challenging targets, we have the experience, the people, the processes, and the supply chain to meet this challenge. How do we transition to a net zero business? Let's consider operational carbon first. Our target is to reduce operational carbon emissions by 75% from a 2019 baseline. We believe this is an achievable but challenging and necessary target to adopt. Emerging definitions of net zero carbon treat whole buildings as a single entity under the responsibility of the owner, with no differentiation between landlord and tenant-procured energy.
Our 75% reduction target is consistent with that. Using this approach, external factors like grid decarbonization and how ambitious our customers are in reducing their own carbon footprint becomes important. The national grid is becoming greener over time, this trend is set to continue. This will support our net zero pathway, particularly where we don't have control over energy procurement. However, our targets go much further than this, so we're not just relying on this grid decarbonization. We see assisting our customers in reducing their emissions as an opportunity for greater collaboration. It's an area where we can lend expertise and experience, and increasingly, this is something our customers appreciate. Energy-efficient buildings produce less carbon per meter squared. A key part of our pathway is to ensure every asset we own is designed and operated as efficiently as commercially viable.
We're seeing emerging industry benchmarks that state what level of energy efficiency are required for a building to be considered best practice. We're also expecting regulation to continue to push operational energy efficiency requirements for both new developments and existing assets. In the first years of this new strategy, we will undertake detailed audits of energy-saving opportunities across our standing portfolio with associated cost plans. Energy management requires real-time data and insights into energy use, identifying where we can make savings or channel resources in order to run properties optimally. Smart technologies have an important role to play here. Alongside improving the efficiency of the portfolio, it's important to consider where the energy we do need comes from. This means continued focus and investment in opportunities for installing on-site renewable energy where viable. For example, solar panels.
When we need to purchase energy, there's a hierarchy of renewable energy to consider. This is an emerging area of investigation. We currently purchase all landlord energy from existing renewable sources. The use of a power purchase agreement can protect against energy price increases while ensuring our energy consumption is from additional renewable sources. To become operationally net zero by 2030, we can assume that the grid will decarbonize, but we'll also need to ensure our buildings are designed and run as efficiently as possible, buy our energy from renewable sources, and engage with our customers on how to reduce their own emissions. Linking back to our definition of net zero, any residual carbon will need to be mitigated through a certified offset scheme, but we think of that as an act of last resort.
Undertaking the actions highlighted here will help reduce the size of that payment. That is really what our approach is about. Over to Juliette to take you through embodied carbon.
Thank you, Matt. Hi. For those of you I haven't met, I'm Juliette Morgan, and my role is Head of Sustainable Development for British Land. I took on this role a year ago, but prior to that was head of campus at Regent's Place, which we established as a sustainable London campus focused on social and environmental leadership. From the Regent's Place community funding cafe and gardening with the local community, a circular economy fit out with customers. We recycled landscaping, worked with cross-laminated timber construction, and the BREEAM outstanding development at One Triton Square, which you'll all come on to hear about. I'm sorry not to be able to share the progress we made on that campus with you in person today, but I'm bringing that background to the sustainable development role, along with a qualification in sustainability leadership from Cambridge.
We've heard from Matt that operational carbon will reduce. Consequently, embodied carbon becomes more important over time, moving proportionately from 22% in 2020 to over 60% in 2050. Carbon from the building industry accounts for about 40% or more of global emissions, and the manufacture of concrete and steel alone each contribute about 5%. The product we build is what we're judged on, both now and in the future, and customers are demanding low embodied energy buildings now. Building greener buildings gives us defensible assets now but preserves future value. The biggest influence we can have on embodied carbon when building is at the brief and commissioning stage, and that influence diminishes over time.
We've updated the development brief to reflect this. Essentially, it means us being much more demanding at the beginning, and our teams are being measured on how much carbon they reduce in the design phases. Let me take you back. When we built the Leadenhall Building, 70% of the embodied energy was on the structure driven by the use of steel and cement. In fact, 84% of the embodied energy came from the materials we used, and it was carbon intensive, emitting close to 100,000 tons of carbon at completion. To put it another way, was more than double our 2030 target at over 1,000 kilograms of carbon per meter squared.
Our 2030 target seeks to be about 500 kilos or less, and in many cases, within the existing pipeline, we're outperforming that with the portfolio average hovering at roughly 650 kilos at the moment. You can see on the left of this slide that steel and concrete are drivers in embodied carbon because they require smelting, and the chart on the right demonstrates that within buildings, it's mostly the structure and the floors where concrete is used. Using alternative materials on the floors reduces the embodied carbon. Most of British Land's developments are concrete, glass, and steel in their design and construction, but we just purchased our first timber-led building at Orsman Road for Storey. cross-laminated timber or CLT as it's known, has much lower embodied carbon content than alternative materials.
When used as a structural material, it lowers the total embodied carbon of a development. Research from Yale suggests that the use of timber at mass scale has the potential to make cities carbon stores, and there's much work going on globally and within BL on the structural use of timber, including an emerging industry alliance to progress its use. By far and away, the best way to reduce carbon is to reuse existing buildings, and that's how we've got outperformance at One Triton Square and 100 Liverpool Street and are meeting some of those 2030 targets on embodied carbon now, with each achieving below the 500 kilo target that I mentioned. Recycling structure can save up to 40% of emissions and shows that these targets are achievable today.
One Triton has achieved our 2030 target for embodied carbon through recycling its façade and retaining much of the existing structure, Tim will talk you through more of that later. If we build from new, we need to be looking at laminated timber and Cemfree cement or replacements like Hempcrete or Limecrete and other recycled content materials. New innovations are coming through, like boards made from mycelium and peel, or insulation from wool and paper as opposed to ROCKWOOL. In One Broadgate, the team is looking to replace air conditioning piping with cardboard rather than metal. No better is this thinking more perfectly demonstrated than the work the design team are doing at 2-3 Finsbury Avenue Square, where they've reverse engineered the carbon target and are close to parity on embodied carbon comparing the use of timber against Cemfree and recycled steel.
It's not just in materials either, it's in how we design. We've been looking at what happens when you change shape. Can it change the amount of materials we use or orientate a building without full-height glazing to reduce solar glare and therefore the amount of glass, or how much it needs to be heated and cooled? We also need to increase the recycled content of our buildings, reusing what's already available in its highest possible value state. For example, not crushing stone for aggregate and also designing for disassembly. Many of you will have heard of this as circular economy design thinking. It's made its way into the new brief. The industry is innovating in its construction methods, materials, and approaches, all of which has attracted R&D and collaboration. As we rebalance our materials, embodied carbon will reduce.
From this year, we commit to make our buildings net zero at completion, and that does require us to make a payment into an accredited scheme to offset the remaining carbon in the building when we've done everything we can to minimize our carbon footprint. Our intention is to pay into offsets, which will grow the materials that will ultimately be used in the building material supply chain, so we have a circular process and are sequestering carbon into lower impact buildings. We intend to do this mindfully of biodiversity, social impact and traceability, and are in the process of due diligence on how to progress this. Remember how I said earlier that Leadenhall was nearly 100,000 tons of carbon? Contrast that with the completion of One Triton at 21,000 tons, and you can see how successful our teams have been at reducing embodied carbon in buildings.
I won't steal Tim's thunder, this was substantially driven by recycling facade and retaining existing structure, which saves circa 40% of the embodied carbon. Cressida will go on to talk about our approach, but we've calculated that using a carbon price of GBP 60 a ton, where we've adopted the same value the City of London use, we can mitigate the embodied carbon in completing this building at a price of GBP 1.3 million. This is de minimis compared with the cost of construction, but it's meaningful to customers and our commitments to develop net zero buildings and would help underpin the building's value both now and in the future. Finally, we have a roadmap to get the whole portfolio net zero by 2030, not just our developments now. We'll spend the next couple of years auditing assets, identifying where we can upgrade to make buildings run more efficiently.
That will help us prioritize where to focus our spend, and we will look at that through improving efficiency, embodied carbon, cost to implement, and the timing of the work. Over the next couple of years, we'll go further with our power strategy. Although we run on 96% renewable energy today anyway, we'll look at REGO backed or PPA power agreements which add more capacity to the grid and are traceable. That will help us meet those science-based targets to stay below one and a half degrees of warming. I mentioned earlier that a number of our future developments are meeting 2030 targets today. Generally, this is where we're doing substantial refurbishments. The profile of the development pipeline may fluctuate over time, where we have more new builds than refurbs, and it's more challenging to meet the 500 kilo target. For example, when Canada Water comes online.
To keep us on track, we intend to have development portfolio average below 750 kilos of carbon by 2025 on a portfolio basis, but we expect to outperform this target as the current average is below this figure. This is to keep us on track to get to that 500 kilos by 2030, and we'll review the strategy by 2025 to see if we can go further. Over the course of the next 10 years, we'll be upgrading the portfolio and working with customers to reduce their footprint too, so that by the time we come to offset portfolio emissions in 2030, we'll have met our Better Buildings Partnership and U.K. Green Building Council commitments. Over to Cressida to explain our mechanism for achieving this.
Thanks, Juliette, good afternoon, everyone. I'm Cressida Curtis, Head of Corporate Affairs and Sustainability. I started working in sustainability 15 years ago while at a major contractor, where I realized the construction industry sent 3 times more waste to landfill than all the U.K.'s households combined. Despite the challenge of getting hard-nosed subbies to segregate waste for recycling, we committed to achieving zero landfill within 5 years, challenging the status quo in the industry. We found it was a really effective way of transforming the internal approach, driving change across the industry, and building stronger relationships with our customers. I also led work on increasing community cohesion, which kept us firmly oriented towards helping our customers deliver their priorities before spending a decade at Quintain, where we had a highly progressive environmental agenda.
Now at British Land, I lead the public affairs, corporate communication, and sustainability functions, drawing together the expertise within these three departments to accelerate our progress. British Land's journey to an entirely net zero carbon portfolio will take 10 years. Our track record over the last 10 years, reducing carbon intensity and energy intensity, give us confidence in our ability to deliver this really bold ambition. The journey will involve work across the investment portfolio. We've created a vehicle that will deliver three priorities. First, it'll make carbon impact a simple concept that everyone within BL can grasp and integrate into their decision-making at every level, every day, so we make increasingly intelligent decisions. Second, it'll provide a ring-fenced source of funding we can use to retrofit our assets. Third, it'll enable stakeholders such as you to monitor our progress annually towards this long-term goal.
How does it work? The vehicle we've designed to deliver this is the transition fund. A few minutes ago, Juliette illustrated our ability to influence the whole life carbon of an asset is at its peak during development. In some years, development itself can represent up to half our carbon emissions. To encourage real focus on driving down embodied carbon, we're applying an actual mitigation cost to every ton of carbon in the BL development pipeline, and we're setting that at GBP 60 per ton. What does that look like in practice? Well, looking again at the example of One Triton Square, there are 21,000 tons of embodied carbon in the building, and that's about a quarter of the amount that was in the Leadenhall. The carbon mitigation cost applied to this development will be GBP 1.3 million.
To put that in context, that's just 0.3% of its net development value. Of this GBP 1.3 million, we'll use GBP 400,000 to purchase certified offsets, making the development net zero embodied carbon at PC. The remaining GBP 900,000 will be paid into our transition fund. You can see in the yellow bar the estimated payments we'd expect to make into the fund from forthcoming developments, and we'll enhance the fund by GBP 5 million each year as a loan, shown in the green bar. Looking to the right-hand side of the slide, you can see the three ways we'll use that money. First, in upgrading our standing assets. Second, where the industry is moving too slowly for our goals, investing in research and development into low carbon materials and design.
Third, as loans to customers on the service charge to improve energy performance. We know that for many customers, particularly those in high growth sectors, real estate is the largest element in their carbon footprint, and we have the expertise and funding that can help them reduce that impact. Using the transition funding this way helps us not only achieve our goal of reducing the carbon impact of our portfolio, but strengthen relationships with our customers, which is key to our wider corporate strategy. This is the first time a UK REIT has committed to paying an actual internal price of carbon on development, and we're already seeing our development team pivot towards lower carbon options as a result.
Although net zero carbon and our place-based approach, which Anna will walk you through shortly, are our headline ambitions, there are two other important goals in our 2030 strategy. First, we're committed to leadership across environmental indicators beyond carbon. We feel that the best way to maintain focus on the efficient use of energy and water, reduction of waste, and the expansion of biodiversity is to target, within two years, a five-star rating in the Global Real Estate Sustainability Benchmark. This is our key index. You can see on the slide our 2019 performance across the eight areas GRESB covers. Our performance is shown by the dark blue bars and the upper quintile, that five-star rating we want to achieve, by the red line towards the top of each.
To date, we've focused attention on the areas we think are most important, such as effective management and high quality disclosure. You can see we score well in seven of the eight areas GRESB measures. We're aware that more process-oriented areas are given significant weight, we're investing in a rolling program of BREEAM certification to lift our performance in that category. These certifications also support our sustainable finance framework, which James is going to talk about in a moment, and our leasing program. Concurrently, we're investing in the performance indicators category and the stakeholder communications category where we score well but think there is more to go after that will help take customer relationships to a new level. Now, you'll be aware that GRESB is just one of a vast range of indices flowing now into the ESG space.
It makes no sense to invest substantial resource purely in reporting. For a decade, we've published a full set of sustainability accounts with key information assured alongside our annual report, and that enables you, our stakeholders, to draw your own conclusions from our data. With the indices, we focus on those our stakeholders most value, and we'd really value your feedback regarding how we can support you in this regard after the event. Now, I mentioned there were two supporting goals in our 2030 strategy, and the second is advocating responsible business. On the right, you can see five key areas, and you'll find plenty of information.