EPCs to Emissions:
Will carbon benchmarks
drive high consumers offshore?

For years, an EPC certificate or BREEAM rating was enough to badge a building as sustainable. But expectations have shifted. Investors and regulators are no longer just asking how a building was designed. They want to know how it’s actually being used.

As pressure builds across the value chain, energy consumption data is emerging as a new priority. It’s not just about carbon reporting, it’s about risk management, deal liquidity, and future-proofing portfolios. And in a tightening regulatory and investment environment, the absence of this data is fast becoming a red flag.

Net zero: enabled vs operational

A strong EPC rating once gave investors and developers a green tick. But performance ratings don’t reflect how a tenant operates the space. A net-zero-ready warehouse is still a carbon liability if it’s used inefficiently.

Frameworks like the Global Real Estate Sustainability Benchmark (GRESB) factor tenant use into scoring, and tools such as the Carbon Risk Real Estate Monitor (CRREM) provide benchmarks for carbon intensity - including the recently rebranded “CRREM Misalignment Year.” Yet implementation is still uneven, particularly for multi-let assets, manufacturing and data-heavy buildings, where reliable consumption data is hard to collect.

One of the key challenges is the lack of a centralised or standardised system for accessing energy data. In most of Europe, including the UK, landlords need tenant consent to collect usage data, making the process fragmented and highly manual. Without consistent access to data, carbon accounting is unreliable, and landlords and investors risk falling short of their net-zero commitments. If we want to align as a country with the Paris Agreement, a national solution for data access and sharing will be essential.

How to address legacy leases?

This shift to prioritising consumption data raises difficult questions especially for landlords operating under existing Full Repairing and Insuring (FRI) leases. If tenants upgrade equipment, alter HVAC systems or over-spec lighting, those changes can quietly degrade the building’s energy performance. And under current MEES regulations, lease renewals - not just lease starts or sales - can now trigger EPC obligations. The result is that some landlords may be on the hook for costly upgrades to buildings they haven’t directly altered.

So far, enforcement has been light. No fines have yet been issued for non-compliant EPCs, and the process for registering exemptions remains slow. But regulatory change rarely happens overnight, it often comes gradually, then all at once.

Energy use impacting transactions

DTRE are already seeing signs of consumption data influencing deal flow.

EPC ratings have been subtly influencing transactions, particularly in the leasing market, where energy efficiency directly impacts annual operating costs. There is some evidence of their impact on the investment market, contributing to variations in net effective rents through shorter void periods, longer lease terms, and reduced tenant incentives.

In capital markets, investors are increasingly re-certifying assets during transaction due diligence to account for changing regulations, tenant use/fit-outs, outdated EPC assumptions, or older certificates. Any change in the EPC rating can lead to price adjustments - often significant ones.

But the conversation is evolving. Driven by growing ESG reporting requirements, consumption data is starting to feature in investment committee discussions. Increasingly, investors and developers are questioning whether housing a high-energy user, without a clear decarbonisation strategy, could undermine their investment value.

This shift could have broader implications. If regulations continue to tighten and energy prices remain volatile, will we see energy-intensive users begin to relocate outside the UK? The feasibility of electrifying UK manufacturing is still under debate, and with the national grid already strained, there are concerns around capacity and resilience.

In practice, this isn’t always feasible. Covenant strength and location often outweigh ESG considerations, particularly in more challenging markets. But there may be other ways to manage the risk. One option is to price it in, charging a rental premium for high-energy users to reflect that risk.

This may already be happening in some sub-sectors and how they navigate the environmental impact of their building. Data centres, for example, are increasingly locating near renewable power sources, co-locating with greenhouses, or building in microgrids and SMRs (small modular reactors) to offset their load.

Rising regulatory pressures

Measuring energy use is no longer optional - it’s essential for regulatory compliance and for achieving certifications, especially as BREEAM Version 7 has introduced an energy section. Fund managers must monitor energy intensity to comply with regulations such as the Corporate Sustainability Reporting Directive (CSRD) - despite a slight delay introduced by the 2025 Omnibus Directive - and the Sustainable Finance Disclosure Regulation (SFDR), particularly for Article 8 and 9 funds.

For those pursuing net zero through frameworks like the Science Based Targets initiative (SBTi), accurate consumption data is equally critical. Without it, emissions cannot be quantified, nor can progress toward climate goals be demonstrated. For investors, reliable energy data is now a baseline expectation during due diligence. Fund managers depend on this data to calculate fund-level metrics, such as financed energy intensity, aligned with the EU Taxonomy.

DTRE has observed that lenders and institutions are already starting to reward strong energy performance. In some cases, preferential loan terms are being offered for assets with sustainable credentials or clearly defined brown-to-green strategies. Meanwhile, consumption data is beginning to feature in red book valuations, signalling its growing importance in how assets are assessed, though the precise impact on valuations is still emerging.

Getting ahead of the curve

The good news is that the market is moving. According to government data on industrial EPCs, the amount of A and A+ rated buildings has increased significantly in just five years, from 7% in 2019 to 72% in 2024. It shows that the sector is responding, even without a firm deadline in place.

Net zero isn't a label, it's a lived reality. Buildings must prove their performance, not just promise it. That means tracking, managing, and reducing real-world energy use in partnership with tenants.

Consumption data is a board-level issue that is central to regulatory compliance, investment strategy and long-term asset value.

Particularly as capital gets more selective, the message is clear: operational performance is the new sustainability benchmark. The era of design-stage box ticking is over. Those who fail to adapt won't just fall behind; they risk being left out of the market entirely.