Platzer

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Platzer Fastigheter AB

Shades of Green assessment

October 20, 2020

Executive summary

Platzer Fastigheter AB (hereafter Platzer) was founded in 1969, and in 2008 Platzer was established in its current form, with a strong focus on commercial properties in the Gothenburg area. In October 2013, Platzer was listed on Nasdaq OMX Stockholm. Today, Platzer is one of the largest commercial property companies in Gothenburg, primarily in office property. The company’s strategy is to participate in the creation, preservation and regeneration of the best locations in Gothenburg. As of 2019, the Company owns and develops 68 properties with a total lettable area of approximately 825,000 m², worth SEK 20bn. Of this area, offices account for 55%, industry/warehouses 31%, retail 1%, and other property 13%. Revenue break down by various types of buildings show that offices represent 57% and that the remaining is dominated by logistics.

In 2019, 91% of the rental revenue and 98% of investments where from buildings shaded green, see Figure 1. In total, 1% of revenue and 42% of investments in 2019 went to buildings shaded Dark green. The above shading allocates a basic shading based on a combination of energy use and building certification level amended with upgrades or downgrades based on assessment of age of building, resilience and transportation considerations, etc.

A grey shading indicates lack of data. See Section 3 for more details.

As a real estate company, Platzer is naturally exposed to transitional risks and physical risks associated with climate change and more frequent extreme weather. For the Swedish building sector, the most severe physical impacts will likely be increased flooding, heavier snow loads and urban overflow, as well as increased storms and extreme weather. Platzer does cooperate with authorities involved in the evaluation of climate risks for entire city-areas which has consequences both for Platzer and other property owners. Moreover, Platzer has plans to incorporate resilience and LCA as bottom-up analysis (for every property) in cooperation with the Swedish Meteorological and Hydrological Institute who can deliver data for each property. Thus, Platzer is well aware of

Sector: Real Estate Region: Sweden

Figure 1 Shading based on rental revenue 2019 (left) and investments 2019 (right).

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the physical risks to their portfolio. It is more uncertain whether risks to their supply chain have sufficient focus in the planning processes.

According to the International Energy Agency (IEA), the buildings and buildings construction sectors combined are responsible for 36% of global final energy consumption in 2018 and nearly 40% of total direct and indirect CO2 emissions. The materials, construction and demolition phase of the building lifecycle constitute additional emissions and are becoming increasingly important as buildings becomes more energy efficient and the electricity and heat supply becomes ‘greener’. A little over half of all life cycle greenhouse gas emissions in new offices or residential apartment building in the Nordics comes from heat and energy use, while approximately 40% comes from use of materials. Emissions associated with construction and demolition accounts for around 2-5%.

Platzer has high transparency on environmental governance structure and good reporting procedures and standards. The management and follow-up of Platzer’s sustainability work is headed by the sustainability and purchasing manager as well as the management team. Platzer has in place some quantitative environmental goals such as an energy efficiency improvement of 2% per year and a CO2 target of 0.5

kgCO2/m² in an unspecified future year. We note that the energy target falls short of IEA’s estimate for Paris agreement alignment (3.2% improvement per year).

All new buildings shall be environmentally certified. Green leases will be promoted. The reporting is in accordance with the Global Reporting Initiative, and GRI Core. Platzer will also report on EU Taxonomy aligned revenues and investments once green equities are launched. However, scope 3 emissions from material use is not included and Platzer do not follow TCFD guidelines when it comes to use of scenarios and stress testing of their portfolio. CICERO Green assess Platzer’s governance structure and practice to be Good, cf. Figure 2.

Platzer has clear but modest target when it comes to reducing energy consumption further in the shorter term. This can partially be explained by already relatively low energy use and the age structure of the portfolio.

The company focuses on areas where property management has the greatest impact, such as energy use, waste management and the choice of sustainable material in reconstruction and new construction. Platzer for example removes hazardous substances and pollutants in properties and land. UN’s Sustainable Development Goals (“SDGs”) form the backbone of Platzer's sustainability work. The age structure of the portfolio of Platzer is quite old with a mean building year of 1974. Still, specific energy use (energy intensity) and CO2 emissions (scope 1 +2) are quite low, the last point reflecting the low carbon content in Gothenburg’s district heating and grid, see table 1. Note that energy use is what is called ‘property energy’, i.e. energy used for running the properties, but excluding specific energy used by tenants.

Table 1 Measured specific sector metrics for Platzer. Energy is for electricity and heat.

Specific sector

metrics Energy use

(kWh/m²Atemp) Environmentally certified (% of area)

Emission intensity scope 1 + 2 (kg CO2e/m²)

Per cent area heated directly by

fossil fuels

2019 98.3 49 % 1.0 0%

2018 105.2 48 % 1.1 0%

2017 104.4 50 % 1.0 0%

Figure 2 Platzer’s governance score as assessed by CICERO Green

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EU Taxonomy ... 12 Appendix 1: Source List ________________________________________________________________________ 13 Appendix 2: Background ________________________________________________________________________ 14 Appendix 3: About CICERO Shades of Green _______________________________________________________ 15

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1 Terms and methodology

The aim of this analysis is to be a practical tool for investors, lenders and public authorities for understanding climate risk. CICERO Green encourages the client to make this assessment publicly available. If any part of the assessment is quoted, the full report must be made available. This assessment is based on a review of documentation of the client’s policies and processes, as well as information gathered during meetings, teleconferences and email correspondence.

Shading corporate revenue and investments

Our view is that the green transformation must be financially sustainable to be lasting at the corporate level. We have therefore shaded the company’s current revenue generating activities. Shaded investments add a forward- looking element and provide insight into future revenue streams and corporate strategy in relation to the green transformation.

The approach is an adaptation of the CICERO Shades of Green methodology for the green bond market. The Shade of Green allocated to a green bond framework reflects how aligned the likely implementation of the framework is to a low carbon and climate resilient future, and we have rated investments and revenue streams in this assessment similarly. To encompass the full scale of potential projects, we have added three “brown” categories. While some projects with fossil fuel elements might be accepted, we are careful to avoid projects that increase the capacity or longevity of fossil fuel infrastructure.

In addition to shading from dark green via light green to dark brown, CICERO Shades of Green also includes a governance score to show the robustness of the governance structure. The company assessment also provides investors and lenders with information on possible alignment to the EU taxonomy as well as companies’

environmental governance structure, including an assessment of how companies respond to the TCFD recommendations on climate-related risk disclosure. We have only shaded revenue or investments to the extent we were able to find sufficient information The amount of “unshaded” revenue and investments is noted.

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2 Brief description of Platzer’s activities, strategies and related policies

Company description

Platzer Fastigheter AB (Platzer) is a real estate company founded in 1969, but it was not until 2008 that Platzer in its current form was established. Today, Platzer is one of the largest commercial property companies in Gothenburg, primarily in office property. The company’s strategy is to participate in the creation, preservation and regeneration of the best locations in Gothenburg. As of 2019, the Company owns and develops 68 properties with a total lettable area of approximately 825,000 m², worth SEK 20bn and with total rental revenue of SEK 1,124m. Of the total area, offices account for 55%, industry/warehouses 31%, retail 1%, and other properties (e.g. restaurants and schools) 13%. The strong focus on both property type and geographical location sets Platzer apart from most other listed real estate companies. In October 2013, Platzer was listed on Nasdaq OMX Stockholm.

Platzer’s real estate portfolio has an average age of 46 years and thus contains many old buildings. 92% of them are environmentally certified with varying certification levels. Also, the average energy use is quite low at 98.3 kWh/m² Atemp¹. This is what is called ‘property energy’, i.e. energy used for running the properties, but excluding specific energy used by tenants. Energy supply is almost 50/50 between district heating and electricity, with a smaller amount for district cooling for a total of 86,241 MWh in 2019. Greenhouse gas emissions (Scope 1 plus 2) amounted to 795 tCO2e in 2019, representing 1.0 kgCO2e/m² lettable area. This sum is equally distributed among scope 1 emissions (mainly use of cooling media) and scope 2 emissions (mainly from district heating).

The largest share of rental revenue in 2019 came from properties shaded Light Green with a share of 58%. As mentioned,91% of the revenue came from green properties of all shades of green. For investments the green share was 98%, but here Dark Green represented the largest segment with a share of 42%. Thus, going forward a larger share of the portfolio of Platzer will be darker green than today. Already, 92% of the properties have some form of environmental certification representing 49% of the lettable area. As all new buildings are to be certified, we expect this share to increase in the coming years.

Climate risk exposure

According to the International Energy Agency (IEA), the buildings and buildings construction sectors combined are responsible for 36% of global final energy consumption in 2018 and nearly 40% of total direct and indirect CO2 emissions. Appliances (excluding heating, cooking and cooling appliances) are responsible for around 17%

of final electricity use by buildings.

Emissions from heating of buildings in Sweden have decreased from 9.3 million tonnes CO2e to 0.88 million tonnes over the period from 1990 to 2018. In 2018, the sector accounted for approximately 2% of Sweden’s total emissions². Emissions from production of materials, as well as construction and demolition activities constitute additional emissions³. These (scope 3) emissions becomes increasingly important as buildings becomes more energy efficient and the electricity and heat supply becomes ‘greener’, reducing scope 1 and 2 emissions.

1Measuring heated area only.

2Naturvårdsverket: https://www.naturvardsverket.se/Sa-mar-miljon/Statistik-A-O/Vaxthusgaser-utslapp-fran-uppvarmning- av-bostader-och-lokaler/

3 https://www.miljostatus.no/tema/klima/norske-klimagassutslipp/klimagassutslipp-bygg/

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According to a report from Asplan Viak⁴, a little over half of all life cycle greenhouse gas emissions in new buildings comes from heat and energy use, while approximately 40% comes from use of materials. Emissions associated with construction and demolition accounts for 2-5%.

Physical climate change such as extreme events and flooding are affecting all sectors and regions already. Due to historical emissions, we are de facto already locked in for approximately 1.5°C global warming.⁵ Given today’s policy ambition, the world is most likely heading toward 3°C warming in 2100 which implies

accelerated physical climate impacts, including more extreme storms, accelerated sea level rise, droughts and flooding.⁶ For near-term physical risk, investors and companies must consider the probabilities of physical events and resiliency measures to plan for and protect against the worst impacts. For the Nordic building sector, the most severe physical impacts will likely be increased flooding, snow loads and urban overflow, as well as increased storms and extreme weather. The real estate sector is also exposed to climate risks through links to the construction industry and the utilities.

In addition to the physical risks, Platzer is also exposed to transition risks from stricter climate policies, associated with e.g. mandatory efficiency upgrades, liability risks due to e.g. legal challenges if preventable damages from climate change increases or technology risks if consumers prefer climate smart buildings and demand for low efficiency buildings decrease.

Key statistics & background figures

Energy use

In 2019, total energy use⁷ was 86.2 GWh, corresponding to a specific measured energy use of 98.3 kWh/m². No direct fossil fuel was used, but district heating contains some fossil fuel elements (11% in 2019) through use of natural gas. District heating had an emission factor of 67 gCO2e/kWh in 2019. Total energy use has decreased by 6% over the last three years (2017-2019), as has energy use per square meter. Platzer has as a target to reduce demand for energy by 2% per year. This is probably not enough to be aligned with the Paris agreement according to IEA⁸.

4 Asplan Viak AS (2018): Utredning av livsløpsbaserte miljøkrav i TEK, https://dibk.no/globalassets/02.-om-oss/rapporter- og-publikasjoner/utredning_av_livslopsbaserte_miljokrav_i_tek_asplan_viak_2018.pdf

5 https://www.cicero.oslo.no/en/posts/news/scientists-demystify-climate-scenarios-for-investors

6 https://www.ipcc.ch/pdf/assessment-report/ar5/syr/SYR_AR5_FINAL_full_wcover.pdf

7This is ‘property energy’, i.e. energy used for running the properties, but excluding specific energy used by tenants.

8 https://www.iea.org/reports/building-envelopes

Figure 3 Life cycle and source of emissions. This shows the value chain of Platzer’s operations. Emissions are connected to the construction,

operation, and demolition of buildings.

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Emissions of CO2

Total emissions in 2019 was 795 tons CO2 (scope 1 and 2). This sum is equally distributed among scope 1 emissions (mainly use of cooling media) and scope 2 emissions (mainly from district heating). Specific emissions were 1.0 kgCO2/m² in 2019. Development over the last three years shows a reduction in total emission of almost 17%, while specific emissions have stayed flat. In the long term, Platzer has as a target that CO2 emissions should not exceed 0.5 kg/m² lettable area.

Certifications

Platzer was early in the process of having a large proportion of its properties environmentally certified. It is a way of reducing its environmental impact, and a way of securing properties in the future. At the end of 2019 a total of 92% of the property portfolio were environmentally certified according to Green Building, BREEAM, LEED, or Miljöbyggnad. The share is 49 % when measured by area.

Environmental Strategies and Policies

Platzer's environmental impact arises both in day-to-day real estate operations and in connection with property and project development. As a locally based property owner, Platzer wants to take responsibility for the sustainable development where they operate, and for the impact property management has on the global environment. The company therefore focuses on the areas where property management has the greatest impact, such as energy use, waste management and the choice of sustainable material in reconstruction and new construction.

Platzer’s sustainability efforts and efforts to limit and reduce the environmental impact of its business are based, among other things, on the UN Sustainable Development Goals for 2030 (SDGs) with particular emphasis on 5, 7, 8 and 11 representing gender equality, affordable and clean energy, decent work and economic growth and sustainable cities and communities, respectively. This is implemented in accordance with ISO 14001:2015. As part of its contribution to a sustainable future, Platzer has formulated four environmental objectives:

• All properties must be environmentally certified.

• In the long term, 100% of the rental value should be green leases⁹.

• In the long term, Platzer’s carbon dioxide emissions should not exceed 0.5 kg CO2/m² lettable area.

• Every year, Platzer aims to reduce its energy consumption by 2%.

As of 2019, the status with respect to these goals were that:

• 92% of the properties have been certified.

• 49% of the leases were green leases.

• CO2 emissions represented 1.0 kgCO2/m² lettable area. (Emissions have been reduced by almost 90%

since 2010).

• Energy use was reduced by 9.7% from 2018 to 2019 and by more than 50% over the last ten years.

9Green leases facilitate joint environmental investments as Platzer and their tenants agree on a common ambition to improve the environmental work in the building. Once a year, Platzer and their tenants meet to discuss environmental issues and update their agreement and associated environmental ambitions.

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Governance

When assessing the governance of Platzer, CICERO Green looks at the overarching structures and procedures for decision making connected to climate risk analysis in Platzer, strategy and policy formulation and implementation including policies towards sub-contractors and use of LCA, handling of resilience issues and quality of reporting.

Platzer’s Board of Directors has adopted a sustainability policy and a business plan that governs Platzer’s sustainability work and sustainability goals. The CEO is ultimately responsible for the sustainability work. The management and follow-up of Platzer’s sustainability work is headed by the sustainability and purchasing manager as well as the management team. External auditors examine the sustainability report. In the daily work and in the relationship with different stakeholders, the company has developed a number of policies and other governing documents which outlines the company’s commitment to operate business in a sustainable way. Sub-contractors need to fill in a form prior to being hired. Additionally, there is always a physical meeting in beforehand where Platzer and the sub-contractor agree on common ambitions.

In Platzer’s projects, the end-clients only get a few alternatives when customizing the building. These alternatives are carefully picked out by Platzer with focus on ensuring that the materials used are the most sustainable options available. Platzer has a list of materials they have approved to use in their projects, and the list is constantly under development. Environmental considerations are key in evaluating which materials make it on the list.

Platzer does cooperate with authorities involved in the evaluation of climate risks for entire city-areas which has consequences both for Platzer and other property owners. Moreover, Platzer has plans to incorporate resilience and LCA as bottom-up analysis (for every property) in cooperation with the Swedish Meteorological and Hydrological Institute who can deliver data for each property. Thus, Platzer is well aware of the physical risks to their portfolio. It is more uncertain whether risks to their supply chain is focused in planning processes.

Reporting

Platzer reports the sustainability work according to the Global Reporting Initiative, GRI Core. Platzer’s annual sustainability report (included in the annual report) contains among other things the number of new units with classification, use of energy, waste handling and CO2 emissions (scope 1 and 2).

Platzer commits to regular reporting at least on an annual basis and the company will strive to report consistent with definitions of sustainable activities available in the EU Taxonomy at every point of time. Platzer plans to follow the TCFD guidelines in the future. The reporting will be published at the Platzer’s homepage and will include the below information for the total property portfolio:

• Total rental revenue whereof rental revenue related to environmentally certified buildings as well as buildings that have undergone energy saving renovations.

• Total investments whereof investments related to environmentally certified buildings as well as investments in energy saving renovations.

• Type of certification and degree of certification, energy performance per m² and/or estimated annual greenhouse gas emissions reduced or avoided for buildings (tCO2e).

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3 Assessment of Platzer’s green activities and policies

According to CICERO Green’s methodology shades of green or brown should be allocated to the revenue stream and investments according to how these streams reflect alignment of the underlying activities to a low carbon and climate resilient future and taking into account governance issues. (See notes and methodology page for further details on shading).

Information on some qualities of Platzer’s portfolio includes information on some or all of the following aspects:

Year of construction, environmental certification schemes and levels, energy performance categories, specific energy use and specific CO2 emissions. Altogether, four environmental classification schemes are used: Green Building, Miljöbyggnad, LEED and BREEAM. Based on this information, we assign a basic shading to each property according to the following scheme:

Dark Green is assigned to properties with an environmental certificate of BREEAM Outstanding, BREEAM Excellent or LEED Platinum and with an energy use less than 100 kWh/m². Without certification, the energy performance certificate needs to be labelled A or the property should have an energy use below 50% of current regulation¹⁰.

Medium Green is assigned to properties with an environmental certificate of Green Building, Miljöbyggnad Silver, BREEAM Very Good or LEED Gold with an energy use of less than 100 kWh/m^2,11. Properties without an environmental certificate will need as a minimum to be aligned with the EU taxonomy thresholds of energy use 20% below regulations¹² or an energy performance certificate of B.

Light Green is assigned to properties with an environmental certification of Green Building, BREEAM Very Good, LEED Gold or other similar certifications or for existing older buildings¹³ with actual energy use below 100 kWh/m². Finally, wooden buildings following the Do-No-Significant-Harm criteria for sourcing of the wood could qualify as light green.

For properties not fulfilling any of the above criteria, a shade of brown is allocated based on actual energy use and year of construction or last major renovation. No properties with direct fossil fuel heating is green. This basic shading can be upgraded or downgraded based on additional information related to resilience measures, access to electrical vehicle charging stations and access to public transport, etc.

With these provisions, we find that for 2019 1% of rental revenue came from assets considered Dark Green, 33%

from assets shaded Medium Green, 58% from assets shaded Light Green, and 1% from Light Brown assets, 4%

from Medium Brown assets and 1% from Dark Brown assets. 3% was not possible to shade due to missing data

10Interpreted by us as currently of the order of 35 kWh/m² not temperature corrected. Actual verified energy use is preferred for design values.

11Preliminary criteria. Used until better data become available, will be strengthened over time.

12This threshold is thus currently of the order of 56 kWh/m². It is yet unclear how this will be applied, i.e from the EU taxonomy: “The TEG recognises that more work needs to be done to collect and analyse data in order to define absolute thresholds corresponding to the performance of the top 15% of each local stock, such as data showing the distribution of EPCs across the stock and the thresholds used to define EPC ratings”.

13Interpreted as at least 10 years old.

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and are labelled Grey in Figure 4. Thus, over 90% of the rental revenue came from assets with some shade of green.

According to Platzer, all new building projects will be environemtally certified. In 2019, 42% of investments were in properties shaded Dark Green, 14% in Medium Green properties, 42% in Light Green properties and 2% are shaded Grey as some of the investments was not possible to shade due to lack of information, see Figure 5.

Governance Assessment

When assessing the governance of Platzer, CICERO Green looks at three elements: 1) Strategy, goals, policies including policies towards sub-contractors and use of LCA; 2) handling of resilience issues; and 3) reporting.

Based on these aspects, an overall grading is given on governance strength falling into one of three classes: Fair, Good or Excellent. Please note this is not a substitute for a full evaluation of the governance of the issuing institution, and does not cover, e.g., corruption.

Platzer has quantitative targets for CO2 emissions, however without a specific timeline. The target of an annual energy reduction of 2% is in line with business-as-usual technological progress. The target of environmentally certify all properties is good, but the level of certification remains unclear. Entrepreneurs must account for the materials used in the projects, and Platzer seeks to use the most sustainable materials available. Platzer tracks what material is used in all projects, which makes it easy to, e.g., change material in a building if the material proves to be unsustainable. Platzer has plans to incorporate resilience and LCA as bottom-up analysis (for every property) in cooperation with the Swedish Meteorological and Hydrological Institute who can deliver data for each property.

Platzer’s properties are all located at hubs around the city with good availability to public transport. Transport related environmental impacts are thus of minor concern.

The planned reporting is good and include elements of impact reporting, however at a portfolio level. We note that Platzer does not carry out climate scenario analysis or risk assessments in alignment with the methodology recommended by TCFD¹⁴, but that is planned for the future. Assessing these elements, CICERO Green concludes

14https://www.fsb-tcfd.org/publications/final-recommendations-report/

Figure 4 Shading based on rental revenue 2019. Figure 5 Shading based on investments 2019.

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that Platzer is getting a reasonable score on all of the elements and is therefore given an overall governance score of Good.

Strengths

Platzer’s portfolio of properties are mostly characterized as low energy and low emission properties, despite having an average age of 26 years. This is a strength, not least because renovation of old buildings is usually far more climate friendly than new construction. This is reflected in the shading of the revenues for 2019.

Through its strategic framework and other policies, Platzer is committed to contribute to a green transition towards a low carbon society in the longer run. The CO2 emission target is good, but unclear when it comes to target year.

Platzer’s insistence of environmentally certifying all properties will secure a continued reduction in climate footprint and other environmental impacts as long as the national building standards improve over time, but this will depend on what other acquisitions are made to the portfolio.

Weaknesses

Platzer has clear but modest target when it comes to reducing energy consumption further in the shorter term. This can partially be explained by already relatively low energy use and the age structure of the portfolio. Also, we note that Platzer do not carry out scenario analysis whether or not formally in alignment with the TCFD recommendations. We find no other weaknesses.

Pitfalls

Our assessment is based on data reported by the company and has not always been verified by a third party. In addition, there are numerous ways to estimate, measure, verify and report e.g. data on energy use, which may make direct comparisons between companies or regulatory criteria difficult and somewhat uncertain. Finally, when it comes to assessing older buildings, the energy implication of environmental certificates is not always clear.

It is unclear to us whether Platzer optimize (from a climate perspective) the choice between new construction versus refurbishments. It is also unclear whether the climate risk of sub-contractors and utilities are explicitly taken into account during project planning. Some of the buildings in the portfolio have a good environmental rating (through certification levels) while not showing energy use below today’s regulation. This is probably at least partly due to the age structure of Platzner’s portfolio which is quite old and relatively energy efficient when the age structure is taken into account. Preserving older buildings may reflect a conscious policy on Platzer’s behalf to minimise the overall climate footprint of the portfolio.

However, in a low carbon 2050 perspective the energy performance of buildings is expected to be improved, with passive and plus house technologies becoming mainstream and the energy performance of existing buildings greatly improved through refurbishments. Platzer is not there yet but is taking valuable steps towards this long- term vision. Environmental certification schemes include many important environmental aspects. However, these certifications alone do not necessarily ensure that energy and resilience aspects are taken into considerations to a high enough degree. In addition most of the energy performance certificates associated with Platzer’s portfolio are quite old and hence may be considered unreliable.

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EU Taxonomy

The proposed EU taxonomy for sustainable finance includes a number of principles including a “do-no-harm clause” and safety thresholds for various types of activities.¹⁵ Do-No-Significant-Harm criteria include measures such as ensuring resistance and resilience to extreme weather events, preventing excessive water consumption from inefficient water appliances, ensuring recycling and reuse of construction and demolition waste and limiting pollution and chemical contamination of the local environment. CICERO Green will not here verify Platzer’s framework against the full EU taxonomy, but notes that the taxonomy includes specific thresholds for the real estate sector, briefly summarized as follows:

1. The design and construction of new buildings needs to ensure a net primary energy demand that is at least 20% lower than the level mandated by national regulations.

2. Ownership or acquisition of buildings built before 2021 should have an energy performance in the top 15% of similar stock.

3. Renovations should deliver 30% energy savings.

4. Large non-residential buildings should have dedicated energy management system.

It is currently unclear how this will apply to Sweden, but it is reasonable to expect that buildings with energy use 20% below present regulation would be aligned with the taxonomy. Furthermore, existing buildings with energy performance certificate of class A or B are most probably in the top 15% of ‘similar stock’. The taxonomy also highlights the importance of lifecycle emissions including a focus on building material such as wood. Energy saving renovations for existing properties that result in buildings lowering their primary energy demand with 30%

are also to be classified as sustainable within the EU Taxonomy. It is further anticipated that activities related to energy efficiency, including installation of solar panels, heat pumps, extension of district heating and cooling, are to be classified as sustainable according to the EU Taxonomy.

Overall, we expect the majority of revenues and investments coming from properties shaded Dark and Medium Green to be aligned with the EU taxonomy, provided the Do-No-Significant-Harm criteria are fulfilled. However, we note that this cannot be guaranteed as the BREEAM and LEED certification schemes do not require a precise energy efficiency criterion to be considered BREEAM Outstanding/Excellent or LEED Platinum.

15 Taxonomy: Final report of the Technical Expert Group on Sustainable Finance, March 2020.

https://ec.europa.eu/knowledge4policy/publication/sustainable-finance-teg-final-report-eu-taxonomy_en

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Appendix 1: Source List

Document Number

Document Name Description

1 Platzer Green Equity Framework Sep 2020_v.4 clean

Platzer’s Green Equity Framework dated September 2020

2 Web site: https://Platzer.se

3 Annual report 2019 Platzer’s 2019 Annual report, including sustainability reporting.

4 Miljövärden för fjärrvärme 2017 Environmental report from Göteborg Energi 2017

5 Miljövärden för fjärrvärme 2018 Preliminär Preliminary Environmental report from Göteborg Energi 2018

6 Miljövärden för fjärrvärme 2019 Prel Preliminary Environmental report from Göteborg Energi 2019

7 02.10.2020 Platzer bedömningsmatris per

fastighet Excel sheet with data on single properties

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Appendix 2: Background

The construction and real estate sector have a major impact on our common environment. According to the National Board of Housing, Building and Planning's environmental indicators, it accounts for 32% of Sweden's energy use, 31% of waste and 19% of domestic greenhouse gas emissions. Calculations from Sveriges Byggindustrier indicate that the climate impact of new production of a house is as great as the operation of the house for 50 years.

As members of the EU, Sweden is subject to the EU’s climate targets of reducing collective EU greenhouse gas emissions by 40% by 2030 compared to 1990 levels, increasing the share of renewable energy to 32% and improving energy efficiency by at least 32.5%.¹⁶ The European Green Deal aims for carbon neutrality in 2050.¹⁷ Sweden has developed a National Energy and Climate Plan (NECP) in which it outlines the targets and strategies in all sectors.¹⁸ These strategies include measures such as increasing renewable energy capacity, increasing energy efficiency, facilitating the large scale implementation of clean transportation alternatives, and increasing carbon sinks through reforestation and the LULUCF sector. Non-ETS emissions, of which public buildings and households are a part, must decrease by 63% by 2030.

The building sector accounts for a large share of primary energy consumption in most countries, and the IEA reports that the efficiency of building envelopes needs to improve by 30% by 2025 to keep pace with increased building size and energy demand – in addition to improvements in lighting and appliances and increased renewable heat sources.¹⁹ The energy efficiency of buildings is dependent on multiple factors including increasing affluence and expectations of larger living areas, growth in population and unpredictability of weather, and greater appliance ownership and use. Additionally, approximately half of life-cycle emissions from buildings stem from materials/construction. The other half stems from energy use, which becomes less important over time with the increasing adoption of off-grid solutions such as geothermal and solar. All of these factors should therefore be considered in the project selection process. In addition, voluntary environmental certifications such as LEED and BREEAM or equivalents measure or estimate the environmental footprint of buildings and raise awareness of environmental issues. These points-based certifications, however, fall short of guaranteeing a low-climate impact building, as they may not ensure compliance with all relevant factors e.g., energy efficiency, access to public transport, climate resilience, sustainable building materials. Many of these factors are covered under the World Green Building Council’s recommendations for best practices for developing green buildings.²⁰ CICERO Shades of Green assesses all of these factors when evaluating the climate impact of buildings.

The Exponential Roadmap²¹ lays out a trajectory for reducing emissions by 50% by 2030 and requires that emissions reductions strategies within the buildings sector be rapidly scaled up. The roadmap advocates for standardised strategies that are globally scalable within areas such as new procurement practices for construction and renovation that require dramatically improved energy and carbon emission standards, developing new low- carbon business models for sharing space and smart buildings to achieve economies of scale, and allocating green bond funding for sustainable retrofitting and construction.

16 https://ec.europa.eu/clima/policies/strategies/2030_en

17 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en

18 https://ec.europa.eu/energy/topics/energy-strategy/national-energy-climate-plans_en

19 https://www.iea.org/reports/building-envelopes

20 https://www.worldgbc.org/how-can-we-make-our-buildings-green

21 https://exponentialroadmap.org/wp-

content/uploads/2020/03/ExponentialRoadmap_1.5.1_216x279_08_AW_Download_Singles_Small.pdf

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Appendix 3: About CICERO Shades of Green

CICERO Green is a subsidiary of the climate research institute CICERO. CICERO is Norway’s foremost institute for interdisciplinary climate research. We deliver new insight that helps solve the climate challenge and strengthen international cooperation. CICERO has garnered attention for its work on the effects of manmade emissions on the climate and has played an active role in the UN’s IPCC since 1995. CICERO staff provide quality control and methodological development for CICERO Green.

CICERO Green provides second opinions on institutions’ frameworks and guidance for assessing and selecting eligible projects for green bond investments. CICERO Green is internationally recognized as a leading provider of independent reviews of green bonds, since the market’s inception in 2008. CICERO Green is independent of the entity issuing the bond, its directors, senior management and advisers, and is remunerated in a way that prevents any conflicts of interests arising as a result of the fee structure. CICERO Green operates independently from the financial sector and other stakeholders to preserve the unbiased nature and high quality of second opinions.

We work with both international and domestic issuers, drawing on the global expertise of the Expert Network on Second Opinions (ENSO). Led by CICERO Green, ENSO contributes expertise to the second opinions, and is comprised of a network of trusted, independent research institutions and reputable experts on climate change and other environmental issues, including the Basque Center for Climate Change (BC3), the Stockholm Environment Institute, the Institute of Energy, Environment and Economy at Tsinghua University and the International Institute for Sustainable Development (IISD).