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A rendering of a lobby in the new offices of the Ontario Teachers’ Pension Plan at 160 Front. St. W. in Toronto. The offices were designed with sustainability in mind, which includes environmentally friendly office furnishings and building materials.Handout

The Ontario Teachers’ Pension Plan prides itself on investing in sustainable companies. So, in planning to move its head office to a new building in downtown Toronto, it’s placing emphasis on the environmental impact and sustainability of its own office furnishings and materials.

“A lot of the furnishings in the building we’ve been in since the 1990s are at their end of life. Moving to the new building gives us a clean slate,” says George Konidis, OTPP’s managing director and global head of real estate operations and workplace transformation. The pension plan has made public commitments to be net zero by 2050 and since 2019 has already decreased its portfolio emissions intensity by 32 per cent and absolute emissions by 3 per cent.

The new offices that accommodate roughly 1,650 employees are moving from an older building at Yonge Street and Finch Avenue to fill about a third of 160 Front St. W. “This is a new building designed with sustainability in mind and it is a better marriage with what we stand for as an organization. We have an opportunity to select the right materials and equipment to provide for the well-being of our employees,” Mr. Konidis says.

The task chairs we’ve selected will contain over 40 per cent recycled material and 50 per cent readily recycled parts.

George Konidis, managing director and global head of real estate operations and workplace transformation of Ontario Teachers’ Pension Plan

Desks, chairs, fabrics and flooring being purchased for the move in the spring are all being vetted for environmental impact and sustainability before purchase. Criteria include use of recycled materials and recyclability, sustainable local manufacture and even the kind of packaging they will be delivered in, Mr. Konidis says.

Suppliers are offering more ecologically friendly furnishings and cleaner manufacturing technologies than were available in the past, he says. “For instance, the task chairs we’ve selected will contain over 40 per cent recycled material and 50 per cent readily recycled parts. There are a lot of fabric selections that contain significant amounts of recycled materials.”

There is a growing trend of tenants prioritizing office environment, and they could consider moving if landlords don’t work with them to help meet their sustainability goals, concludes a new study on the future of real estate by Deloitte Canada.

It surveyed 100 major Canadian commercial real estate owners and tenant companies and found only 26 per cent of office landlords have a decarbonization strategy and emission-reduction goals for 2030, while just 34 per cent said they use sustainable materials. Meanwhile, nearly half of the tenants surveyed from a diverse range of industries said they might seek early lease termination if landlords fail to meet their own decarbonization and net-zero goals.

“Landlords of buildings that are updating their investment in sustainability, for example in common areas and building envelopes that create sustainable office environments, can be seen to have a more perceived value in this market,” says Marco Macagnano, digital real estate leader at Deloitte in Toronto. “Tenants are more likely to want to move into offices if their buildings are net-zero carbon aligned.”

These days it’s important for landlords to structure incentives and shared costs to provide green benefits and customization for tenants, otherwise many of them may begin to think about lease renegotiation, he adds.

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Tenants are more likely to want to move into offices if their buildings are net-zero carbon aligned, says Marco Macagnano, digital real estate leader at Deloitte in Toronto.Handout

“Many companies have set 2030 as a target for carbon-neutral and that’s right around the corner,” he says. “Many current properties and offices are below modern standards of green building performance and materiality while a program of upgrades can take years to complete, so there’s really a small window to begin making improvements.”

Calculating the return on investment from building modernization and retrofits is something landlords are struggling with at the moment, Mr. Macagnano says. However, “landlords are increasingly aware of the risk [that] not acting has on longer-term asset value and market attractiveness.”

To help building owners and tenants assess environmental effects of construction materials, Gensler (the global architecture firm that is designing OTPP’s new office) is launching a material performance system it calls GPS – the Gensler Product Sustainability Standards, version 1.0.

The standard includes 12 categories of construction materials, including carpet tiles, ceiling tiles, insulation, partitions, metal framing and paint. It quantifies the effect of embodied carbon on interior air quality, emissions and the lifespans of materials.

“This is a clear framework that we’ve launched publicly that gives our client partners and the construction industry notice that we will be targeting levels of performance,” says Philip Galway-Witham, Gensler’s northeast region resilience and sustainability leader.

“For each portion of the industry there are different levels of requirements with enough nuance that we can encourage the industry to supply more carbon-neutral materials,” he says. “We are asking suppliers to provide third-party environmental product declarations of what has gone into the production, in terms of energy, carbon and recyclability.”

GPS also asks providers for documentation of volatile organic compounds that could be off-gassed from their materials.

While the standard is voluntary, jurisdictions around the world are setting embodied carbon standards.

“Broadly speaking, the market today still only has a minimum level of certification,” Mr. Galway-Witham says. “Our goal is to start a discussion within the design firms, material suppliers and the construction industry to encourage the industry to improve compliance.

“These are not standards we are making up,” he adds. “Many of them are out there already, but we hope to make them centre stage and keep moving the needle. We are hearing feedback from contractors that say, thank you for having the foresight to lay this all out.”

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