Investing in sustainability
At Bridges, our mission is to help build a more sustainable and inclusive economy – one that enables more people to thrive and fulfil their potential, while protecting and restoring our planet.
We follow the Brundtland Commission’s definition of sustainability, which talks about “meeting the needs of the present without compromising the ability of future generations to meet their own needs". By this definition, humanity is failing: we are currently overshooting every single one of the UN’s ecological limits. And for all the progress made on emissions reduction since the Paris Agreement of 2015, it looks as though we may already have left it too late to limit global temperature rises to 1.5C. Tackling these challenges is hard enough; tackling them in the teeth of an ESG/ Net Zero backlash is harder still. So it’s no wonder that people have suggested that we are living through a ‘sustainability recession’.
According to the UNDP’s People’s Climate Vote 2024, which surveyed 77 countries, 80% of respondents want their governments to take stronger climate action
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But it’s not all bad news. If we zoom out a little, there are definitely reasons to be positive. For example, in 2024, global renewable energy capacity hit 4,448GW, 15% up on the previous year – with solar up by 32%. China has been the biggest driver of this: in 2023 it installed more solar power than the rest of the world put together. But there is progress closer to home, too: this year, for the first time, more than half of the energy that powers our grid will come from renewable sources. Electric cars now account for over 20% of global light-duty vehicle sales, up from less than 1% a decade ago. And at the recent COP, countries agreed to triple adaptation finance to $120bn annually. These are long-term societal shifts that are only going in one direction.
Another positive indicator is that public support for climate action remains very strong. According to the UNDP’s People’s Climate Vote 2024, which surveyed 77 countries covering 87% of the world’s population, 80% of respondents want their governments to take stronger climate action. More than half of respondents (56%) said they think about climate change every day or every week, while one in three said it significantly affects their major life decisions, such as where to live or work. In other words: whatever some would have us believe, positive climate action remains pretty popular with voters.
However, we cannot afford to take this kind of public support for granted. The recent backlash in part reflects a failure of politicians and lawmakers to bring people with them on the journey to Net Zero – to show that the benefits outweigh the costs. The reality is that any climate action must be rooted in the lived experience of people – or we have no chance of building the long-term consensus necessary to drive change.
Of course, one of the easiest ways to make the case for sustainability is to talk about its economic benefits. Through our Property Funds, we are currently developing some of the UK’s most sustainable industrial buildings – and because minimising embodied carbon and maximising on-site renewables makes these buildings more resilient and cheaper to run, they’re also more attractive to occupiers and onward investors.
Over the last year, our investment in this area – and the challenges we’ve seen along the way – has pushed us to think more broadly about decarbonisation of the built environment. Through a project led by our Bridges Insights team, we have developed a ‘Spectrum’ of real estate decarbonisation (inspired by our earlier ‘Spectrum of Capital’). It allows for a simple classification of the carbon performance of real estate assets, with the ultimate goal of achieving buildings that are ‘True Zero’: i..e. zero emissions across their whole life-cycle, without the need for offsets. In this section, we introduce some of the thinking behind this Spectrum. We also provide a case study of one of the most sustainable industrial buildings in the country: Nursling 135 near Southampton, an EPC A+/ BREEAM Outstanding development that we exited this year.
In line with our ongoing commitment to try and support the growth of sustainable and impact investing, we recently shared our Spectrum with the market. We hope it will prompt many more conversations with fellow travellers about how to accelerate the pace of change in real estate decarbonisation.
Technology is clearly going to be a big part of the solution here – from innovations like smart grids and battery management systems, which facilitate the integration of on-site renewable energy, to solutions that reduce people’s everyday emissions. MatrixIQ, which we also feature in this section, is a good example of the latter: its technology helps drivers optimise route selection (thereby reducing car emissions), limit wear and tear and have fewer accidents. We’ll be exploring this topic of technology and decarbonisation in more detail in 2026.
If humanity is to have any hope of reducing carbon emissions in line with the Paris Agreement goals, the built environment – which currently accounts for 40% of the global total – has to be a top priority.
But even for investors who are committed to finding solutions to this challenge, decarbonisation is easier said than done. Navigating the various standards and guidance developed across different sectors and different geographies can be complex. Terminology is used in confusingly different ways. And there's still too much focus on operational carbon, when embodied carbon will soon be the largest contributor to a building’s ‘whole life carbon’. All of this makes it difficult for investors to evaluate and compare the true carbon performance of their assets.
To help us navigate some of this complexity, we have developed a ‘Spectrum of Real Estate Decarbonisation’. It allows us to map real estate assets into one of four categories, depending on how their carbon performance compares with a globally-accepted benchmark: the Science-Based Targets. Crucially, it also lays out some practical steps that can be taken to improve performance, with the ultimate goal of getting to 'True Zero Buildings': buildings that are zero emissions across their whole lifecycle, without the need for offsets. That means reducing energy consumption through smart design, construction and management, then maximising the use of on-site renewables.
But this Spectrum is just a first step. Achieving the radical decarbonisation necessary in the built environment will require two things: innovation and collaboration. This Spectrum already reflects the expert input of some of the real pioneers in this area - investors and developers. We hope that publishing it will spark more conversations like these.
In the coming year, we’ll be sharing more insights from pioneers – along with case studies from our own portfolio, and some thoughts on the role technology can play in this transition. Watch this space!
The Bridges team explains more about our thinking on decarbonisation in this short video
Bridges Insights is the dedicated knowledge and advisory arm of the Bridges Group.
Its mission is to build Bridges' expertise, facilitate the flow of capital towards impactful enterprises, and support the growth of sustainable and impact investing.
It does this through selected research and advisory projects, drawing on Bridges’ two decades of practical experience of investing for impact.
Read our Spectrum in full here
CASE STUDY: PROPERTY
Highly sustainable industrial/ logisticsdevelopment near Southampton
THESIS
The rise in e-commerce – accelerated by the pandemic – has driven greater investment in urban and last-mile logistics, while macro factors such as re-shoring are also increasing manufacturing take-up. As such, highly sustainable industrial buildings are becoming increasingly sought-after by organisations looking to respond to this growth in customer demand while also reducing operating costs and carbon emissions; this not only supports their own climate goals, but also makes the building more resilient to climate change and future regulation.
INVESTMENT
Bridges partnered with Graftongate, a specialist developer, to bring forward Nursling 135, a new c.135,000 sq. ft. state-of-the-art industrial unit on an underused six-acre brownfield site near Southampton.
The scheme sits on the Nursling Industrial Estate, part of an established industrial and logistics zone that stretches from the M27 to the Port of Southampton, which is just five miles away to the south.
OUTCOMES
Nursling 135 is one of the UK’s most sustainable industrial buildings. It is rated EPC A+, BREEAM Outstanding and has been designed to achieve zero operational carbon at completion, with photovoltaic panels providing over 100% of the building’s energy needs. It also offers 10 electric vehicle charging points on site and rainwater harvesting technology contributing to water efficiency 50% above the BREEAM baseline.
By revitalising what was previously a disused site, Bridges and Graftongate have created a development that could potentially support about 175 new jobs for the local community.
We successfully exited the scheme this year to global real estate platform Indurent.
17% reduction vs benchmarksAhead of Science-Based Targets(Spectrum: LEADING)
100% reduction vs benchmarksAhead of Science-Based Targets(Spectrum: LEADING)
CASE STUDY: PRIVATE EQUITY
Fleet telematics and software provider helping to improve driver safety, prevent accidents, and reduce emissions
In 2018, the UK’s transport sector was the largest emitter of net domestic greenhouse gases (28%); and in 2019, 91% of the country’s transport emissions were produced by road transport vehicles. Sector-specific technology-driven solutions continue to gain traction, from electric and hydrogen powered vehicles to low cost, low carbon & high-efficiency operating innovations, to essential improvements in road safety. In 2020, collisions on the UK’s roads caused 1,460 deaths, 22,000 serious injuries and 92,000 slight injuries. A third of these incidents were estimated to be individuals driving for work. There is no separate test or training required for occupational drivers, and many occupational drivers get no driving training throughout their career.
Based in Altrincham, Matrix iQ provides cutting-edge software-based solutions that make occupational driving safer and cleaner. The telematics data it collects provides operators and clients with insights into vehicle risk, location and utilisation, including granular details on driver braking and acceleration habits, which help to mitigate exhaust emissions plus tyre wear and tear (which can leave particles on the roadside). As well as minimising the environmental impact of fleets, Matrix’s technology has an economic benefit (by minimising fuel usage via efficient routing and managing vehicle maintenance) while also improving driver behaviour and safety – reducing accidents, injuries and deaths.
Matrix iQ’s fleet management solutions improve driver safety and performance via training and live monitoring, leading to safer fleets, increased fuel efficiency and ultimately reduced carbon emissions. Its technology now tracks over 45,000 vehicles, saving over 120 tonnes of CO₂e through route optimisation and improved driving. 77% of drivers recorded improved driving performance.
