ENERGY IN RETAIL, HOTELS & LEISURE


The retail sector has the third biggest building footprint in the UK


ceasing operation down the line. Already, 35% of operations managers estimate more than a third of their estate could become stranded assets if these regulations are implemented. This is already having financial consequences, with retailers losing an estimated £146 million through energy leakage per year from ageing equipment that should be replaced with modern, energy-efficient systems.


Decarbonising the retail sector


A new report from Mitsubishi Electric, Retail Net Zero Readiness 2025, is highlighting the gap between sustainability intentions and action in the UK retail sector.


T


he study surveyed 500 facilities managers and revealed that retailers could lose an estimated £146 million


per year if buildings are not adapted to meet net zero targets. The report emphasises the critical role of facilities managers, the risk of stranded assets and the opportunities presented by upgrading key building systems such as HVAC.


Bridging the gap UK retailers are under increasing pressure to decarbonise their estates. Buildings account for roughly a quarter of the UK’s carbon emissions, making the retrofit of retail properties essential to meet net zero commitments. Yet despite widespread awareness of sustainability’s benefits, a significant proportion of the sector remains unprepared for the operational and financial implications. Despite eight in 10 retail operations managers knowing that sustainability can boost financial performance, almost half (43%) believe net zero is not seen as a priority for their business because the return on investment falls in future trading years. The report finds that 89% of facilities managers feel prepared to meet net zero targets. However, 34% believe parts of their retail estate will remain non-compliant. The disconnect stems in part from corporate prioritisation, with 43% of facilities managers reporting that net zero is not treated as a business priority within their organisations.


The role of FMs Facilities managers play a pivotal role in delivering decarbonisation strategies. According to the report,


EIBI | SEPTEMBER 2025


84% recognise their ability to improve sustainability and see its value to the business, while 83% agree that energy efficiency and environmental performance can positively impact financial outcomes. Upgrades can also enhance staff and customer experience through better air quality, temperature control, and comfort. Forward-thinking retailers are adopting a phased approach towards net zero upgrades, which helps to spread upfront equipment costs by tying it to lease events or planned refurbishment. However, the research also finds that many of those responsible for running these estates have little influence over sustainability, and this is affecting their ability to act. Over a third have no control over budgets or decision making for net zero and 42% report that they have had no direction from their seniors, while 21% do not even have net zero as part of their performance targets. This lack of authority is stalling


upgrades to one of the UK’s most energy-intensive industries. While facilities managers recognise that


decarbonising estates can boost financial results and strengthen business resilience, many just aren’t being empowered to act. Chris Newman, zero carbon design manager at Mitsubishi Electric Living Environment Systems, says: “The retail industry has the third largest building footprint in the UK, with around 16% of all non-domestic building space occupied by shops. This offers a substantial opportunity to decarbonise at scale, starting with identifying the ‘easy wins’ now and reviewing the systems responsible for heating, ventilating and cooling these spaces. In having an in-depth understanding of how this equipment operates, facilities managers are uniquely positioned to support the delivery of net zero estates in future.”


Stranded assets With regulations such as the Minimum Energy Efficiency Standards (MEES) expected to tighten over the next five years, retailers that don’t adapt their buildings also risk them becoming unlettable, losing asset value, and


Replacing equipment with energy-efficient alternatives, such as modern air conditioning and heat pumps, can lead to significant energy and cost savings


Upgrading HVAC systems Replacing equipment with energy- efficient alternatives, such as modern air conditioning and heat pumps, can be as straightforward as replacing indoor and outdoor units while keeping the existing pipework. This can lead to significant energy and cost savings, compliance with incoming regulation and ensure that the retail industry is prepared for the net zero economy. Heating, ventilation, and air


conditioning systems are particularly significant, accounting for up to 60% of a store’s energy consumption. The Mitsubishi report shows that 54% of facilities managers have implemented energy-efficient upgrades to these systems, but significant potential remains. Practical upgrades do not always require large-scale interventions. Adjustments to control settings, scheduling, and routine maintenance can produce immediate gains. Larger interventions, such as replacing equipment or retrofitting buildings, can be aligned with lease renewals or planned refurbishments to minimise disruption and capital expenditure.


Strategy and execution The report emphasises that successful decarbonisation depends on aligning facilities management expertise with corporate strategy. Facilities managers have detailed operational knowledge and are often the first to identify efficiency opportunities. Yet without executive support and budget authority, their ability to influence long- term sustainability outcomes is limited. “The longer we leave it, the harder adapting these buildings is going to get,” concludes Chris Newman. “Now is the time for retailers to be creating long-term strategies that align ‘business as usual’ with concrete commitments for energy reduction. This will not only support compliance with existing and proposed regulations like MEES but also protect asset value and lower costs at a time when the majority can ill-afford further financial strain. This will allow retailers to stay competitive and fully operational within an increasingly sustainably minded market.” ■


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