By Donna Kelly
5 September 2012 — Australian property companies again outperformed their peers in other regions in the 2012 Global Real Estate Sustainability benchmark survey released on Wednesday, with four funds recognised as sector leaders.
They are, in alphabetic order:
- Colonial First State Global Asset Management’s Commonwealth Bank Group Super – diversified
- Colonial First State Global Asset Management’s Commonwealth Property Office Fund – office
- Lend Lease Investment Management – industrial
- Stockland – residential
- The GPT Group – retail
The annual world-wide survey provides a global standard for assessing, monitoring and improving the sustainability performance of real estate portfolios.
Based on sustainability data gathered from almost 450 property companies and funds around the world, the survey found that real estate investors and managers were intensifying their focus on improving the sustainability performance of their assets.
Key trends found in the survey included:
- High on the agenda – Sustainability is moving up on the agenda with 88 per cent of property companies and funds having dedicated resources to manage the sustainability performance of their assets. Another 80 per cent of respondents had an articulated vision or strategy on sustainability, and a senior manager had the ultimate responsibility for sustainability issues at 92 per cent of the respondents
- Energy consumption a big focus – At 81 per cent, energy consumption is the main policy focus, representing a slight increase from 2011 when it was 75 per cent. Importantly, 60 per cent of the respondents now collect and report energy consumption data, as compared to just 34 per cent in 2011
- Emissions down – On a like-for-like basis, the greenhouse gas emissions of 171 property companies and funds decreased by 6 per cent. In absolute terms, this is a reduction of 432,000 metric tons of CO2, which is equivalent to removing 85,000 cars from the road
- Green building ratings – Green building certification is becoming more prevalent, with 51 per cent of the respondents including green building certificates in their portfolio. LEED certification is the most widely adopted
- Green talk – There is a noticeable shift in “Green Starters” moving towards “Green Talk” which further illustrates the growing focus on addressing sustainability issues. The number of Green Stars increased from 65 in 2011 to 82 in 2012
However, the GRESB data showed there were several areas where property companies and funds could make substantial improvements, including:
- Starters – 40 per cent of the property companies and funds are still considered “Green Starters,” with limited disclosure of sustainability performance towards the investment community.
- Data – Portfolio coverage of energy data is still limited with 52 per cent of respondents having data for less than 10 per cent of their portfolio. Measuring tenant-obtained energy remains a challenge, with less than 8 per cent of respondents collecting such information
- Assessment – Only 34 per cent of respondents conduct regular risk assessments on climate change risks. Regulatory and financial risks related to sustainability are conducted by over half of the respondents
- And after energy efficiency – There is still limited progress in sustainability performance beyond energy efficiency. Engagement with tenants is implemented by half of the property companies and funds, 86 per cent of the respondents in Australia, whereas sustainability is integrated in contracts for external suppliers/service vendors by 55 per cent of the respondents.
The survey’s report gave Australia a general tick of approval, saying that since inception, property companies and funds from Oceania have “led the way in implementing sustainability in real estate portfolios”.
“On aggregate, Australian respondents receive higher GRESB scores than their peers in other regions,” the report said.
“The Australian market is quite mature in tackling sustainability issues, which is reflected in very high scores for aspects like sustainability management (79 per cent), assessing sustainability risks and opportunities (79 per cent) and the deployment of environmental management systems (69 per cent).
“A stunning 95 per cent of respondents have internal resources dedicated to sustainability and all but one respondent have senior management accountability for sustainability.
“While there remains room for improvement in the collection and management of environmental performance data, all respondents in the region have assessed the energy performance of standing investments and 95 per cent have implemented an energy efficiency program for standing investments during the last three years.
“Many property companies and funds in Australia are increasingly looking beyond environmental aspects and have started to focus on tenant engagement (88 per cent have a program of tenant engagement in place), with about a third of the respondents addressing health and wellbeing aspects.
“Sustainability criteria are commonly integrated into the supply chain with more than 80 per cent of Australian respondents integrating sustainability into contracts for external suppliers and/or service providers.
“Within respondents’ organisations there is strong focus on social factors as well with almost 90 per cent providing employees training and education.”
Colonial First State Global Asset Management property managing director Angus McNaughton said the company had a dedicated sustainability team that helped drive initiatives across all of the listed and unlisted property funds it managed in Australia and New Zealand.
CPA Fund manager Charles Moore said since FY2007 the company had made substantial reductions in its environmental footprint with its portfolio 30.4 per cent more energy efficient, 21.3 per cent more water efficient and producing 30.2 per cent lower emissions intensity.
“The reason we take sustainability so seriously is because we know it makes good business sense. The fund’s cumulative avoided energy costs alone since July 2007 stand at $8.2 million,” he said.
GPT chief executive officer and managing director Michael Cameron said sustainability was integrated into all aspects of the business, including strategy, culture and stakeholder engagement.
“GPT’s approach to environmental sustainability has delivered significant savings to the Group since 2005,” he said.
“We have reduced water intensity by 38 per cent, energy intensity by 28 per cent, carbon emission intensity by 36 per cent and improved recycling rates from 29 per cent to 49 per cent. These efforts saw GPT avoid $15.9 million in costs.
“In 2011/2012, we have focused on strengthening community engagement and investment. Our research has highlighted recurring themes around social inclusion, education and employment.”