23 September 2011 – The bar for sustainable property reporting world-wide just got higher, thanks to the new reporting guidance for the property construction sector released today (Thursday) by the highly regarded Global Reporting Initiative.
According to Steve Driscoll, director of sustainability and policy for Landcom, who was one of two Australians on the two-year working group, along with Maria Atkinson, global head of sustainability for Lend Lease, the reporting framework has also become more transparent, and probably fairer.
In an interview with The Fifth Estate, Driscoll explained there were eight new “commentaries” or reporting topics introduced. These include carbon emissions, management and remediation of contaminated land, and sub-contracted labor issues.
The process involved starting with the general commentaries for reporting.
“We then tinkered with upwards of 40 commentaries to get them to say something important and relevant to property an then introduced another eight,” he says.
According to Driscoll the GRI had reached its general reporting framework, G3.1 during the working party and has now released the latest version G4.
“These are, as the name suggests, general…but they don’t go deep enough into our sector,” Mr Driscoll said.
The GRI has completed a sector specific framework for the financial industry, airports and footwear and apparel and utilities. The property sector report is the latest addition in the evolution.
So what will the GRI now look at more closely in relation to property?
Product and service labelling, including building and material certification, for a start. What’s a star worth, for instance; what does it actually measure?
“The GRI doesn’t pick a winner,” says Driscoll. “It says if you are claiming some sort of outcome with star ratings, then disclose what your level of performance is in relation to that.”
Australia is pretty good at this, he says, but the rest of the world is very patchy by comparison.
Another of the new criteria is building energy intensity, water intensity and CO2 emissions and the GRI is ” very concrete and very definitive about calculating that.”
The common carbon metrics being devised by the United Nations Environment Program is looking to harmonise the way carbon is measured, a process Driscoll thinks will be finalised soon.
Water is fairly easy as long as there is a meter, and it’s the same for energy use, but a more complex issue is “whose carbon is it?”
Labour and health issues will be particularly relevant for companies operating in developing countries or unstable environments such as war zones.
But these issues can also hit closer to home.
“You can be doing a wonderful eight star building but if it’s furnished with materials made in a sweat shop in Thailand then you should disclose this.”
Some of the more challenging commentaries are around labour issues, says Driscoll. Do the indicators call for disclosure of “near misses” for instance. If not dangerous labour practices can go undetected in the reporting framework, he says. It means that a company that does disclose this may be penalised in the view of the reporting results, against a company that does not.
How it works
The point about the GRI Driscoll says, is it is “non judgemental”. It does not say whether your results are good or bad, it simply provides areas for “commentary” that a company either addresses or not. However, each company reporting against a GRI will be rated according to its level of disclose – that is how many of the commentaries it addresses.
“It’s all about reporting honestly and opening up; it doesn’t care if it’s a bad or a good impact.”
The assessment is someone else’s job, says Driscoll.
“That’s why they introduced Bloomberg. Because Bloomberg will trawl through the reports and go through a process to rank or describe the results.”
The other discretion is the “materiality test” in which a company discloses how many of the criteria are relevant to its operations.
The GRI tends to report in a five-year trend cycle: does the company’s results show an upward or downward trend in the cycle? There is also a rating for the level of disclosure which measures the number of indicators reported against, not a ranking of the results.
According to Driscoll interest in reporting is on the rise.
“There is an enormous amount of interest in disclosure and it’s put to different purposes, sometimes scientifically, sometimes not and there is a tension that exists with a certain set of results and how it’s applied by ratings.”
Ten countries were represented on the working group and Lancom was selected from a number of applicants for its track record of sustainability reporting, Driscoll says. Other participants were Bloomberg and Engineers against Poverty, the United National Environment program, the Energy and Resource Institute and the British Property Federation
So what are some of the issues for Landcom’s reporting?
Landcom has used the GRI since it started reporting, says Driscoll. And the qualitative elements of the mechanism probably suit it because of the complexity of its operation.
For instance, there is little point in trying to compare Landcom with other government development agencies or private companies because of the various imperatives that apply to each entity, says Driscoll. For Landcom, for instance, it can mean that provision of affordable housing rates higher in its agenda than it would for a publicly listed company.
But it also has to make a profit.
“It’s the beautiful tension that is Landcom; our first objective is to be commercial.” The next six or seven imperatives related to issues such as the provision of affordable housing, presence at the regional level and environmental outcomes, and these fight against us being as economic as private developers.”
But other government owned development agencies might have different objectives. In fact they do, says Driscoll. VicUrban for instance has recently moved from a land development concern to focus urban renewal.
Landcorp in WA is still involved in residential for instance but also in port development and some of the issues around development pressures in mining boom towns such as in The Kimberleys.