By Tina Perinotto
11 November 2010 – Kate Langan comes with impeccable credentials. She has headed ANZ’s property operations since 2009, is an architect by training, and in her previous role was a regional director for Jones Lang LaSalle, with a strong track record in corporate real estate. In fact it was a contact from the CRE industry who suggested that Langan would make an interesting interview subject.
But The Fifth Estate was already intrigued. In reporting some recent changes to the property roles at the bank, it emerged that the property operations had sprung to the top of the top of the reporting tree, taking charge of the sustainability and corporate responsibility units – normally it’s been the other way around.
One of those new roles in itself was significant: – the luring of Dr Gabrielle Kuiper to head the sustainability team after only a few months with VicUrban, and a former key role with Investa in Sydney.
These were all moves that followed the decision by Langan’s predecessor at the bank, Jane Hamilton, to catapult the bank’s sustainable property ambitions to a new level when she backed the move to make the proposed five star Green Star headquarters at Melbourne’s Docklands a deep -green six stars.
(Hamilton, by the way, is now in a high profile property job with HSBC in London.)
According to Langan, the restructure of reporting lines in the bank is part of a new understanding of the role of property in sustainability.
“For those crucial environmental elements it made sense for property to take on the sustainability team, which previously sat in an area called shared services,” Langan says in an interview last week with The Fifth Estate.
“Property was taking the lion’s share of that work,” she says. “Previously it had worked closely with corporate responsibility under which sat the wider social responsibility agenda, of which environmental issues were just one part.”
“It’s a recognition that 75 per cent of emissions comes from property generally.”
In terms of signifiers, Langan says it was probably the move to Docklands in Februrary that proved to be a watershed for how the bank viewed property.
“The ANZ Centre marks a turning point in the ANZ property journey and the building, as [chief executive officer ] Mike Smith said, very much embodies and demonstrates the new global view and values of the bank.”
And that’s no small call. As Langan puts it: “ANZ has a super- regional agenda by which it strives to be the best bank in Australia and the Asia Pacific, striving to be very customer- centric across those markets and recognising that Asia, being on our door step, – recognising the trade Australia and New Zealand has with the region.”
The Asian reference is key. One reason for Kuiper’s appointment is to bring a level of sustainability to the bank’s burgeoning property portfolio in the region.
This includes the string of properties that need to be absorbed as part of ANZ’s 2008 acquisition of the Royal Bank of Scotland, on top of the organic growth that will come from the licences acquired in India and China, as well as in the existing Asian markets as such as Hong Kong and Singapore.
In Australia the move to ANZ was conceived by former CEO Don McFarlane who wanted to bring ANZ staff together from 13 separate locations in the Melbourne CBD, and it was backed by Smith when he took the CEO role.
“Mike made the commitment, could see it was a step change and opportunity for more open and collaborative work,” Langan said.
So the bank left its famed “gothic building” at 388 Collins Street with its small floor plates and ageing facilities and shifted to Docklands and a new customer-centric profile. Once through the security barrier, staff are able to move freely though the building and work in the library or in “neighbourhoods” with arrays of work stations.
“It was move to a new generation of super-regional and customer-centric operations,” says Langan. And while the deep green credentials might be nice, they in no way indicate that the bank is going the same way.
“At ANZ we like to think of ourselves as fast followers,” Langan says. The bank does not want to appear to shareholders as if it wants to “change the world”, but at the same time it’s keen to demonstrate that “a level of sustainability is becoming very, very important.”
This moderate view shows through in the bank’s new Sydney headquarters at Grocon’s $800 million tower at 242 Pitt Street, which will aim for a relatively modest five star Green Star rating.
Langan – and separately Grocon – say the decision to stop at five star was taken jointly by all the stakeholders: tenants the ANZ and Freehills (which will have its own entrance at the adjoining 163 Castlereagh Street), and investors GPT Group, LaSalle Investment Management and Grocon.
“We work closely with the developers… and the commercial reality of what’s achievable,” Langan said.
What about the bank’s vast portfolio of retail properties? What is the sustainability aim there?
The ratio of leased to owned is about 80:20, says Langan. “We tend to own where it’s near and dear to our hearts, such as the ANZ Centre, but leasehold gives you more flexibility.”
Again it’s about working with the realities of the marketplace. And while mandatory disclosure will create greater awareness throughout the industry, there is no doubt that it’s much easier to hammer out sustainability issues with bigger developers and landlords rather than the typically smaller private investors that own much of ANZ’s retail portfolio, she says.
“It’s more difficult with the smaller landlords. And we do have to make [the decisions] commercially viable.
“Retail is a lot more complex, especially when you are dealing with shopping centres and the like,” Langan adds. “For instance, how do you do your NABERS rating? It’s there at the centre as a whole, [but not separately for the bank’s facility].”
At the same time there is an ongoing program across both the leased and owned portfolios to improve energy performance.
“We’re working with specialists in the area and looking critically at how we manage and monitor our portfolio and how we ensure we manage our energy consumption.
“And it helps us decide where we put our capital as well, not just in the physical energy space but in terms of tracking the bank’s travel and use of water [and other sustainability obligations].”
What about the lease covenants? Are green leases entering the negotiations?
“Green leasing is what Gabrielle is looking at for us now,” says Langan.
The Asia Pacific challenge.
Kuiper, who has sat in on the conversation, agrees that retail issues are difficult. But maybe they pale a little compared with the challenges of eking out some sustainability standards in the Asia Pacific region.
There’s quite a bit of work in integrating the portfolio of properties that came with the RBS for a start, says Kuiper. On top of that is the organic growth in the region.
“One of my biggest challenges is growth in the Asia Pacific,” Kuiper says. “The first step is to collect data … which, as you can imagine with 26 countries altogether and 45,000 staff world wide, is not easy. So first and foremost is to get robust reliable data, which will be a challenge.” And she adds: “What do you do when there isn’t a NABERS scheme?”
The US has an energy star rating system and is looking to use that more broadly, but there are also moves for the spread of an adapted NABERS tool, first to New Zealand.
Kuiper says the common carbon metric currently under development (see a TFE article on this) will be only a part solution. “The common carbon metric doesn’t tell you how the building is being used. You need to have an energy measure per square metre, but you also need the carbon calculation. You need both,” says Kuiper.
“My view is you pay for energy. Emissions are ultimately what’s important, but you need to look at both. Because even if you are buying hydro energy [such as Tasmania and New Zealand], you are still paying for it and looking at the cost per square metre.”
In construction, the Asia Pacific region shows signs it will follow the US LEED rating system. But in Singapore, Green Mark has been established, and here ANZ hopes to achieve the country’s first Platinum rating under Green Mark for its new 20,000 square metre headquarters off Raffles Place, through developer Keppel Land.
And then there is the organic growth back home. As usual the pace will be measured, Langan concludes, and sustainability will be kept “front and centre as we go forward in a balanced way.”