According to Margot Black, Investa’s corporate sustainability manager, if there are more changes in climate policy, carbon taxes or anything of a similar nature, her company will be ready with a portfolio running on a very low carbon footprint and future proofed investments.
Investa is seeking to strengthen its position as a leader in the sustainable property market by setting itself a target of 100 per cent green finance across its core managed funds by 2025, as part of its new Transform Tomorrow ESG strategy.
The firm has a strong track record of leadership in green loans. Back in 2017, the Investa Commercial Property Fund laid claim to the first green bond in Australia’s first green loan that is globally recognised by the Climate Bonds Initiative.
The company has also led the industry across a range of sustainability initiatives such as committing to net zero emissions by 2040 through the Science Based Target initiative, which it did back in 2006, and achieving Responsible Investment Association Australasia certification.
To date, it’s has secured more than $1.4 billion in green debt, representing 86 per cent of its total funding. This includes 100 per cent green debt financing for its $700 million Parkline Place office complex in Sydney’s CBD, and its $130 million Indi Sydney City build to rent residential development.
With emissions reductions now well and truly back on the agenda and after the election of Prime Minister Anthony Albanese, having a strong strategy already in place puts the firm in a good position to meet any future policy obligations.
“We’re future proofing our portfolio by bringing forward our net zero targets so that if there is more changes in climate policy, carbon taxes or anything like that, we’re preparing our portfolio to be running on a very low carbon footprint and we’re enabling our investments to be future proofed in that space,” Investa’s general manager corporate sustainability Margot Black told The Fifth Estate in an interview alongside head of investment management Jason Leong.
Investors, employees and tenants want sustainability
Mr Leong said that investors looking to decarbonise investment portfolios is one of the big factors driving better sustainability outcomes at the firm.
“Increasingly investors are demanding it and expecting it. They want more disclosure, transparency and reporting on sustainability,” he said.
In addition, Ms Black said that the firm’s employees “bleed green” and were keen to take a leadership position around ESG. As the company grows the footprint of its residential Indi build-to-own platform, residential tenants were also looking for sustainable homes.
“As we were doing our materiality assessment and our sustainability strategy review, we were doing a corporate strategy review as well. And our employees were very passionate about ESG and they really wanted to take back that leadership,” Ms Black said.
With competing funds now lifting their sustainability game in the face of similar pressure from their stakeholders, Ms Black said her company was keen to raise the bar even higher.
“We’ve seen that a lot of our peers have caught up with us and they’re starting to seek to go beyond. We weren’t going to sit on our laurels for long, we absolutely want to retake that leadership.”
One of the ways Investa is seeking to do that is by revising the net zero targets the company set back in 2018. Having made good progress on reducing its scope one and two emissions, the firm is bringing forward its target to 2025.
It is also looking at new ways of working with its tenant customers to reduce their scope three emissions, including through a 40 per cent reduction in their electricity use.
The biggest challenges
One of the big challenges the property group faces is retrofitting its older buildings to meet modern green building standards, which is more difficult to do than in new builds.
“Retrofitting buildings and new buildings take a very different lens in terms of what you’re investing in. In a new building, you can design it from the outset to have all these environmental outcomes, whereas a retrofit in a building is a bit more challenging,” Mr Leong said.
“When you look at electrification, for example, it does require more space in the buildings. It‘s more than just replacing one piece of building machinery, it requires a lot more change in the existing buildings,” Ms Black said.
Another big challenge it faces is getting its supply chain on board with products that have lower embodied emissions. It is doing this through its active involvement in the Green Building Council of Australia and the Materials and Embodied Carbon Leaders’ Alliance.
“Suppliers are learning a fast curve of how to reduce the carbon in their concrete and steel and also how to have their plants and equipment start to look more at fossil fuel free opportunities,” Ms Black said.
What Investa is doing and how
Finance secured through green loans and bonds must be used towards continually improving sustainability outcomes across its operations and portfolio.
- energy efficient processes in new or existing buildings
- renewable energy investment, either onsite or through renewable energy procurement
- reducing greenhouse gas emissions and waste reduction technologies, which decrease the proportion of building waste sent to landfill.
- water use reduction and recycling measures
To reach these goals the company has developed a net zero pathway in line with the Green Star trajectory of a 60 per cent reduction by 2040 for its new developments, as lower embedded carbon building materials become available.
It is also working to make sure its new developments, such as 39 Martin Place and Parkland Place are fully electrified.
Beyond environmental sustainability, the company is also working towards social and health outcomes through WELL ratings, as well as its employee, diversity and Reconciliation Action Plan commitments.
Internally, it’s inviting industry leaders in the sector, such as Monica Richter from MECLA (the Materials and Embodied Carbon Leaders’ Alliance) and Davina Roney from the Green Building Council of Australia to give talks to staff about the latest developments on topics such as electrification and net zero.
It has also placed “pledge trees” on the walls around its offices, where staff share their personal sustainability goals, and will roll out an internal “sustainability school” to upskill its employees.