Improved collaboration, changes to organisational structures and customer demand are among the ways property sector leaders can encourage sustainability, according to a panel discussion at the Green Building Council of Australia’s Transform conference in Sydney.
During the discussion on Wednesday morning, four leading industry executives examined how the property industry can come together to create greater urgency and deliver transformational change on sustainability.
The speakers for the session, which was hosted by GBCA chief executive officer Davina Rooney, were:
- Dale Connor, chief executive officer for Australia, Lendlease
- Anthony Boyd, chief executive officer, Frasers Property Australia
- Selina Short, managing partner, Oceania real estate, hospitality and construction, EY
- Denis Coupland, managing director, real estate management services, Colliers
Here are five key lessons from the session:
1. On sustainability, Australia’s property sector can lead the way
Australia is not necessarily a nation that is known globally as a leader of carbon emissions reductions. Despite this, Australia’s property sector does often lead the way in terms of its willingness to create innovative green buildings.
“Australia [was] called out by the UN overnight as being not where we should be [on carbon emissions reductions]. Despite that, [the property] sector and the rankings of this sector globally have been the absolute tops 11 years in a row. That is incredible,” Selina Short said.
“So, despite not having a broader ecosystem to support [us], [the property] sector has completely punched above its weight and has been world leading… [But] the world is catching up.
“If we can get a broader policy environment and the regulatory environment, that gets supercharged. That’s why I think you’re going to get that other scale piece, and we’ll be able to scale even quicker if we can get some of that policy and regulatory piece around it.”
Mr Connor agreed, calling for greater collaboration between the property sector and government around sustainable buildings.
“We need to make sure all levels of government come along for the ride, to be able to outdo us in the challenge. I feel like we’re all in this room maybe a few steps ahead. If we could get the government to come along and equal our charge, I think that’s the place to start,” he said.
2. We’ve been here before…
Deeply embedding environmental practices within a company often means rethinking practices and organisational structures.
At first, the change can seem daunting. However, Anthony Boyd from Frasers Property points out that the changes he’s seeing mirror those that happened in the early 1990s, when legislative changes forced businesses to increase their focus on occupational health and safety.
However, as with the OH&S changes, sustainability needs to be the responsibility of delivery teams throughout an organisation, rather than just an isolated sustainability team.
“The safety thing was, you have development teams out here and they are responsible for delivering outcomes and projects. And for a period of time, we had a separate safety team sitting out here and a role of influence, not ownership,” Mr Boyd said.
“I think it’s exactly the same thing here [with sustainability]. The best organisations will structure themselves so that there’s not a sustainability team sitting over to the side trying to come in and influence what the business is doing, but that it’s one of the fundamentals of the business.”
On a practical level, Mr Boyd said this is achieved by ensuring that targets and KPIs around environmental goals are shared throughout the organisation.
“[That way] everybody in the organisation owns them, as opposed to smiling politely at the table in the corner and saying: ‘I know you’re interested in that, but I’ve got a job to do’.”
Likewise, Denis Coupland from Colliers likened the changes the property sector faces with sustainability to the changes in lease management fee structures that happened when Japanese construction companies entered the Australian market in the 1980s.
Before the change in the market, he says “it would come to the time to negotiate the property management fee. Typically you’d say: ‘Okay, we’ll start with $1 million a year. And it’s okay for year one, but year two costs will go up, you have to protect the margins. So the fee for year two will be $1,100,000. Year three, $1,300,000.”
That changed once the Japanese firms, armed with their Toyota method lean management techniques, along with continuous improvement and quality assurance practices, entered the market.
“You will get better at providing the service to use because you will get to work with us. You will understand more about how we operate. Your people will be more efficient. It will be better. So things started at [$1 million]. Year two, bring it down to $900,000.
“There was just a change of mindset. And I think a lot of that started the … thinking around continuous improvement and being better at what we do day by day.”
3. Setting standards drives the marketplace
Property companies have a vital role to play in building scale in the marketplace for more sustainable building materials by mandating their use in new construction projects.
As an example, Dale Connor shared the example of how Lendlease had recently requested that all its contractors switch to a B5 biodiesel blend in their equipment at the company’s construction sites.
“I just recently sent a letter out to all of our civil contractors and suppliers to strongly encourage them to go to B5 diesel. At least make that first step, and hopefully we get to B20 diesel.
“[B5 diesel] is not produced in Australia yet. But if you get scale in the marketplace using a product, then maybe the product might start to get made here. Maybe you go to B20. Maybe somebody comes up with a totally synthetic approach to diesel.
“So I think it’s those sorts of statements being made by organisations that sets up a standard that hopefully enables a challenge. We’re happy to pay for that and invest in it. As we always see, over time, industry looks to catch up.”
4. Collaboration is the key
New sustainability initiatives are vitally important.
However, as Frasers’ Anthony Boyd noted, the scale of the environmental impact can be multiplied by sharing lessons across the property sector.
“It’s taking initiative, with someone stepping forward and saying we’re gonna take this new way. Then it’s about knowledge sharing, and this industry is awesome [at that]. That’s the important part.”
As for how this can be done, Mr Boyd shared the example of Frasers’ recent Living Building Challenge development, the Brickworks Shopping Centre in Burwood, Victoria.
For that project, staff at Frasers spent around 20,000 hours in total identifying the most sustainable products to use in construction.
“It was about identifying and using products that had all the relevant certifications around embodied carbon, responsible sourcing, waste, impact on air quality when in use, all those sorts of things. And there’s around 1400 products on what we call a green sheet,” Mr Boyd said.
“So for a very small period of time, we thought this is probably intellectual property that could be quite valuable for us and our suppliers and that sort of thing.”
While the product list could have been a valuable trade secret, Mr Boyd said his team decided to share that knowledge with the industry in order to increase its impact.
“So the impact of that is suddenly you’ve got a much broader suite of consultants that understand what these products are and start to challenge their use. You’ve got a whole bunch of suppliers and probably getting a little bit more pressure on them to say, ‘well actually, how do you comply with these sorts of things?’
“And suddenly, once you throw that rock in the pond, the ripples go a lot further a lot quicker.”
5. Lifetime benefits will drive the market
On any construction project, sustainability considerations are often balanced against costs.
The good news, according to Mr Boyd, is that customers are increasingly examining the lifetime costs of their buildings, resulting in more green buildings being built.
“There’s an affordability issue, and it’s a battle every day. Costs are a concern for developers and consumers. But there’s a tipping point coming soon, where people can see the lifetime financial benefits of something like the Passive House [standard]. It might cost more now, but it will pay for itself over time,” Mr Boyd said.
“Once you see the benefits and once you see the products, [once] you can see the lifetime financial benefits, suddenly it becomes a different argument.”