A raft of sustainable property leaders turned up on Wednesday to hear that the Aussie green building industry had topped global competition in the latest Global Real Estate Sustainability Benchmark survey. Again.
The Australian and New Zealand sector scored 69 points against a global average of 56.
Regional sector leaders were Lendlease with its Australian Prime Property Fund in the commercial category and Australian Prime Property Fund Retail in the retail category; Stockland in the diversified property category; and GPT in the diversified retail/office category.
But while there were good results on a raft of measures, on renewable energy generation the sector lags the global averages by about four times, the report found.
On the demand front the sustainability and divestment movements were noted as major global trends. These were strong and they absolutely included the property sector. Local and international institutional investors were not only more actively engaging to evaluate environmental social and governance issues but divesting from assets deemed not sustainable, the report found.
Key to the report’s overview was that property is at the heart of critical global issues that include resource constraints, climate change and urbanisation.
GRESB’s head of Asia Pacific, Ruben Langbroek, stepped guests at Jones Lang LaSalle’s Sydney offices through some of the big drivers behind global trends, showing slides of heavily polluted Shanghai and noting that global companies had started refusing to send executives to the city because of potential adverse health impacts.
He said pollution, climate change and volatile weather were all having an impact on property investment, so was the drive for better health shown through new WELL building standard.
Another presenter, Christopher Chua, portfolio facilities manager at ISPT, focused on the imperatives of wellbeing and asked the audience to all stand up for a bit.
“Sitting is the new smoking,” he said before sharing some of the work his organisation had embarked on to implement the upgraded NABERS Indoor Environment rating tool. It was part of his fund’s responsibility, owned as it was by industry super funds to lead the way with sustainability initiatives, he said.
- See our recent article on this issue, Green and wellbeing are the new black, sitting is the “new smoking”
Paolo Bevilacqua, national sustainability manager for Frasers Property Australia, talked about his company’s initiatives with sustainability in the industrial space and with trialling geothermal energy.
Paul Murphy, executive manager institutional investments and policy with the Australian Council of Superannuation Investors, provided highlights of his organisation’s most recent sustainability research report, Corporate Reporting in Australia.
Property Council of Australia chief executive Ken Morrison said the underrated story was of Australian property companies who were “not only leading the pack in Australia but on world terms”.
The reason GRESB was biting so hard now was because we have a global market and people want sustainability, he said.
It was a good warm up for the report, to which the audience members were not privy until the end of the presentations – a local perspective that underscored the global focus of GRESB.
New director sustainability Australia for JLL, who hosted the event, Simone Concha (previously with Build It Green and Hansen Yuncken), took things a step further introducing each presenter along with an insight into their own personal commitment to sustainability that included using KeepCups (Bevilacqua), bringing batteries to Sydney to recycle (Langbroek) and cycling (Murphy).
Globally the 707 property companies that were surveyed in the report showed a three per cent reduction in greenhouse gas emissions in 2014, which was just a touch under the Australian results for this metric, at 4.3 per cent and a 50 per cent increase in onsite renewable energy generation, which was four times the local results.
Companies showed a 19 per cent improvement in overall ESG performance and were increasingly aware that doing so created value for investors, the report said.
There was also greater integration of environmental, social and governance considerations into corporate policies and business strategy.
Key achievements included:
- More property companies and funds report on sustainability: 707companies, an 11 per cent response increase from 2014
- 04 per cent reduction in GHG emissions,2.87 per cent reduction in energy consumption, and a 1.65 per cent reduction in water use
- Significant uptake in renewables: onsite renewable energy generation of 445GWhin 2015 (0.5 per cent of total energy consumption) from 296GWh in 2014
- Australia and New Zealand continue to significantly outperform other regions with an average GRESB Score of69 – compared to a global average of 56
- 54 per centof all property companies and funds have policies in place that address climate risks
GRESB chief executive Nils Kok said global property industry was making sustainability a “core part of business strategies”.
Green Building Council of Australia chief executive Romilly Madew said the results were driven by demand.
“Investors, governments and consumers are demanding more transparency and accountability – and clearly Australian property and construction companies are responding to this demand by making sustainability front-and-centre of all that they do,” Ms Madew said.
Australians scored highly with disclosure on sustainability performance – at 93 per cent, compared with 85 per cent globally.
More than half of the companies – 54 per cent – had green building certifications such as Green Star and 87 per cent had energy ratings, compared with 71 per cent globally.
Best practice leasing also figured strongly, with the report saying these were now mainstream in the region.
The report said these clauses created tenant awareness and could be expected to impact positively on tenant behaviour and realising “tangible benefits such as energy and water savings, and improved productivity and occupant health and wellbeing”.
“Moreover, clauses that include data sharing, reporting and information provision help owners to assess whole building performance rather than just base building. ”
The report said of all GRESB participants in the region, 91 per cent of participants included sustainability-specific requirements in its standard lease contracts. The global number for this was 60 per cent.
Specifically, clauses related to:
- operational performance standards for the building at 81 per cent (global 33 per cent)
- sharing of utility data, 79 per cent (global, 73 per cent)
- obligations to do nothing to adversely affect the environmental performance of the building, 79 per cent (global, 58 per cent)
- Energy-efficient and/or environmentally responsible specifications for tenant works, 76 per cent (global, 60 per cent) Information sharing relevant to green building certificates: 74 per cent (global, 60 per cent)
See our nine chapter series on green leasing, in our Tenants and Landlords Guide to Happiness
Changes in energy consumption remained at 1.9 per cent on an average like-for-like basis but greenhouse gas emissions went down with “an impressive 4.3 per cent, and water consumption decreased by 2.3 per cent.
Renewable energy generation lags, badly
On renewable energy generated by the Australian commercial property market the results were not so good and remained at “very low, at 52GWh” with just 3.1GWh generated onsite – just 0.09 per cent. For other regions the results were four times higher.