Chief executive of DEXUS Darren Steinberg ventured into the hot political space of climate change at the Property Council of Australia’s annual Congress in Sydney on Wednesday.
He’d been asked to follow up some strong comments made by joint managing director of Investa Ming Long.
Long had slammed the Abbott government for axing the carbon tax, and instead proposing a direct action policy that suggested Abbott “knows better than the United National and better than the World Bank”.
The government was now “spending public money on direct action, using public money to pay for a carbon reduction strategy and missing a lot of the opportunity in the broader economy that the carbon tax achieved for us”, Long said.
And this at a time when the government was talking about “ending the Age of Entitlement”.
Steinberg, asked to respond said DEXUS had been focused on sustainability for 10 years. “Why? Because it makes good business sense and investors are demanding it,” he told the audience.
But on the carbon tax, the repeal had not had a big impact on DEXUS, he said.
“I wasn’t a believer in the carbon tax but on direct action – I probably agree with Ming,” he said.
Later that day and in a phone conversation with The Fifth Estate on Thursday, Steinberg elaborated on his comments.
From DEXUS’s point of view the elimination of the carbon tax wasn’t an issue because the company would continue to do its best to reduce emissions regardless, Steinberg said.
The government’s target was to bring emissions down by five per cent by 2020; DEXUS’s target was 40 per cent by 2020. It had already shaved 30 per cent from emissions from a 2009 baseline and was part way through a three-year plan to reduce emissions by another 10 per cent.
“We are now 30 per cent more efficient than in 2008. And we’re now two years into a three year program for another 10 per cent reduction,” Mr Steinberg said.
“The worry would be if we stopped [because of he carbon tax repeal], but we are not stopping.”
On the Emissions Reduction Fund Mr Steinberg was more equivocal. It was a “practical measure to deliver genuine emissions reductions” but it needed work.
“There needs to be a fresh look at the ERF as a pathway to establish a price on carbon abatement.”
DEXUS was aware of the stance the Property Council had taken to influence the shape of the program, and clearly it “needs a lot of work”. Hopefully, “through that advocacy it would make it more attractive”.
Very attractive indeed, in fact.
It would be “interesting to see whether it would be possible to go back to the government under the new scheme and claim the money we are spending”, Steinberg said.
So how does Steinberg feel other companies might respond to his group claiming back money from the government that it intended to invest anyway?
“Not everyone is fortunate enough to be in the same position as DEXUS. We’re going to get on and do this, and we’ve got the capital to do it, but not everyone has the capital to make more buildings sustainable.”
In which case some owners may “suffer from lack of tenant interest”.
Mr Steinberg said that regardless of policy it was clear that sustainable buildings led to more better rental outcomes and there was a clear case to continue this.
“There’s no doubt that tenants, when they’re looking to accommodate themselves, are looking at buildings that are more sustainable.”
There was still an absence of “cold hard” evidence on this, he said, and it was certainly not widespread but the evidence would “definitely come over time; it’s definitely emerging.”
Driving his company’s commitment to sustainability was that “fundamentally we believe we should be a good corporate citizen and reducing emissions”.
But there was a question of allocation of capital involved.
“Capital is a finite resource and it’s always a debate where you allocate it.”
DEXUS also attempted to influence tenants to respond to sustainable buildings with greener fitouts through green leases and fitout guides.
Most of the larger tenants were focused on this in any case, he said.
On the influence of the anti-climate, anti-renewable energy stance of the current federal government, Mr Steinberg said, “I won’t make a comment on that.”
But he would say that bipartisanship was needed to create certainty.
Paul Wall, group sustainability and operations manager, who also sat in on the conference call, said DEXUS had most definitely not taken its eye off the ball. “Not one bit.”
Sustainable property indices placed Australia at the top of the tree in leadership, Mr Steinberg said.
Recent documentation from DEXUS said the company has scored well on a number of targets. Emissions intensity has fallen 29.7 per cent since 2008, and by June this year there had been an 8.4 per cent energy savings across the group’s “like-for-like property portfolio on an absolute basis in the second year of a three-year program targeting a 10 per cent reduction”.
At 30 The Bond, Sydney as at 30 June the building had achieved its “best operational performance in its 10-year life-span, with a 5.5 star NABERS Energy rating, demonstrating a continued focus on sustainable outcomes”.
At 50 Carrington Street in Sydney, DEXUS bought a property with “less than average environmental credentials” and repositioned the property to return to the market, benefitting the new owner and tenants.
DEXUS: consumption/emissions on an intensity basis
|Intensity metric||FY08||FY14||Base year to FY14|
|Energy consumption (MJ/sqm)||335.4||234||-30.2 per cent|
|Scope 1 & 2 Greenhouse gas emissions (kgCO2-e/sqm)||72.1||50.7||-29.7 per cent|