On The Economist speaks, James Hansen too; and how AMP Capital plays reverse dominoes and ramps up its susty strategy

It’s interesting to see that the top job at AMP Capital is now in the hands of a thorough property expert, Adam Tindall who’s notched up nearly 30 years at AMP Capital, Macquarie Group and Lend Lease.

Emlyn Keane head of property management and sustainability who’s moved to acting managing director of office and industrial, for one is happy. It’s a critical time for his company’s property strategy and also a critical time for the entire asset class.

  • See our story about the multitude of shifts within the company and the recruitment of Chris Nunn from Jones Lang LaSalle

Not only is property front and central of sustainability and climate challenges but it will be the key to unlocking all the rapid technological advances on our door step: from multiple sensors to clean almost free energy, distributed energy and water treatment, new ways to live and work, and the call for greater equity and governance models.

What’s on the horizon will not just turn the spotlight increasingly on property but burn a hole right through all our previous conceptions of it.

On 12 August, we will be holding a Surround Sound on Sustainable precincts. Since we started this project with a Salon last year and an ebook canvassing the vast issues at stake, the world has moved even faster and certainly further.

Our property assets will increasingly be networked. Inside these arrays of bricks, glass and hopefully new sustainable non-toxic materials, will reside the hopes and dreams not just of our economic life but of our private and social world.

Tim Williams

Tim Williams, chief executive of Committee for Sydney, one of the panellists for our Surround Sound told us during a briefing interview on Wednesday that key to greater equity is actually spatial and centred on mobility. In Sydney it’s the great divide between east and west which when he came to this town form the UK both horrified and fascinated him,

In London’s Canary Wharf, in the long downtrodden East of London, the tables were turned dramatically on the spatial/social divide when a huge transformative development went into the area, backed by rapid rail tube transport.

Where Sydney has trains to the west they are ridiculously slow, he says.

No Millennial will go and live in those areas if it takes more than an hour to travel 25 kilometres. Put in rapid transport and more denser more connected living and working spaces and the jobs will flow to those area, Williams said, because people will be happy to be there. They can just live or live/work there but they can also get into the city in rapid time.

Williams was on fire during our conversation. But from what we hear he is ever thus. And he’s not shying away from the massive controversy he stirred up when he attacked the WestConnex motorway. But you’ll have to come the Surround Sound or read about it in the book we produce to see what he says about it next.

As climate change becomes more real and far more frightening than ever before – see below on James Hansen’s latest forecasts of how we got the modelling on sea level wrong – our buildings and our precincts might need to increasingly look like

A Noah’s Ark of sustainability and the inside of a data centre.

SAMBA

We’re getting better at understanding how our buildings affect our health too. Increasingly the focus is on the impact of buildings on the humans inside. Interesting that it took so long. The new thinking can be quite confronting.

In Australia Richard De Dear and his team including the irrepressible Ashak Nathwani at the University of Sydney’s Indoor Environment Quality Lab are starting to make an impact in the office sector.

Chris Nunn who seems to be genuinely torn between the prospects of his new job and the exciting work he had under way at JLL, says the IEQ Lab’s “SAMBA” analytic device JLL has been trialling is looking very promising indeed.

As it would since it’s able to measure temperature, humidity, Co2, lux (lighting) levels, VOCs (volatile organic compounds) and air speeds or draughts.

The final version is expected to be also able to measure formaldehyde.

According to Nunn this completely plays into the quest for performance measures for health and well being that are known to impact on staff productivity.

So how did the JLL offices measure up? At 420 George Street, a relatively new building owned by Fortius and Lend Lease, (also the home of our host for the Surround Sound AECOM) the rating was quite high, as you’d expect from a new building, Nunn pointed out.

Nunn says the team at JLL is looking forward to V2 of SAMBA with some of the nicks that were discovered ironed out.

Meanwhile corporate clients are racing each other to rate their buildings under the WELL Institute tool, latest kid of the rating tool block. The rumour that it was invented by a US developer desperate to find some marketing advantage for their property, other than regular sustainability and LEEDs.

Who cares? The tool is now rocketing to the top of the charts because the leading talent-seeking corporates want to show their staff they “really really” care about their welfare and they also want to show their investors they’re extracting the best possible value from their often biggest investment, their staff.

The Economist speaks

Property is also at the heart of climate impact.

Now The Economist, this bastion of tradition, steeped in the deepest DNA of capitalism, centred in London, in one of the more robust hearts of the financial world, has called for an urgent survival strategy.

Its Intelligent Unit has produced a seminal report, The cost of inaction: Recognising the value at risk from climate change

What’s most notable though is that report concludes that governments will need to lead the charge to mitigation.

They should be as radical as the French who recently forced their institutional investors to report on their sustainability and climate exposure, it says, and it has urged that that the Paris climate talks be the place where this should be put in train.

The risk, the report says, is too expensive to chance and investors are starting to understand the scale of direct and indirect losses; that it’s likely irreversible and a problem of “extreme risk”.

It’s not just the direct losses but the “outliers” the really extreme scenarios that could matter most of all, it says.

We’ve now got a new acronym for the risk, VaR. It stands for Value at Risk. We should get used to it.

According to the report the average mean expected losses, the VaR, is estimated to be US$4.2trillion the report says, “roughly on a par with the total value of all the world’s listed oil and gas companies or Japan’s entire GDP”.

The numbers matter less when the The Economist wades into a 5°C warming scenario. We know that’s pretty much game over.

From the point of view of government the losses rise dramatically, the report says

“It is clear that government action is required to establish a firm, clear price that reasonably reflects its externality costs.”

Also heavily in the mix should be institutional investors, regulatory bodies and international financial organisations, it says.

It calls for effectively coordinated regulation is necessary so that best practice can become standard practice.

“Without requirements to recognise climate risks as material, many organisations will choose to ignore them, creating “free riders” who shirk their own responsibilities while contributing to the longterm, systemic impact of climate change.”

It’s not as if there is not some upside and hope.

Lower greenhouse gas emissions decrease the probability of temperature increases and thus the expected harms, the report notes.

There’s also a swathe of economic benefit to preparing for mitigation and investing in related resources.

“Provided that warming from climate change can be kept under 2°C, the average projected losses can be cut in half, while the extreme losses, identified as tail risks, can be reduced by more than three-quarters.”

James Hansen on why it’s later than we think

And here’s why The Economist is so serious: NASA climate legend James Hansen says we’ve underestimated the impact of climate change and the news is worse than we feared A study by Hansen and 16 co-authors finds that the “effects of even moderate warming on sea-level rise are worse than previously believed” because melting polar ice sheets will likely disrupt the flow of warm and cold water.

This disruption would essentially “shut down the ocean’s circulation, causing cool water to stay in the Earth’s polar regions and equatorial water to warm up even faster,” Grist reports on an interview with Hansen.

“It’s a really dangerous situation where you get melting that causes more melting.”

He thinks the cut off point for warming should be 1.5C not 2 C.

But he too thinks there is hope.

Hansen thinks the US and China could well negotiate a carbon price and then use their global buying power to force all of their trading partners to join.

Hold that thought.

Industry ignores the Feds, Al Gore ignores the Feds and so do the city councils

In a conversation with one an industry advocate this week, it was clear that property leaders are increasingly ignoring the federal government and getting on with whatever job they deemed important to their sustainability business case. This is very important in light of the UK conservative government ditching a whole swathe of green initiatives. It’s like they’re taking lessons from their colonial compatriots.

Al Gore is certainly on the same wavelength. When he came to visit Oz he went straight to the City of Melbourne and a bunch of other city councils and said his focus now was on cities and state governments.

The idea explained Cathy Alexander from the University of Melbourne is to foster a “global patchwork of thousands of provinces and councils enacting separate climate policies may sound messy” but “might just prove efficient at reducing greenhouse gas emissions – while some national politicians grandstand and dither on the sidelines.”

Another thought to hold close.