GRESB’s global property market ESG report showed yet another year of record participation and shining results from the Oceania region, with many Australian companies recording world-leading results.
Globally, Oceania maintained the highest regional average score of 79 in the Standing Investment Benchmark and 84 in the Development Benchmark.
Local companies that achieved a top ranking globally by sector were Lendlease, Frasers, Cromwell, Dexus, Growthpoint, Scentre Group, ISPT and AMP.
Australia’s overall global sector leaders in standing investments
• Office – Shared between Lendlease International Towers Sydney Trust, Lendlease; and Australian Prime Property Fund Commercial, Lendlease
• Retail – Non-listed – Australian Prime Property Fund Retail, Lendlease
Australia’s overall global sector leaders in real estate development
• Diversified – ISPT Core Fund, ISPT Pty Ltd
• Diversified – Office/Industrial – Frasers Property Industrial Australia Pty Limited, Frasers Property Industrial Australia Pty Limited
• Office – Australian Prime Property Fund Commercial, Lendlease
• Retail – Shared between Scentre Group, Scentre Group; and Unisuper, managed by AMP Capital Investors Limited
Lendlease managed funds achieved two top rankings globally, with the company’s Australian Prime Property Fund Retail the global leader in its category and International Towers Sydney at Barangaroo South top of the office funds.
Earlier this year the company announced world-leading sustainability targets, such as achieving absolute zero carbon emissions by 2040, including Scope 3 and without the use of offsets.
Lendlease Australia chief executive Dale Connor explained that strong sustainability targets, including net zero carbon commitments were critical in continuing to attract both capital partners and quality tenants.
“Every year we’ve continuously improved sustainability outcomes across our assets, and investors are also increasingly aligning their own investments with sustainability, social and environmental outcomes,” he said.
Meanwhile, Frasers Property Industrial’s Australian portfolio also performed well, achieving the highest score globally for the Developer – Diversified (including industrial and commercial assets) sector, with a score of 95 from 100 and 5 Star rating for the entire portfolio
The company also has ambitious sustainability targets, including attaining net zero carbon status in operation by mid 2030 and achieving a GRESB score of 5 Star across its portfolio by mid 2024.
World-leading regulatory bodies help the region perform well
World-leading groups and rating systems such as the GBCA’s Green Star and NABERS helped see Oceania emerge as the top ranking region for net zero commitments again this year.
“I would say the market here is very familiar with sustainability practices,” GRESB head of Asia Pacific, Ruben Langbroek explained.
“And the other reason I would say, aside from the collaborative spirit, where everyone is willing to create those new standards or enhance them, there’s also a high level of commitment to just be the best.
“Here in Australia, I guess sustainability is one of the attributes companies are measured against; it’s almost like a proxy for the quality of management. Everyone wants to show they are great at addressing these issues.”
Looking at targets for achieving net zero, more companies and fund managers in Oceania set targets for their portfolios than anywhere in the world.
“It’s very interesting considering that we still don’t have a federal net zero commitment from the government. So, it shows that companies are willing to show commitment and lead,” Mr Langbroek said.
GRESB’s stringency a balance of data availability and impact
This year, participation in the GRESB Assessment experienced its largest ever growth, with the number of listed entities growing by 20 per cent and non-listed by 25 per cent — likely driven by investor interest in ESG data and industry’s focus on emerging regulations.
The organisation now covers US$5.7 trillion of assets under management, up from US$4.8 trillion in 2020, and nearly 117,000 individual assets.
GRESB assessments are based on reports made by companies which are then validated. Mr Langbroek said any data that is not able to be validated does not count towards the results.
Scores are awarded for each indicator as part of the assessments, and separately the performance of specific funds and companies is benchmarked against their peers.
“GRESB provides us with an independent and transparent benchmark that helps us manage sustainability risk and drive innovation,” Lendlease chief executive Dale Connor said.
Last year the organisation changed the structure of its assessment process to break down into smaller component categories, prompting some concern over veracity by some, however, Mr Langbroek says over the years the verification process at least has only become more strict.
“Last year was the first time we made a structural change in the assessment so obviously there was a conversation in terms of whether that was a good or bad thing,” he said.
“In the end we serve the industry, so we really tried to convene our different stakeholders to make sure that whatever is covered by the assessments is material and also the way data is treated… is relevant and aligned with the different stakeholder interests.”
GRESB recently commenced an 18-month “stakeholder engagement process” to redefine the assessment’s purpose and strategy.