Australia and New Zealand have, as expected, topped the Global Real Estate Sustainability Benchmark (GRESB) for the seventh year running, but improvements on energy and water have stalled and the gap between other territories is narrowing.
The Australia/NZ region came in with a score of 73, compared with a global average of 63. This was a drop of one point from 2016, while the global competition moved up from 60.
Energy use was up 0.2 per cent, where worldwide there was a reduction of 1.1 per cent. Similarly, water use went up 0.7 per cent, though dropped 0.5 per cent globally.
Lendlease, whose Australian Prime Property Fund Commercial fund topped the global charts for private office sustainability, told The Australian Financial Review its small energy reduction of one per cent on 2016 levels was due to hotter weather causing more airconditioning use. Managing director of Lendlease’s Australian Investment Management business Josh McHutchison said the reduction was also smaller than in previous years because the low-hanging fruit had already been targeted.
The number of property companies reporting in the region grew by 27 per cent on 2016 (up 11 to 66), making it the fastest growing region for GRESB participation, with $205 billion in assets represented. The performance of newcomers (17 of the total 66) to GRESB might explain why Australia hasn’t continued to improve overall, however, GRESB head of Asia Pacific Ruben Langbroek told The Fifth Estate their influence was “very limited”.
More likely it’s to do with difficulties in improving Australia’s already high performance when it comes to energy intensity.
“Australia/NZ portfolios on average show energy intensity of 121kWh [a square metre a year] for Office and 108kWh for Retail, compared to, respectively, 164kWh and 192kWh globally,” Mr Langbroek said, which includes base building and tenant space.
“Although further improvements can, and must, be made, many buildings within the top segment of the commercial sector are already performing at a high level. As such, improvements within this segment are expected to be incremental.”
He said there therefore needed to be an increased focus from both landlords and policymakers on the middle and bottom segments of the market in order to drive the global net zero agenda.
Property Council of Australia chief executive Ken Morrison said it should be acknowledged that the gap between Australia and the rest of the world was closing, which “suggests that the lack of clarity around climate and energy policy is influencing our ability to continuously improve”.
One area where Australian buildings outperformed their global peers, however, was on carbon emissions, which dropped 4.7 per cent compared with a global average reduction of 2.2 per cent.
Mr Langbroek said increased investor demand for transparency would further enhance how ESG risks were managed, empowering companies and fund managers to adopt “leading sustainability practices”.
- Listed – Office: DEXUS Office Trust
- Retail: Vicinity Centres Direct Portfolio – Vicinity Centres
- Private – Office: Australian Prime Property Fund Commercial – Lendlease (also global leader)
- Industrial: Frasers Logistics & Industrial Trust – Frasers Logistics & Industrial Asset Management Pte. Ltd.
- Diversified – Retail/Office: Dexus Wholesale Property Fund – Dexus (also global leader)