Cundall partner, David Clark

For all the efforts of the building industry on sustainability and decarbonising assets, the emissions of tenants who actually occupy the buildings generally lie beyond the remit of owners and managers and consequently are getting left out of the equation.

Strategy leaders from Mirvac, Frasers, SCA and the GBCA discussed the challenges and opportunities in reducing tenants emissions at an online forum organised by Cundall this week. 

“Some of the big developers and building owners have set zero carbon targets for scope 1 and 2, which is effectively their direct emissions because that’s what they control,” Cundall partner and forum moderator, David Clark said. 

“And then there’s scope 3 which is an enormous basket of other emissions. This includes operational waste, tenant electricity consumption and travel to and from the building.”

“The companies that have already committed to zero carbon now need to start looking at their tenants.”

Making clean energy available through solar installations and embedded networks is one way to help tenants clean up their act. Another is engaging more with fitouts, which aren’t factored into base building emissions profiles but can end up being extremely wasteful if not done thoughtfully.

“You might build a building that will last 60 to 100 years, but a fitout can be only five to 10 years. There’s a lot of churn and a lot of waste,” Mr Clark said 

He added it was important for building owners engage with tenants, and as an industry that is further down the net zero road, be willing to take the lead.

“A tenant’s business is not running a building. Energy is just a bill that they have to pay,” Mr Clark said. 

“Landlords’ business is to run buildings. So how can a landlord help a tenant get to zero carbon, when most tenants other than the big corporates, are not really going to be thinking about it?”  

Green Star credits up for grabs

Taking action on tenant emission doesn’t have to be a thankless pursuit. The Green Building Council of Australia (GBCA) recently launched additional Green Star rating credits for those that do. 

“We think there’s a really important part for developers to play in bringing tenants along on the [renewables] journey,” GBCA senior manager of Green Star strategy and development, Taryn Cornell said. 

The initiative offers two credit points for buildings that have 40 per cent of tenants using renewable energy, and an additional three credits available for those that have 80 per cent of tenants using renewables.

Fitouts are also covered by the scheme, with one credit available for building owners that create a mechanism which enables tenants to calculate and offset the emissions associated with their fitout. 10 per cent of tenants must sign up to the scheme for the credit to be awarded, with an additional two points available if at least 40 per cent of tenants take part.

Making clean energy available

Giving retailers the opportunity to purchase renewable energy through embedded networks is a key way building owners can help reduce tenant emissions. 

“If you’re a landlord you can buy renewable energy at scale. So if you’ve got an embedded network you can then sell renewable electricity to your tenant at a similar cost they would be buying normally electricity,” Mr Clark explained.

“You can’t force people to buy your electricity. But what you can do is make it easy and attractive for people to buy renewable electricity.”

Mirvac sustainability manager, David Palin said across its portfolio his company saved around 50,000 tonnes of CO2 each year through onselling clean energy to tenants. 

Palin recommended building owners use NABERS Co-asses, a tool specifically designed for building owners and tenants to better understand their energy profiles and work together to improve performance.

Landlords can also help to reduce energy consumption through design features, be it prior to construction or in the refitting process. Lighting, heating and cooling can make a big difference for how building occupants operate.  

Providing helpful guidance to tenants is also important, with landlords often able to play a demystifying role when it comes to the complex world of energy markets.

Retail

Retail tenants can be extremely energy hungry, accounting for up to 80 per cent of building energy use, compared to office tenants that sit around 40-50 percent.

SCA Property Group owns around 100 shopping centres, primarily across regional Australia, which means dealing with major retailers like Coles and Woolworths that have their own progressive decarbonisation plans in place, but also many smaller retailers as well. 

Chief operating officer of SCA, Michelle Tierney said by installing $13 million worth of solar her company was giving some retailers the opportunity to use green energy during the day as it was being generated. 

“We are starting to see more of an emerging trend from our Mum and Dad retailers expressing interest in solar energy,” Ms Tierney said. 

She added that tenant fitout guides were being updated to include more references to sustainability in terms of energy, materials choices

Stephen Choi from Frasers Property acted as the living building challenge manager at Burwood Brickworks shopping centre, which deliberately aimed to set an exceptionally high standard for sustainability. 

This required having tenants actively involved in emissions reductions, which Mr Choi said meant dealing with issues on a case by case basis. 

“It’s a very slow, very manual, very one on one process that depends on if it’s a yoga studio or a sushi bar,” he said. 

He added that landlords shouldn’t assume they always know better than tenants and rather than being overly prescriptive, should approach challenges as a partnership.

Getting tenants to let go of gas

A difficult discussion many landlords will need to have with tenants is one about gas. Cutting gas is already a requirement for 6-Star Green Star rated buildings and will progressively be so for 5 and eventually 4-Star buildings also over the coming years. 

Mr Choi said, establishing parameters early was key, letting tenants know what the expectations were early, explaining what that means, and setting a good example as a building manager.

“Particularly if you’re looking at retail, which is a big consumer of gas in buildings, there are some barriers related to cooking,” GBCA’s Taryn Cornell said. 

“But I think largely a lot of those barriers tend to come down to education and training. 

“There’s some embedded understanding that people think gas is cheaper, that it’s more efficient and that it cooks better. So I think there’s a real opportunity for landlords to talk to tenants about the benefits of all-electric.” 

Cundall’s David Clark said while there were many buildings only really beginning to look at their own emissions, already the conversation had to start changing if we are to get the whole of society, not just property companies, to net zero.

“We have to start talking about zero carbon building being a  zero carbon building, not part of the building,” he said. 

“We’ve still got a long way to go to get all buildings on this pathway. But let’s not forget the tenants; let’s take them on the journey with us as an industry.”

Join the Conversation

1

Your email address will not be published. Required fields are marked *

  1. Don’t ignore residential tenants, who are at the mercy of their landlords – many of whom have one or two properties, and have no intention of making any changes to their properties that don’t attract a 100% tax writeoff in the same year as the expense.

    Tax laws around residential properties desperately need changing; currently, state and territory governments may encourage green changes all they like, but until the federal tax laws reinforce those behaviours, nothing will change.