Property Australia

National Sustainability Roundtable picks up the pace

Karen Jamal Karen Jamal June 15, 2021

With emissions, social value and resilience just some of its agenda items, the Property Council’s National Sustainability Roundtable has never been busier. Chair Andrew Cole and deputy chair Amy Hogan sit down for a chat.

160621 - Story 3 - Andrew ColeCole, general manager for sustainability in Lendlease’s investment management team, joined Lendlease in 2006 after seven years working in the NSW Department of Planning's sustainability unit. Hogan, Stockland’s head of sustainability, has held sustainability roles with a range of property companies, including JLL and Colonial First State Global Asset Management.

After years of selling the sustainability message, Cole and Hogan say a noticeable shift in the narrative has occurred in the last 12 months.

“It’s hard to self-isolate from climate change. We've been talking about the shift to sustainability for years, but it feels like the step change has finally occurred,” Cole says.

“We’ve really seen sustainability move beyond risk screening or ticking a box from an investor point of view. If you’re not positioning your portfolios or your products with sustainability at the centre, you face a real capital challenge,” Cole says.

Fifty-eight per cent of ASX-listed companies have climate and carbon zero targets, he says.

“Investor queries coming through around sustainability demonstrate the increasing relevance investor stakeholders place around environment, social and governance, or ESG, considerations.” Hogan adds.

“Who would have thought, 20 years ago, there would be such recognition that ESG factors act together to augment sustainable business outcomes? It is such an exciting and transformational time.”

 

Sustainability sign posts

Green bonds tipped over the $1 trillion mark in 2020 and the Net Zero Asset Owner Alliance, which represents $7.2 trillion in assets under management, has committed to decarbonise by 2050.

Nearly 60 per cent of the world’s 100 largest public companies support or report in line with the Task Force on Climate-related Financial Disclosures, or TCFD, Cole adds.

Consumers are also driving demand for sustainable products and services, and that includes property. Climate change is the priority issue for young people, according to Deloitte’s 2020 Global Millennial Survey.160621 - Story 3 - Amy Hogan

While sustainability has been business-as-usual in the office space for many years, the backdrop of profound weather events across Australia is reshaping perceptions of sustainability across previously hard-to-reach sectors, like residential and retirement living. “Consumers are asking: ‘How is this home safe, resilient and healthy?’,” says Hogan.

Housing, responsible for 13 per cent of Australia’s emissions, has been challenging to address in the past, but a growing list of volume builders are testing the new Green Star Homes standard, and Stockland is signed on as its gold partner.

Hogan says the language of sustainability in the residential sector is shifting. “People’s homes are more important now than ever.” Consumers want to be insulated from higher energy costs, but comfort is more important to a cohort of remote workers who found themselves shivering through last winter’s lockdown. AHURI research pointed to the problems of energy poverty arising from Melbourne’s lockdown last year. “People are definitely thinking more about good design and thermal comfort,” Hogan says.

 

Sky high stakes

The Property Council’s National Sustainability Roundtable is both “hyper collaborative and competitive”, Cole explains, and is currently focused on five priorities. While energy and emissions are top of the agenda, social sustainability is also in the roundtable’s sights, and a new framework to measure social value is currently in development. (You can read about this in our recent article with Social Sustainability Roundtable chair Ro Coroneos).

Then there’s work on resilience – both climate and community – and the circular economy. Finally, the Roundtable is working on consistency of sustainability language and benchmarks.

It’s an ambitious agenda, but the stakes are sky high. Australia’s property industry has shown steady leadership in sustainability for more than a decade, with 10 years at the top of the GRESB table a clear testament to those efforts. But Climate Action Tracker says the world is heading towards a temperature that is 2.9°C warmer in 2100 than it is today – well above the Paris Agreement ceiling of 1.5°C.

Buildings are responsible for 39 per cent of global carbon emissions – 28 per cent from operations, and the remaining 11 per cent from materials and construction – according to the World Green Building Council. And over the next 40 years, 230 billion sqm of additional buildings will be constructed – that’s equivalent to adding the floor area of Japan to the planet every single year to 2060.

 

Ambition and action

Cole and Hogan are optimistic about the future. “Despite the challenges of COVID, many of our industry peers have come out with the boldest and most ambitious sustainability targets yet,” Cole says.

These bold ambitions must now be backed up with action, and the roundtable is busy diving into the detail.

“We’re starting to get into the nitty gritty,” Hogan says. “What exactly does a net zero carbon commitment look like? What does it mean and how are we actually going to deliver it? What does electrification look like? What does a solar power purchase agreement actually mean?” Carbon abatement and offsetting is “incredibly complicated”. The roundtable’s net zero working group is looking for “consistency, robustness and rigour” around these sorts of questions, Hogan explains.

These are the sorts of questions that investors will be asking, Cole adds.

“The TCFD is looking at transitional risks and also future carbon liabilities out to 2100. This means not just testing assets and operations against historic weather events, but also testing business planning processes against future climate scenarios.”

A good example of this is Lendlease’s ground-breaking climate change adaptation and community resilience framework for Barangaroo South. After Lendlease modelled the precinct against climate predictions, an increase in the number of extreme heat days was addressed through material selection. Stormwater infrastructure and building façades were designed to withstand intense storms and winds; an elevated ground plane accommodates predicted sea level rises.

Cole also suggests Property Council members read Every Building Counts, a policy toolkit with 31 practical recommendations that can achieve net zero emissions by 2050.

“When it comes to sustainability, continuous improvement is the key – and that means measuring, learning and sharing,” Cole says.

“The challenges that we face are incredibly complex and interdependent,” Hogan adds. “One organisation can't solve this on their own. Innovation will play a really big part in the future of real estate. We need to be more courageous now and we can’t be afraid to fail.”