For the seventh year in a row, Australia and New Zealand have topped the Global Real Estate Sustainability Benchmark, scoring 74 out of 100 points, compared to a global average of 60.
GRESB assesses environmental, social and corporate governance performance of participating companies to assist institutional investors in making investment decisions. This year GRESB detailed the sustainability performance of a record 759 real estate companies and funds (including 37 companies from Australia), representing 66,000 assets and $3.7 trillion in gross asset value.
Lendlease came out top on two categories regionally, in retail for its Sub-Regional Retail Fund and in office – private for its Australian Prime Property Fund Commercial. The office fund ranked third globally.
“Sustainability is central to Lendlease’s business strategy,” managing director of Lendlease’s Australian investment management business Josh McHutchison said. “For our investment management business, this approach puts customers, tenants and investors at the heart of our vision to create the best places and deliver positive legacies.”
Leading the pack on listed offices was DEXUS, whose results chief executive Darren Steinberg said were due to an “active asset management approach”.
“Our commitment to optimising the environmental performance and resilience of our buildings ultimately creates a better customer experience and reduces the impact of our operations on the environment,” he said.
Stockland topped the diversified – office/retail category in the region as well as globally.
Stockland managing director and chief executive Mark Steinert said the company was proud to be recognised as a world leader.
“Achieving the Global Sector status is an outstanding result that is a testament to the hard work and unwavering commitment of our people to delivering sustainable outcomes across our entire business,” he said.
“We continue to find innovative ways to improve our sustainability performance to deliver both monetary returns to our shareholders and long-term shared value benefits to our customers and other stakeholders in the communities we help to create and grow.”
Frasers Property also did well, and disclosed its score of 75, up from 68 the year prior.
It came first globally on Diversified Office / Industrial / Non-listed funds and second globally for all Diversified – Office / Industrial funds (listed and non-listed).
“Frasers Property is driving continual improvements in environmental performance across all our operating sectors and this year’s GRESB result vindicates our investment,” general manager – sustainability Paolo Bevilacqua said. “It’s also a testament to the hard work and passion of our people.”
Collaboration and openness key to success
A GRESB statement said the region’s leadership came down to a long-term commitment to sustainability and a “pervasive spirit of collaboration and knowledge sharing”.
“Companies and funds in Australia and New Zealand are competitive, yet they also are unusually open to exchanging experiences and insights,” GRESB said. “Competitors frequently work together to address new issues.”
For Australia and NZ the biggest improvements were around building certifications, policy and disclosure, and performance indicators. For those participating, energy use in 2015 was down two per cent on 2014 levels, while carbon dioxide emissions were down 5.4 per cent.
However, it may be a challenge to keep up performance improvements.
“While Australia and New Zealand continue to lead, this year’s relative improvement in average ESG performance trails other regions – from 70 to 74,” a GRESB statement said. “This reflects the challenge of trying to continue to raise the bar from an already high level of performance.”
Does it detract from the major issues?
While the sustainability performance of Australia’s top property owners is important to acknowledge and celebrate, the notion that Australia is a world leader in property sustainability could detract from a very serious issue: that there has been little performance improvement at the middle and bottom of the property industry – encompassing companies not likely to participate in ESG exercises like GRESB.
If all property were taken into account, the low minimum standards of Australian buildings would most likely see us lose out to a country like Germany, which sets a higher bar for what is allowed to be built.
As we’ve often highlighted, the commercial sector in Australia overall has seen little improvement in sustainability performance over the last decade, mostly confined to those leaders mentioned above.
Australia has the best-performing real estate sustainability leaders in the world, but it doesn’t mean it’s leading on sustainability.
BY The Fifth Estate