Global real estate is estimated to consume 40% of global energy annually, which accounts for more than 20% of international carbon emissions. So, it’s hardly surprising that international agencies have identified real estate as a major target of international efforts to reduce greenhouse gas emissions.
In Australia, the construction, operation and maintenance of buildings accounts for almost a quarter of greenhouse gas emissions in Australia. The Property Council of Australia, in collaboration with the Green Building Council of Australia, is aiming to address this with plans to secure a portion of the recently announced A$2 billion in additional funding by the Australian Government for the Climate Solutions Fund.
The proposal includes the introduction of a single national rating for the energy performance of homes, which could pave the way for mandatory disclosure of energy consumption and push for better building performance, similar to the Commercial Building Disclosure (CBD) for commercial properties. The CBD Program requires most sellers and lessors of office space to obtain a Building Energy Efficiency Certificate, which stipulates a building’s energy star rating before the building goes on the market for sale and lease.
The trend towards sustainability in commercial real estate has been underway for well over a decade and has been driven by institutional investors who want sustainable assets, cost efficiencies and rent premiums, as well as commercial tenants who support sustainability and want better working environments for their employees. In fact, the Australian property sector has topped the GRESB global rankings, the world’s leading environmental, social and governance benchmark, for the ninth consecutive year, with Dexus Property Group scoring the highest within the diversified office/retail property space, while Goodman Group was awarded leader within the Industrial sector.
Overall, the results noted that listed entities continue to outperform their non-listed peers, which could partially be attributed to investor demand for public disclosure on ESG reporting. The assessment takes into account a range of sustainability parameters, such as energy and water usage, waste and greenhouse gas emissions. Meanwhile, the assessment evolves each year, and in 2019 it considered a participant’s approach to human health and wellness (i.e. employees, tenants, communities and supply chains) as well as resilience to climate risk.
Ultimately, an effective strategy to cut emissions will need to encompass the whole lifecycle of planning, designing, constructing, operating and even decommissioning and disposal of buildings. A holistic vision of sustainable building calls for building strategies that are less resource-intensive and pollution producing.