State of Play for ESG in the Property Sector

There was so much to take in during last year's Property Council of Australia's ESG in the Property Sector Course that I took a lot of notes.

It was more than a crash course, rather a complete overview of what's happening across the very diverse property sector.

It was a super useful experience, to learn and understand best practice, practical case studies and ultimately more about ESG itself.

I wanted to share my key takeaways from the course on sustainable property development and emerging trends in ESG.

Thank you to the organizations and presenters involved for such a comprehensive course, and Springfield City Group for the chance to attend.

Property Council of Australia - Stockland - Six Capitals ESG Advisory - Aurecon - 世邦魏理仕 - Corrs Chambers Westgarth .

An amazing mix in the room from organization Dexus - BHP - Clean Energy Finance Corporation - Arkhefield - Health Organizations - and more.

The cross-section of attendees added to the knowledge sharing in the room. The collective presence in the room underscored a shared commitment to addressing ESG challenges and driving progress in this area.

Firstly, the property sector is incredibly diverse, from global first to smaller family owned businesses, to a range of asset types like commercial, residential, mixed-use, health care facilities, education facilities and sporting venues. As well as the diverse business models like, property developers, residentials, social enterprises, health care providers and more.

With such diversity, ESG needs to be tailored and fit for purpose. Its not just about the E- environmental, but equally the S - social and G - governance roles support the entire process.

Here are some key areas that stood out:

Integrating ESG Principles into sustainable business practices:

• ESG should be fully integrated into an organizations vision and strategy rather than an add on. Considering ESG as an investment rather than a legislated mandate.

Decarbonization & Net Zero Targets:

• Decarbonization and net zero are interconnected goals. Decarbonization is the process, while net zero is the desired outcome.
• This is a critical component in combating climate change, as reducing or eliminating carbon dioxide (CO2) emissions which helps to reduce the amount of CO2 trapping heat in the atmosphere.
• Electrification and energy efficiency are leading the charge. For example, I learnt many large property organizations are targeting net-zero emissions across their portfolio of assets by 2050, aligning with the Paris Agreement.
• These companies are utilizing solar panels and Green Star ratings across their facilities as a means to get there as well as incorporating green power.
• Decarbonization demonstrates a clear commitment to reducing carbon footprint.
• Energy performance is about shifting the focus to electric buildings. Measuring and disclosing performance is rising, such as NABERS or Green Star metrics.

By embracing decarbonization and striving for net zero emissions, we can create a more sustainable built environment and contribute to a healthier planet.

Circular Economy:

• The construction industry is a significant contributor to global economic development and a major source of negative environmental impacts due to its substantial resource consumption and waste generation.
• Mindful fit-out requirements and resource efficiency are becoming more common and are a fantastic way to improve sustainability. I was particularly keen to see organizations embedding circular economy principles into their projects, focusing on upcycling and minimizing construction waste from new builds, fit outs, renovations, knock-downs and decommissioned buildings.
• It's about efficient use of resources, waste minimization and the maximization of resource utility over the lifecycle of products.

Unlike a linear economy, a circular economy designs products to be reused and recycled to extend the products' lifespan for as long as possible.

Social Impact:

• Employee wellbeing and community impacts are measurable and significant ways to make a positive impact.
• Organizations are reporting on human rights, modern slavery and worker well-being, demonstrating a growing focus on the "S" in ESG.
• Myth: Slavery is a thing of the past. Fact: No. It's not.
• Modern slavery affects every country. It's real and important to consider from a range of areas, even when it's not obvious.
• Modern slavery can be hidden in complex supply chains. Addressing this is not only an ethical responsibility but a legal one.

Human rights provide the framework for understanding and combating modern slavery. Human rights are universal, inherent, inalienable and interconnected.

Sustainable Finance

• Sustainable finance is a growing sector and no longer a niche area.
• Finance is a powerful force in promoting ESG. From directing capital towards sustainable projects and companies to incentives for responsible practices.
• Green bonds: Debt instruments specifically earmarked to finance environmentally friendly projects, think renewable energy, transport and energy efficiency.
• Task Force on Climate-related Financial Disclosures (TCFD): This framework provides recommendations for companies to disclose clear and consistent information about the financial risks and opportunities related to climate change. It also helps investors and other stakeholders to assess climate-related risks and make informed decisions.
• International Financial Reporting Standards (IFRS) Foundation and International Sustainability Standards Board (ISSB): These organizations are working to develop global standards for sustainability reporting. This will improve the consistency and comparability of ESG information, making it easier for investors to assess sustainability performance

Waste Management:

• Diverting Waste: This is a crucial step in reducing environmental impact. It means minimizing the amount of waste sent to landfills and maximizing the reuse and recycling of materials.
• Recycling Promotion: Encouraging and facilitating recycling in the workplace is essential. This can involve providing clearly labeled recycling bins, educating employees on proper recycling practices, and setting up systems for collecting and processing recyclable materials.
• Eco-Friendly Office Spaces: Creating an office environment that minimizes waste and promotes sustainability. This could include using reusable products, reducing paper consumption, and opting for eco-friendly office supplies.

Employee KPIs on ESG:

• Traditionally, employee KPIs focus on things like sales targets, project competition or customer satisfaction. Integrating ESG means some employee performance goals are directly linked to ESG objectives.
• Everyone is working towards sustainable and responsible practices.

I gained invaluable insights into the impressive ESG strategies being implemented by leading organizations like QIC, BAC, Stockland, Charter Hall, and Dexus.

It was particularly inspiring to see the breadth of their priorities, spanning decarbonizing infrastructure and advancing the circular economy to fostering social sustainability and strengthening community engagement.

The focus on circularity was especially compelling, and I'm eager to explore how we can all contribute more in this critical area, as well as in decarbonization.

I'm curious to hear what ESG initiatives in the property sector you find most exciting – please share your thoughts!