Unlocking sustainable finance for all properties would be a game-changer in Australia's journey to decarbonisation.

While top-tier buildings have reaped the benefits of green investments, the challenge now is ensuring that these advantages reach the 75% of underfunded, underperforming buildings that are essential for large-scale climate action.

Jamie Wallis, Senior Manager Buildings, Fitouts & Performance at the Green Building Council of Australia explains the significance of broadening access to sustainable finance.

“Our focus is on ensuring that capital flows into projects that can accelerate the market’s transition to greener practices,” Wallis explains. This approach is essential as the World Bank estimates that addressing climate change will require trillions of dollars, much of which must come from private investment.

While sustainable finance has grown, the majority of funding still goes to high-performing buildings—the top 15% of the market. This leaves a substantial portion of properties at risk of becoming ‘stranded’ assets without the upgrades or financial support needed to meet decarbonisation goals. Wallis notes that this trend highlights the need for an evolved approach to sustainable finance.

“A more inclusive response would recognise different tiers of ‘green’ and ‘transition’ levels, enabling investment in a broader range of projects,” he says.

To address these disparities, GBCA calls for more flexible finance taxonomies globally that support varying levels of sustainability progress. By identifying ‘green’ and ‘amber’ tiers, lenders and investors can direct capital toward projects that are still on their path to full compliance but are making meaningful steps toward improvement.

Reducing climate impact while addressing climate risk

A holistic approach is essential for scaling sustainability efforts across the sector. Wallis emphasises that, “Incorporating climate resilience in real estate finance is crucial. Without it, lower-performing buildings remain vulnerable to climate impacts.”

This resilience-focused finance can help ensure that the ‘other 75%’ of buildings are not left behind.

Tools like GBCA’s Green Star certification system can help to provide credible decarbonisation pathways. “Green Star is built on recommendations from the international bodies and lays out clear pathways for highly efficient, fossil fuel-free, and renewable-powered buildings,” Wallis says. These benchmarks are critical for guiding the industry toward decarbonisation goals.

GBCA’s long-term vision is a property investment landscape where all finance decisions are made through a sustainability lens.

“Financing projects that don’t align with decarbonisation goals should no longer be acceptable. Every investment should contribute to the transition,” explains Wallis.

This perspective reflects a commitment to ensuring that every property investment supports sustainability and aligns with the global push toward net-zero emissions.

The property market is beginning to respond to these shifts. An increasing number of property portfolios are setting net-zero targets and registering for Green Star Performance ratings. Wallis points out that while these portfolios may initially score modestly, they signal an important shift toward continuous improvement and sustainability.

“To decarbonise the property sector at scale, green finance must be inclusive. We need to ensure that every building, regardless of its current performance, is part of this journey.”

For further insights, GBCA has contributed to the report, “Building Transition: How to Scale and Finance an Inclusive Transition for the Built Environment,” which offers detailed guidance on these topics. You can also hear more about the evolution of sustainable finance at the upcoming TRANSFORM conference in March 2025.

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