Property firms in Australia and New Zealand continue to lead the world in sustainability when it comes to the environmental, social and governance performance of their assets, the latest results indicate.
Releasing the results of its 2019 GRESB Real Estate Assessment of the environmental, social and governance performance of real-estate companies, REITs, funds and property developers, the Global Real Estate Sustainability Benchmark (GRESB) said that the Oceania’s region’s property sector continued to lead the world in sustainable performance – the ninth consecutive year in which our region has been in the lead.
According to the benchmark, the Oceania region lifted its benchmark score from 76 out of a possible 100 in 2018 to 81 this year.
This was nine points above the global average score of 72.
Furthermore, more than half of the portfolios which are ranked by GRESB as 5-star are located within the Oceania region.
As well, companies such as Lendlease, Dexus and Frasers lead individual categories in several areas.
Lendlease achieved the highest global score for its sector in the private office and private retail categories as well as the highest score at a regional level in the industrial property category with its Australian Prime Property Fund Retail and its Australian Prime Property Fund Industrial respectively.
Dexus, meanwhile achieved the highest score globally in the private office/retail diversified category with its Dexus Wholesale Property Fund.
Frasers was recognised as a global leader and achieved the highest regional score in the industrial and diversified office/industrial categories.
Covering 1,005 property companies, REITs, funds and developers representing more than USD 4.1 trillion assets under management worldwide, GRESP measures the sustainability of real-estate assets from an environmental, social and governance perspective.
It is used by more than 100 institutional investors representing USD22 trillion in assets under management to monitor and make decisions about the sustainability of assets within their portfolios.
Worldwide, the results show that real-estate companies who participated in the benchmarking reduced their greenhouse gas emissions by 2.66 percent between 2018 and 2019.
Whilst this is welcome, the rate of improvement is lower than the 4.91 percent reduction achieved in the previous year and is not sufficient to help the property sector meet its contribution toward the 1.5 degree target set by the Paris Accord.
Property Council of Australia chief executive officer Ken Morrison welcomed the results.
“These results show that our industry is taking the initiative on ESG in ways that lead the world and not merely sitting back waiting for government action,” Morrison said.
“The investments that Australian property companies are making in sustainability is supporting the global transition to a low-carbon, more sustainable and more resilient future which is delivering value for investors and meeting the needs of a growing population and economy.
Worldwide, according to GRESB:
- 88% of GRESB participants have annual performance targets linked to ESG outcomes (up from 83% in 2018)
- 69% of entities now have Board-level financial compensation linked to ESG goals, an important indicator of ESG integration at the highest levels of governance.
- 90% of GRESB participants monitor employee satisfaction, 81% monitor tenant satisfaction and 79% monitor impact on the community, putting the conditions in place for improvements in social aspects of ESG.
- In its second year, there was a 96% increase in entities participating in the voluntary Resilience Module, which is aligned with the recommendations released by the Task Force on Climate-related Financial Disclosures (TCFD). The uptick in participation demonstrates an increasing awareness of the need to respond to investor attention on climate risks and resilience.
- Participants are including health and well-being as an explicit component of their ESG strategy.
As well, GRESB’s trend analysis for indicators that have remained consistent over the past years shows a significant shift in practice.
- In 2009, 19% of participants collected energy data. In 2019, it’s 98%
- In 2009, 13% of participants used renewable energy. In 2019, it’s 61%
- In 2009, 59% of participants obtained green building certificates, in 2019, it’s 63% at the time of construction and 58% for operational buildings
- In 2011, 39% of participants incorporated sustainable factors in their Board of Directors. In 2019, it’s 41%
- In 2012, 70% of participants had a senior decision-maker accountable for sustainability, in 2019, it’s 99%
- In 2012, 26% of participants had sustainability clauses in their lease contracts. In 2019, it’s 86%;