With sustainability requirements now a key driver in most business-decision making, New Zealand’s commercial property sustainability specialists have a key role in driving strategic asset planning, and therefore business success.
Bayleys National Director Commercial and Industrial Ryan Johnson says environmental, social and governance (ESG) policies now sit at the forefront of strategic planning for most companies and will continue to have a bigger and bigger influence on commercial property decisions for those companies.
With 'Building the Transition' the theme of the 16th annual World Green Building Week, 9-13 September 2024, Johnson says the message for all businesses, whether they are commercial property landlords, tenants or investors, is clear.
“There must be an understanding in all companies, particularly strategic asset teams, that sustainability is a complex strategic issue that impacts every aspect of a business,” Johnson says.
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“Conversations used to be around attracting higher rents through ESG strategies such as emission reductions, or keeping staff happy with healthy buildings and employee initiatives. Now sustainability strategies are nuanced equations that factor in green premiums on cap rates, tax credits, embodied carbon, supply chains, commute costs.
“Seeking good, insightful advice on the true costs of moving or building, versus staying and working with landlords or tenants to improve ESG measures, has become a crucial part of business management that sits high on company’s list of values and strategic priorities,” he says.
Charlotte May, Asia Pacific Director Strategic Projects and ESG for Bayleys’ partner Knight Frank, says the World Green Building Week theme of Building the Transition reflects the need to help companies make the best of their real estate, whether they are tenants or landlords.
“Real estate can be an excellent identifier of your company’s approach to ESG,” May says.
“Across APAC, ESG is now a key consideration in multi-national corporation decision-making around real estate. Without mandates the majority of sustainability changes are being led by institutional investors who have their own ESG ambitions to realise, or by tenants and landlords with emissions goals.
“From an occupier perspective, we have seen a greater focus on how real estate can directly reduce a company’s Scope 1 and 2 emissions*. This includes factors like a commitment to agile working, improving energy efficiency within occupied buildings, green leasing and EV charging of a transitioned vehicle fleet. Elements like these are now embedded into Knight Frank’s client renewal and relocation negotiations.”
Precinct Properties Head of Sustainability Lisa Hinde says the property industry must adapt to changing ESG expectations. “Organisations like ours are in a period of transition. While this transition may look different for each organisation, our goal is to align our activities with a low-carbon future because it’s the right thing to do, and it’s in line with our stakeholders’ expectations.
“We are also mindful of our responsibility to ensure we’re driving social value in the sector through our purchasing power as we transition.”
Some of the sustainable practices implemented throughout Precinct’s business include proactive measures to adapt to climate change, and a commitment to transparent communication with clients regarding their ESG data, Hinde says.
“A sustainable building and construction sector in this country is characterised by innovation and a strong emphasis on sustainability. These factors are increasingly attracting investment from financial institutions and international capital partners based on a growing global appetite for green finance opportunities.
“The changing approach to sustainability brings opportunities for New Zealand, including mobilising the building and construction industry to invest in low-carbon local procurement. Encouraging local manufacturing is key, as it supports a number of areas including reducing carbon emissions and strengthening our local economy.”
Beca Carbon Navigator Phoebe Moses says it is not just the physical climate that is transitioning, with the rise in importance of ESG. “It’s the mindsets of people and society. Within the building industry, we need to make sure we are considering all risks and opportunities associated with these changing social and economic landscapes.”
Collaboration across the property and construction sector will also be key to creating a robust commercial property sector in New Zealand, Moses says.
“We are beginning to see cross-industry collaboration more often, particularly in the sustainability realm, which is great to see. It would be even better to reach a point where everyone involved in developing the built environment takes responsibility for their environmental impact, instead of looking to others to take the lead.”
* NOTE: Scope 1 emissions are direct emissions, owned and controlled by the company. Scope 2 emissions are those a company produces indirectly that come from where energy bought and used is produced.
- Supplied by Bayleys
