Emerging business trends in green building
Australia is leading the way in preparing our buildings for the impact of climate change - but more work needs to be done now.
Clive Warren, Associate Professor in Property Studies, UQ Business School
Regulatory and legislative change is ongoing in green building. Industry bodies such as the Green Building Council of Australia continue to lobby government to introduce legislation to mandate better sustainable building practices. On top of this, the Australian Sustainable Built Environment Council has released suggested changes to the National Construction Code to improve the green credentials of new buildings.
Additionally, an agreement was reached in Paris in December 2015 at a United Nations conference to reach zero net carbon emissions by 2050, as a step towards a zero net carbon environment. These initiatives put increasing pressure on the construction sector to develop new buildings that are zero net carbon emitters.
The UQ Global Change Institute's Living Building has led the way in green building design. A 6-star rated building, it generates more energy than it consumes through solar panels and stores up to 60,000 litres of rainwater.
Now, the onus is on existing buildings to become more environmentally friendly. But there is a disconnect between landlords and tenants, given it's up to the building owner to invest in technologies to make old buildings more sustainable, but it's the tenant that reaps the rewards in terms of lower energy bills.
There's an opportunity to address this problem, for instance by offering tax incentives to landlords that install renewable energy capability in their assets. One idea might be to move to a national scheme to incentivise landlords to improve the energy ratings of the buildings they own. Low-cost or low-interest loans might also be available to property owners who are prepared to invest in green building initiatives. Another approach might be to penalise those that don't meet certain requirements. Certainly, action is required to meet the 2050 net zero emissions target.
Asset managers have a role to play in this, especially as investors are increasingly looking to take stakes in buildings that do achieve superior green building ratings. They have a real opportunity to apply green building performance-rating schemes to existing buildings and measure their performance, as well as engage with tenants about what they can do to improve a building's rating.
Australia is actually leading the way in this area. The Global Real Estate Sustainability Benchmark (GRESB) assesses the performance of 61,000 properties worth US$2.3 trillion across the globe. According to its research, 72 per cent of Australia's buildings have a risk assessment for climate, compared to 41 per cent of buildings in the US.
This is good news, given the Australian population's close proximity to the coast means our buildings are particularly susceptible to rising sea levels and cyclones. As a result, we need to think much more closely about how we can ensure the nation's building stock is prepared for the impact of climate change.
Importantly, there is evidence to suggest green buildings attract a higher value than those that don't pursue this approach. Certainly, green buildings are more able to attract high-quality tenants compared to non-sustainable buildings, given many big businesses look for properties that help them meet their corporate social responsibility aims.
Much work has already been done to ensure the construction sector is on board with green building.
But more work needs to be done to maintain Australia's position as a leader in this field and to ensure our buildings, new and existing, can respond to the threat of climate change. Now is the time to act.