In a bid to reduce carbon emissions and ensure the longevity of our planet, nations worldwide are targeting a net zero economy within the next few decades. For commercial property, there is opportunity in the change.
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Australia is targeting a net zero economy by 2050, while the nation hopes to reach emission levels 43 per cent below levels reported in 2005 by the end of this decade. Essentially, targeting reduced emissions and net zero long term means “achieving an overall balance between greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere”, according to the Climate Council.
On top of these targets, Australia is a party to the Paris Agreement which outlines global long-term goals to guide all nations towards greenhouse gas reduction, providing financial support to developing countries to mitigate climate change, and reviewing each country’s commitment to the agreement every five years.
According to Hayden Groves, president of the Real Estate Institute of Australia (REIA), sustainability has become a central pillar of the commercial property sector in recent years, with its position within the sector set to grow moving forward.
In his view, this transformation “is not merely a response to changing consumer preferences or regulatory pressures, rather, it reflects a broader recognition of the industry’s profound impact on the environment, society and the global economy”.
The REIA’s Commercial Real Estate Sustainability Report 2023 looks at ways in which the sector has shifted, both now and into the future, as “our economy and Australia’s consumer base gears up to decarbonise”.
“Central to this will be the adoption practice of owners in the mid to long term to adapting their spaces to consumer demand; but also, what Australia’s emissions targets will dictate,” he shared.
For Australian commercial real estate, the REIA believes there are 12 key opportunities to assist investors in improving commercial assets for the net zero transition. They are:
- Energy efficiency improvements
- Renewable energy integration
- Building automation and controls
- Energy-efficient appliances and equipment
- Water conservation
- Green building certifications
- Waste management and recycling
- Indoor air quality improvement
- Tenant engagement and education
- Green roof and landscaping
- Carbon offsetting and mitigation
- Regular monitoring and reporting
Mr Groves insisted “getting the right information and making sure there is the right expertise on hand for our industry will be absolutely critical to achieving success through this transition”.
He believes a good starting point on the discussion of sustainability is understanding the Australian government’s Scope 3 emissions targets, described as “goals and objectives set by organisations to reduce or mitigate their indirect greenhouse gas emissions”.
“These emissions are generated because of an organisation’s activities but occur from sources not owned or controlled by the organisation,” he said.
With companies of all sizes honing in on Scope 3 emissions to minimise their impact on climate change, Mr Groves noted the “commercial property that organisations occupy has swiftly become a key focus for tenants”.
Moving forward, this consideration will be a key driver of the selection of office space moving forward, with one of the primary reasons tenants prefer prime grade office space over secondary grade alternatives is the “ability of tenants to reduce their emissions through their office space occupancy”.
“As environmental awareness, sustainability practices and the regulatory environment demands it, it is anticipated these considerations will continue to gain traction.”
Mr Groves concluded: “Addressing embodied carbon will likely become a more integral part of the real estate and construction industries.”
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