Between them they have over $1 trillion in market capitalisation, yet the top 50 companies on the ASX at the end of Q1 2017 are collectively underperforming in terms of transparency around their operational energy use and carbon emissions.
Of the top 50, while many borrow the glory of occupying flagship offices with high environmental ratings on Green Star and base building NABERS, only 15 of the 46 non-retail companies have undertaken any Tenancy or Whole Building ratings.
Three of the retail centre asset owners and managers have NABERS Shopping Centre ratings across all or most of their portfolios
The leader of the global Real Estate sector in the 2016 Dow Jones Sustainability Index (DJSI), Stockland, is setting a good example, with 22 out of its 23 retail centres holding NABERS Shopping Centre ratings and all three of its corporate offices in Sydney, Melbourne and Perth holding Tenancy ratings.
Another ASX top 50 retail giant, Vicinity Centres, has had all 91 properties in its retail centre portfolio assessed under both NABERS Shopping Centres and Green Star Performance.
Scentre Group has NABERS ratings for all 34 of its Westfield centres.
But it’s among the banks where things get really interesting. Westpac, rated top of the banking sector in the 2016 DJSI, holds no NABERS Tenancy or Whole Building ratings at all. Nor does Macquarie Group appear to.
The Commonwealth Bank in contrast has a total of 10 Tenancy ratings. Suncorp holds four Tenancy ratings, ANZ holds one Whole Building rating for 100 Queens Street Melbourne, and NAB holds two Tenancy Ratings and two Whole Building ratings.
The disparity between Westpac and Macquarie and the other major financials appears to reflect something RobecoSAM, which produces the DJSI each year, noted in its commentary on the 2016 results.
It said the responses from the world’s largest publicly listed firms showed that “operational eco-efficiency” was one of the index components where the world’s largest companies overall scored the lowest.
Operational efficiency is the key difference between a NABERS Base Building Rating and the NABERS Tenancy or Whole Building ratings. One only gives a snapshot of the base building – the common spaces, common plant and common facilities. The other two show how the occupants are performing in their own space.
Who are the stars of the operational stars?
Looking further into the Tenancy ratings, there are no ASX Top 50 offices that have achieved the high level of energy-efficiency required to reach 6 Stars Tenancy.
Only 15 office tenants have achieved the highest possible rating (in no particular order):
- Energy Action Sydney and Canberra
- Steensen Varming Sydney
- Green Building Council of Australia
- Sustainability Victoria
- Western Australia Local Government Association
- Surface Design Consulting
- HESTA Melbourne office
- South Australian Department of State Development
- State Library of NSW
- NSW OEH Hurstville office
- Momentum Energy Melbourne office
- Department of Industry Innovation and Science’s Nishi Building office in the ACT
- Moreland Energy Foundation
- Dixon Appointments
The highest NABERS Tenancy score achieved by any of the ASX top 50 is 5.5 stars.
The high achievers are:
- AMP Capital’s AMP Centre office, Sydney
- AMP Services at 240 Queens Street, Brisbane
- Goodman’s office at 60 Castlereagh Street, Sydney.
Again, it is the smaller companies and the state, federal and local government agencies that comprise the bulk of the high ratings.
The same is true for Whole Building NABERS ratings. The highest Whole Building rating achieved by any of the top 50 is 5 Stars, awarded to NAB Cannon Hill and Scentre Group’s ATO Chermside.
The standout performer in terms of portfolio coverage for Whole Building ratings is Goodman, with 13 current ratings across commercial offices, distribution centres and office park developments – plus a Tenancy rating for its own office.
Who are the real laggards?
The truly woeful performers appear to be the same companies whose activities are often more questionable in terms of overall environmental impact – the big industrials, fossil fuel companies and miners. These are heavy hitters in terms of market cap, such as Incitec Pivot, BHP Billiton [bumped from the DJSI last year], Santos, Woodside Petroleum, Origin Energy and Newcrest Mining.
AGL holds only one Tenancy rating – for the ACTEW AGL Office in the ACT.
So why does it matter?
Investors are increasingly looking at environmental, social and governance factors, and the top end of town is under increasing pressure to present transparent, verifiable information about how it is addressing both ESG and also risks such as carbon emissions.
NABERS as a tool has been identified by leaders such as Stockland, Vicinity and Goodman in their sustainability reporting as a valuable asset for delivering some of that data to shareholders.
“Base building ratings, whilst a step in the right direction, are not going to be enough to ensure we achieve the sustainable world we would all like to live in,” Stephanie Sterck, senior consultant at Australian Centre for Corporate Social Responsibility told The Fifth Estate.
She said that the Commercial Building Disclosure program had led to a large uplift in the number of base building ratings being completed, but that ACCSR would like to see “more building owners ensuring their tenants take the same approach to sustainability by implementing more green lease clauses for tenancy ratings”.
This table and information for the article have been collated to the best of our ability but it’s possible some of the data sources are outdated. Please get in touch if we need to update or clarify. Editorial@thefifthestate.com.au