- Commercial property is responsible for 20% of the country’s carbon footprint.
- Improving the sector’s environmental performance will help with emissions targets.
- Non-listed owners are key in the “greening” of commercial property
Commercial buildings account for a fifth of New Zealand’s carbon footprint, so their owners need to do more in the drive towards a sustainable future, a property fund manager says.
Recent moves towards action on climate change have focused on transport and agriculture, but commercial property, (not including construction and demolition) was also a big greenhouse gas emitter.
PMG Funds chief executive Scott McKenzie said the sector was responsible for about 20% of the country’s carbon footprint, so improving its environmental performance would make a strong contribution towards emissions targets.
While big listed property firms had exacting environmental, social and governance (ESG) responsibilities, those firms only held about 10% of the commercial property stock, with the remaining 90% held either privately or by the unlisted sector, he said.
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“We’re committed to environmental sustainability, and our goal is to take action and lead the unlisted sector, and other landlords, to reduce our impact on the environment.”
The fund had implemented recycling practices which had diverted 200 tonnes of waste, signed up to Toitū Envirocare to reduce its carbon footprint, and was working with contractors on its waste and recycling.
It had two accreditations from Nabersnz, a system for rating the energy efficiency of office buildings, and technology which monitored the energy used in electricity, water, waste and recycling had been installed in many of its buildings.
The fund worked with its tenants to implement sustainability initiatives they wanted. These had included installation of LED lighting to reduce energy consumption, and provision of energy efficient bathroom facilities.
McKenzie said the work it had carried out helped reduce maintenance and operating costs, added value to the buildings, and supported a healthier workforce, which helped attract quality tenants and retain existing ones.
It also made good financial sense as it supported investor returns, and there was growing interest in it from the fund’s investors and tenants, he said.
“Greenifying existing buildings by retrofitting and upgrading, and supporting tenants’ businesses to be more sustainable is something our sector can do that will make a real impact on minimizing pollution, energy consumption and carbon emissions.”
PMG has released its inaugural sustainability report to detail what it had done to reduce its portfolio’s environmental impact, and McKenzie hoped it would encourage others in the sector to do the same.
“Unlisted companies are not mandated to do it, but greater transparency can inspire a sharper focus on bringing existing buildings within funds’ portfolios into line with the environmental standards of today’s new builds.”
Retrofitting existing stock was key to improving the environmental performance of commercial property, but it was a huge challenge, according to a new report from commercial real estate company JLL.
In the 32 established cities surveyed about 80% of the building stock that would be standing in 2050 had already been built.
But the report found most of that stock would be below the standard required to meet carbon zero goals, with 97% of stock in the EU not efficient enough to comply with carbon reduction targets for example.
JLL NZ head of strategic consultancy Jon Manns said the amount of embodied carbon in commercial property meant the efficient use of buildings was critical when trying to mitigate climate change.
That meant cutting down on building waste, focusing on whole lifecycle carbon use, improving the efficiency of existing stock and assessing whether retention was a viable option prior to demolition, he said.
“Taking action will support a high-value and resilient labor market while also ensuring those most in need benefit from investment in sustainable and resilient infrastructure.”