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Opening the door to more efficient buildings

By Esther Bailey, National Program Leader, CitySwitch

Four million square metres of office space in more than 900 offices across Australia are now signed up to the national CitySwitch Green Office program, after ANZ recently signed on 833 Collins Street in Melbourne.

This means that businesses representing 16% of Australia’s office spaces are coming together to actively improve their energy, emissions, waste, health and productivity. And savings are impressive, with program partners slashing bills by an average of 25%. But this is not a story about square metres, or even energy savings. It’s a story about people and corporate culture shift. 

When we started CitySwitch, the name said it all – it was about switching off lights. Now, it’s about values. Five years ago, my conversations were with building managers who were chipping away at kilowatt hours through lighting retrofits. Today, I’m having conversations with CEOs about why disclosure drives value and directs investment inflows.

The big end of town is following the money – and those purse strings are being held tighter by investors who are concerned with more than short-term profit. The Responsible Investment Association Australia says $866 billion in assets – more than half of Australia’s professionally managed assets – now consider environmental, social and governance issues. Many investors turn to a company’s sustainability report to understand its corporate purpose, values and long-term strategy.

More broadly, climate change – in terms of the physical impacts and the transition away from fossil fuels – is expected to have ‘first order economic effects’, according to the Reserve Bank Deputy Governor Guy Debelle.

Many businesses are already making that transition. Last year alone, CitySwitch signatories saved 711,000 tonnes of carbon emissions from entering the atmosphere through energy efficiency, carbon offsets and renewables. This year, we called on all signatories to reset their targets to move towards being carbon positive. We were hoping for a handful of companies to put their hands up. Instead, we found that 130 CitySwitch companies had already made carbon positive or renewable energy commitments and the same number again had targets in development.

Let’s call it; voluntary action can only drive the market so far. Businesses are at the starting lines with their engines revved, but they are being held back by policy uncertainty.

In the absence of a price on carbon or mandatory energy efficiency standards, we should, at the very least, measure and manage the energy and emissions in our buildings. We have a policy lever at our disposal that can help us put the pedal to the metal – the Commercial Building Disclosure (CBD) Program.

When the CBD Program was established in 2010, it required energy efficiency information to be disclosed when any office space over 2000 square metres was offered for sale, lease or sublease.

A review in 2016 found that the program had reduced energy consumption by a cumulative total of 10,020 terajoules – equal to taking 425,000 cars off the road for a year.

As the threshold was lowered to 1000 square metres, building owners didn’t blink. In fact, those new owners have improved their ratings to the same level in half the time. People care; disclosure works. Economic modelling conducted by Energy Action on behalf of the City of Sydney has found that lowering the threshold even further and expanding into new sectors would deliver a 2:1 cost benefit.

A small compliance investment of $26 million would unleash a $157-million investment in energy efficiency and cut more than two million tonnes of carbon emissions. The economic multiplier effect is even more impressive: $365 million by 2030 across the economy in direct and indirect jobs.

When disclosure came into the office market, tenants weren’t demanding it or making decisions based on a rating, but in the 10 years since, we’ve seen disclosure direct capital. A tsunami of capital has hit Australia’s commercial office sector because investors can see that we have a well-managed market, sound governance, resilient stock and a plan for the future.

Tenants, who are increasingly driving their own ambitious carbon-abatement strategies, want healthy workplaces that help, instead of hinder, their efforts.

Expanding the CBD Program is a smart move – and a safe move. Every business will be expected to manage their energy as we move towards a zero-carbon economy.

As they do, CitySwitch is standing ready to turn energy efficiency disclosure into a long-term driver of value, and open doors to new opportunities.

This story was originally published in Facility Perspectives, Vol 13 No 3