How green is your office tower?

Three Australian companies made the final list for the program: Cerclos, which provides software to support sustainability teams with analysis of embodied carbon and lifecycle carbon management; Everty, which makes software to monitor, manage and monetise electric vehicle chargers; and Sapien Cyber, a software platform providing cybersecurity risk protection for operational technologies within assets.

So what exactly is ESG, and why has it become so important?

Environmental: Involves how a company protects the environment, including internal policies on climate change, energy efficiency, waste management, and conservation efforts.

Social: Examines relationships with employees, suppliers, customers, and the communities in a company operates. It considers factors like workplace conditions, employee health and safety, and fair labor practices. By creating a positive work environment that values diversity and inclusivity, companies can retain top talent and foster a culture of innovation and collaboration.

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Governance: This refers to a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Good governance ensures transparency, integrity, and accountability in decision-making processes. They are also expected to promote ethical behaviour and comply with legal requirements.

These criteria have become crucial for companies and are integrated into their business strategies. Employees now expect better working conditions, and companies that provide environmentally friendly buildings with a focus on health, wellbeing, and sustainability are more likely to attract talent.

As a result of the pandemic, there is a greater emphasis on workplace health and wellbeing. Factors such as air quality, proximity to amenities like gyms and cycling facilities, and the overall working environment have gained importance.

ESG buildings prioritise these aspects, offering spaces that promote employee wellbeing, productivity and satisfaction. The NABERS Energy rating is an important benchmark for buildings’ energy efficiency. Those with higher ratings tend to have higher occupancy rates, while those with lower ratings face higher vacancies.

More than 1.2 million square metres of premium and A-grade office space is ripe for energy efficiency upgrades, according to a new report by CBRE, a commercial real estate leader. While there has been 22 per cent increase over the past five years in office buildings with a NABERS Energy rating of 5 stars or above, 13 per cent of the country’s premium and A-grade office stock has a rating of only 4.5 stars.

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“Upgrading [buildings] represents an opportunity to both do good and tap into the growing pool of office occupiers prioritising ESG,” says Sameer Chopra, CBRE’s head of research, Pacific and ESG.

Property developers and building managers play a crucial role in ensuring sustainable practices, such as implementing energy-efficient technologies, adopting renewable energy sources, and incorporating sustainable design principles into building construction and operation. They are quickly realising that environmentally friendly buildings with excellent amenities in prime locations yield stronger investment returns.

Office markets are moving through major structural change, and ESG impact is a key concern for asset owners. Environmentally sound buildings in the best locations with excellent amenities will thrive, while older A- and B-grade properties that do not upgrade to account for increased ESG requirements risk being left behind.