At a lunch briefing on Thursday we sat with a bunch of industry leaders such as Dexus, Oxford Properties (the Canadian pension fund) architects Woods Bagot, urban planner Urbis, resi developer Third.i and quantify surveyor Slattery. Among others. All brought together by engineers and consultants ADP, which recently opened an office in London and wanted to share what they’ve learned so far about how property is done there.
What was notable about this group was how seriously they were casually talking about sustainability, ESG and carbon accounting – not strained, like they were on stage or being quoted, but as a normal part of conversation. It was another signal the world has moved on. At least in part.
In the UK what’s increasingly common is the compelling drive to reduce carbon, ADP co-founder Laurent Deleu shared, in a run through of experiences for the group.
“It’s very much around, ‘we’re happy to have column spacings as close as possible, we’ll make sure that we can reduce our floor to floor (heights) and therefore there’s a carbon reduction to the building.” Even in premium buildings.
What’s happening in London, he said, is that governments there have agreed “on the same cause, which is, ‘we want to be carbon net zero. And we ultimately want to make sure that we have as limited impact on the earth as possible.’”
At the Marks and Spencers store the design team could not provide a sufficiently compelling reason to knock the building down thanks to the The London Plan, where a planning permit now requires a carbon plan to be submitted. If you want to knock a building down, you need to show that you can make up that lost carbon somewhere else.
“For instance, if you’re a property trust that owns 10 buildings, you might decide to knock down one of those buildings, but you need to demonstrate a [carbon] saving across the other nine buildings that you might hold in your portfolio.
“So a huge focus on embodied carbon, and huge focus on materiality is probably the main sort of driver.”
Do we start to notice a bit of a difference between the UK and Aus?
The Brits are driving big sustainability changes from the top of government down. Not from the top of industry down, where it’s all voluntary and “carrots only please”, and “we might change if we possibly can, and in our own time, and if it doesn’t interfere with investor expectations – and of course we do hope there’s also a trickle down effect from our excellence to everyone else”.
In Australia we prefer these days to sidle up closer to the market animal spirits of the Americas than the Brits. We like market drivers and we’ve allowed them to wrap their ideological haloes tight around most politicians in the country and nearly everyone else.
There’s not a lot of questioning of whether this is the governance model that gives us the future we want. And we can see this most clearly when we compare and contrast to other countries.
If we had a lazy 50 years or so we’d no doubt get as sustainable as all get out. Because it’s better. And better always wins in the end. But we don’t have 50 years.
In simple terms market drivers mean you don’t have to do something if you don’t really want to. And in this country, even if we make a stack of regulations, we don’t like enforcement. You can see that in the housing market. People at the bottom of the pile get shoddy goods even though we know how to do brilliant at the top end.
Government in Australia, if it wants to save this country, must try to shift the dial while hauling around these ideological saddle bags stacked full of this market-driven ideology.
And always, for any proposed improvements in energy standards or sustainability, you get powerful lobby groups trying to stop them. Or deflect outcomes.
On housing for instance all the attention has been successfully skewed to planning and supply as an answer to the crisis. Not on the symbiotic influence of the tax system and how it fundamentally skews outcomes for property ownership in favour of those who already own capital. As Alan Kohler has pointed out in his well regarded thought piece on housing published in the Quarterly Essay that reflects on the political debacle that Bill Shorten created with his missed opportunities to change the housing related tax system when he lost his contention to be PM.
The market does a lot of things well. But the best thing it does is influence and spin. It can afford the best mind-bending media and marketing geniuses on the planet who once might have written a world changing novel. Or otherwise changed the world for good, instead of for their well paying masters.
Against all this, trying to change to a more sustainable net zero world – which is hard and uncomfortable and costly anyway – becomes incredibly hard.
Green is good but if it is only constrained to those who can afford it and use it for market leadership and excellence, which doesn’t trickle down much further than these companies’ own stakeholders, then we are only empowering the elite, which won’t be enough.
Change in this environment is super hard and slow.
Nevertheless we’ve had some big wins. Commercial buildings in Australia, at the top end of town, are world leaders. In places like Bunnings we can get quite a few products that sport their green credentials and there’s huge solar rooftop solar. But overall the green transformation has gotten stuck at the top end.
In commercial property that’s below the A grade standard, there’s been no transformation to speak of. Local governments who want to stimulate greener buildings find it hard to even get in touch with wealthy private owners who dominate this end of town.
In the free market voluntary economy we love so much it’s trying to influence willful adolescents by setting a good example but not quite knowing what to do when they want to jump in powerful cars and roar around with their exciting friends.
The Australian government did a pretty good job of influencing the agenda in the days before the climate got terrifying.
Even under conservative government it mandated minimum environmental standards for any buildings it bought or leased. This kicked off the green building movement and gave huge impetus to the Green Building Council for instance.
The government used its huge size and procurement clout to lead by example and demonstrate actionable change. It created a marketplace that stimulated the development of green goods and services and brought down prices.
The industry got good at green. And the government kept with the leadership until the oil industry realised what was going on and stepped in to halt the slide of their market share.
Now the greener feds are back and finally starting to roll out some better policies. After 10 years they are going to declare their carbon commitments and green goals again. Just launched is the government’s Net Zero in Government Operations Strategy.
We’ll have more on this soon but suffice to say NABERS boss Carlos Flores was delighted and this week and told his LinkedIn followers: “This policy breaks SO MUCH new ground that is difficult to summarise in a single post,”
He nominated three highlights:
- Buildings must achieve 5.5 stars NABERS Energy to lease to the Australian government in metro cities (highest of any government in Australia). With preference given to all electric buildings from July 2024
- All new office buildings owned or built for the government must be 6 stars NABERS Energy and 4 stars Green Star (equal highest of any government in Australia). From 2026, buildings must also be all-electric!
Another good piece of news from on high this week was Thursday’s announcement of the $15 billion National Reconstruction Fund which Circular Australia managing director and chief executive Lisa McLean was also naturally delighted to see.
The NRF would be a “powerful mandate” for sustainability and circular economy, she said.
It would scale onshore manufacturing and recycling of solar panels, batteries, e-waste, masonry, textiles, plastics and healthcare waste, which make up most of the 20 million tonnes of waste currently going to landfill every year.
Great as these policies are, we need more.
And if the market is still behaving like adolescents, doing a bit of good, ignoring most of the goals, fibbing about their net zero homework, squibbing with greenwashing, we need to deal with bad behaviour the only way that works: we issue a hard “no”.
Leading by example works for long term influence. Which is fine when the kids are young.
This is life and death.
Now if The Fifth Estate was prime minister for a day – or a month, given how much there is to do – we’d put an end to market rule where it’s a danger to people and planet.
In the critically important property world we’d say, “stop with the nicey, nicey, slowly, slowly, take your goddam time to get sustainable and cut emissions, destruction of nature and poisoning of the planet, but only if it’s OK with all the board members and the stakeholders – and if absolutely no-one at all is inconvenienced”.
We’d put an end to the media mafia that controls the narrative to slow progress.
We’d go the English way.