Lessons learned from the NABERS Sustainable Portfolios Index 2022

July 11, 2022
CIM Team

Differentiating a building portfolio’s success in achieving sustainability goals compared to the rest of the market can be challenging. The NABERS Sustainable Portfolios Index 2022 (SPI) supports these efforts, showcasing the environmental performance of 53 top building portfolios and funds across Australia. This is Australia’s only publicly available index that provides a whole-of-portfolio view of energy emission, water usage, waste and indoor environment quality performance for the built environment.

The SPI, now in its fourth year, not only gives the world an insight into Australian building performance at a point in time but highlights the ongoing improvement being achieved by building portfolio managers. This hard data, that is independently verified, highlights the real changes being made by building owners and portfolio managers to continually improve their environmental performance within the NABERS framework.

After digesting the SPI’s findings, here are our key takeaways.

Lesson 1: Growing participation indicates increased focus on sustainability

This year’s SPI is notable as the number and coverage of building owners submitting their portfolios for inclusion increased significantly. This highlights that portfolio managers want to show that efforts to improve their NABERS rating are not about getting a point-in-time gold star. They are keen to demonstrate their commitment to the long-term improvement of their sustainability goals. There was a massive jump of 34.5% since last year in the number of participating portfolios, including seven brand new property companies. Also, for the first time ever, two office portfolios are 100% rated with energy, water, waste and indoor environment ratings.

Lesson 2: The emphasis on tenant wellbeing has grown

The Index reported an impressive 50% increase in the number of portfolios disclosing NABERS Indoor Environment ratings. This reflects an increased focus from tenants for work environments that are healthy, safe and productive, particularly since the start of the pandemic. Tenants are also increasingly demanding greater levels of transparency, and the increased reporting demonstrates that building owners are taking note. Scott Armstrong, Active Super Head of Property, said “We are finding that our tenants are very interested in sustainable buildings as this reflects positively on their own business, staff and shareholders.”

Lesson 3: There is a growing appetite for robust data visualisation

This year’s Index has elevated the volume and display of information. The revamped format, with new graphs, enhanced charting capabilities and improved dashboard navigation reflects a broader industry shift towards openly and creatively using data to measure and disclose metrics. Powered by Tableau’s interactive data visualisation software, the Index provides unprecedented insight into portfolio performance metrics. Building owners and managers are increasingly taking heed to the value of data in driving strategic and operational decision-making.

Lesson 4: Retail has come a long way

30% more shopping centre portfolios were included in the SPI this year. Carlos Flores, Director NABERS & Building Sustainability said: “This is a powerful demonstration of just how far retail has moved in the past decade, and follows a long-established trend of increased sustainability action in the retail sector”. Today, most major shopping centre portfolios are using NABERS to set ambitious sustainability targets and track progress at an asset level as well as across their portfolios. This year, several shopping centre portfolios have decided to take the next step in their sustainability journey, and disclose their performance in the SPI.

Lesson 5: Sustainable performance is a driver of sustainable finance

Fund managers recognise the importance of independent and evidence-based reporting as they seek sustainable finance. The wide coverage of funds in this year’s Index reflects the link between NABERS and green loans has been acknowledged industry-wide. The ability to demonstrate sustainable leadership and commitment has become a key avenue to support REIT’s in sourcing sustainable finance now and in the future.

Download our practical guide to improving your NABERS rating

CIM Team
July 11, 2022
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