Sustainability management will continue to get smarter in 2022

February 11, 2022

Wherever we turn, sustainability and the environment is big news. But beyond that, it’s a key area of focus for investors, owners and managers of large buildings. Whether we look at airports, shopping centres, museums or office towers, ensuring that the built environment continues to reduce its environmental impact while operating at peak efficiency is critical.

We expect 6 key factors to impact sustainability in the Australian built environment sector in 2022.

Increased consumer and government focus on the built environment

There will be increased visibility and awareness on sustainability in 2022 as the news cycle loosens its focus on the pandemic. 2021 saw sustainability and Net Zero become mainstream for the first time in history and we expect it will be one of the main themes dominating Australian and global headlines in 2022.

Becoming a sustainability leader in the quest for Net Zero is viewed favourably by consumers keen to spend with businesses that align to their values. It’s also becoming a factor in the war for talent in the increasingly tight labour market. A survey last year by Savills, on what younger workers want, found that the “green rating” of their building was most important to them, ahead of free snacks, games rooms and a gym.

Given the very public political debate and manoeuvring prior to COP26 Net Zero, sustainability will likely be a significant factor in Australia’s Federal Government election and also play a role in state and territory elections in 2022.

Pulling forward of 2030 (& 2050) targets

Building owners, operational managers and fund managers will see increased scrutiny on their Net Zero pledges. We anticipate that “a pull forward” of 2030 targets will occur across the built environment. However, many organisations have not been able to complete the detailed planning work required.

The Federal Government has published projections for emissions reductions that are expected to be achieved by 2030. And while these predictions are subject to conjecture and some scepticism, there’s little doubt that all industries are looking at how they can reduce emissions and operate their assets more sustainably. This includes a shift towards Net Zero carbon emissions.

In order to achieve this, building managers will need to gain a deeper and more detailed understanding about all the plant and equipment in their buildings are operating.

Sustainability benchmarks will become mainstream

GRESB (Global Real Estate Sustainability Benchmark) is now emerging as a key framework for investors and the wider financial community to understand the performance of assets in the built environment. NABERS and Green Star will also continue to be key frameworks for the industry to demonstrate progress.

Mainstream industry adoption of GRESB is relatively new and benchmarking performance has been challenging. But that is changing. Over 1,500 property companies, trusts and developers across the world last year used GRESB to report on energy, greenhouse gas emissions, waste, water and building certification at the asset level.

Australian companies that have participated in the GRESB assessments have been ranked number one in the world for 11 consecutive years in their two cornerstone benchmarks. Strong performance against the GRESB benchmarks will provide Australian property owners and investors with a competitive and reputational advantage over rivals - especially awareness of GRESB increases.

This is more than environmental activism. It is a financially sound action. We will see increased use of financial instruments to incentivise sustainability action. Building owners who are able to demonstrate quantifiable results will have “first mover” competitive advantage. This will make them more attractive to investors and tenants and customers who want to align with brands making real effort and progress.

Ability to demonstrate quantifiable progress

While many building owners and managers have been measuring environmental and sustainability at a high level, there will be a demand for higher quality and more granular data.

Businesses will grapple with how to report progress, what are the best metrics and who will directly be responsible and accountable. Reducing emissions on the scale required in complex environments, with multiple stakeholders, will make collaboration and communication incredibly important.

Tenants, particularly large commercial office tenants and shopping centres, will be under pressure from investors, employees and customers to prove quantitative actions and results. Building owners who are able to provide this will have a significant advantage.

Operational efficiency more important than ever

In 2022 and beyond we will see an increased focus on driving greater opex efficiencies through technology to drive investment in sustainability initiatives. For example, data driven maintenance that utilises machine learning will allow facilities managers to detect issues before they escalate.

The drive for greater efficiencies will be made even more difficult in 2022 as occupancy will be more variable than ever before (as hybrid and activity-based work becomes more entrenched) and fluctuate significantly on a daily basis. Efficiently maintaining thermal comfort in 2022 will increasingly become a real-time activity.

CAPEX planning will also come under tighter scrutiny and control in 2022. We anticipate there to be a greater interest in Smart Capital Planning and AI led analytic projects and initiatives. For example, a large Chiller operating at capacity may be using more energy than two smaller units that can do the same job. But without access to real-time data, operation teams can only work on ‘gut feel’ and instinct.

The most cost effective energy is energy you don't use. While the broader electricity market is seeing a transition away from traditional fuel sources such as coal and gas towards cleaner energy sources such as solar and wind, avoiding unnecessary energy use is important.

Data investment and projects prioritised

The need to quantify sustainability actions, continue to improve operational efficiency and maximise return on capital investment will lead to greater focus on data strategy, planning and utilisation.

In 2022, we will see an increased focus on ensuring that data is delivered quickly and in a way that allows decisions about operational and capital investment to be made in the most environmentally sustainable way possible.

Using data intelligently helps businesses take the gut feel and guess work out of operational and capital expenditure decision making. By collecting data and using it with AI and machine learning models, teams can detect and remediate issues faster than ever before, resulting in improved operational efficiencies and reduced downtime.

See how CIM’s PEAK platform can help you optimise your buildings' carbon emissions and minimise impact on the environment.

CIM Team
February 11, 2022