In the building and property industry we are still at the early stages of the sustainability journey but there are some companies which are trying to lead change.  Currently, most of the building industry is based around lowest initial cost, which means finding the cheapest prices to put a building on the ground, with the exclusion of other important factors, such as how much a building will cost to run for the rest of its life. 

This short-sightedness has several ramifications. For example, developers may install cheap air-conditioning units that will cost tenants a lot more to run, but then they’re not the ones who later pay for the running costs.  More importantly, society pays for the resulting increased greenhouse gas emissions, well after the developers have already pocketed the money from the property deal.  There is a fundamental disconnect in this equation that doesn’t produce anywhere near an optimal outcome. 

How does your building rate?

Rating systems now exist in many countries to provide benchmarks for how ‘green’ buildings are. In Australia there are a number of rating systems in operation, such as:

• The Australian Building Greenhouse Rating (ABGR) system focuses on the building’s energy and contribution to greenhouse gas emissions and is measured by the building’s actual performance using 12 months of its energy bills.
• The Green Building Council’s Green Star environmental rating is currently used as a design stage tool while a building is being planned and developed. It “rates” the building’s projected or intended sustainability.
• The National Australian Built Environment Rating System (NABERS) is another system which builds on the ABGR rating and is being progressively developed to incorporate other aspects of building performance, such as water, waste and air quality.

In a few years, any building not rating well according to these standards will devalue, especially as water and energy costs continue to rise. To maintain a building as an attractive rental option to tenants – including the best customer in the country, the Government – higher standards will have to be met. Leases will increasingly take into account the cost and the performance of the building over time.

This is why performance-based rating systems are so important. Design-based ratings such as Green Star are limited in that they only measure the theoretical performance of a building at blueprint stage and don’t take into account whether a building actually delivers once it is operational. If a building’s actual performance isn’t measured, how can we ever get a grasp on what works and what doesn’t? By implementing performance measurement, we can improve on the design and make sure that designers and developers are accountable for the efficiency of buildings they create or refurbish.  This vital loop needs to be closed so that design and performance are brought together.

Accountability for design and construction

As an industry, we need to be held accountable for the consequences of our actions, especially because our decisions directly impact resource and energy use.  The effects of climate change are starting to make us realise that we are destroying the planet we’re living on – there is an actual cost of the way we do business.  The construction industry, unions and developers have not been held responsible for building performance, and therefore there has been no incentive to look past getting the lowest upfront cost.

I don’t think anybody who builds or retrofits a building should be able to get a rating on their project until at least 12 months after a building is complete.  This means you are rated on your performance outcomes, not just the projected outcomes. If the performance isn’t up to standard, there should be a legal agreement signed that the parties involved will make good on it. Our colleagues at the Green Building Council of New Zealand are already taking this style of approach in the development of their ratings.

These days, tenants are increasingly demanding more sustainable features. Not only are there savings to be made in energy and water use, companies see it as enhancing their image as well as attracting and retaining employees. There is a lot of positive anecdotal evidence about increased productivity of employees in green buildings which factor in more daylight and use natural ventilation. If we get to the stage where we can quantify improvements in productivity in the same way as energy savings, the sustainability argument would be even more compelling.

Addressing market barriers

In order to move forward we need to address the market barriers which hinder sustainability efforts. For example, there is currently no pricing mechanism to take into account the cost of polluting the environment, which means that there is also little or no economic incentive to be a good environmental citizen. Nonetheless, within the year, 40 Albert Road, Melbourne will be generating enough energy on site that it will be able to meet its needs as well as exporting extra electricity back into the grid.We plan to become permanent exporters of electricity and if all the buildings in Australia performed like this, we could save the estimated A$40 billion needed over the next 15 years to build new power stations and transmission lines. My company doesn’t get any benefit from the fact that we will be contributing to these cost savings. There is a major gap in the market for those cost savings from avoided investment to be conferred back to the people providing the offset. 

The sustainability journey is not just about doing the right thing, it’s about changing our economies and mindsets to embrace these new markets. The business opportunities are untapped. If you project yourself 10 years in the future, you’re going to think that things like energy, water and waste efficiencies are de rigueur.  In fact it would seem utterly ludicrous not to adopt them. The trends are all going towards efficiency, so we may as well start early to reap as many benefits we can as quickly as possible – especially when the liveability of our climate is at stake.

I’d like to think that by that time, all buildings will be measured on their sustainability rating. They will have zero net electricity demand, zero emissions, zero water wasted, and no waste going to landfill. They will provide more productive environments for their employees, a higher degree of amenities and more enjoyable and vibrant places to work.

Leadership in this area is very rewarding. My goal is to continue to align business and societal outcomes while developing a more sustainable world. I want to be able to look my kids in the eye and say that I have done everything I can to not stuff up their future. Let’s leave behind a healthy economy and a healthy environment –and let’s start working to make this a reality today.

Peter Szental is managing director of Szencorp, a group of companies involved in property development, renewable energy as well as energy and water efficiency. He is President of the Business Council for Sustainable Energy and the Australasian Energy Performance Contracting Association, and Treasurer of the Australian Sustainable Built Environment Council.

www.szencorp.net