Investing in environmental, social and governance (ESG) initiatives is no longer just responsible business, it’s smart business, too. Here, Carleen Fitzsimon, Global Director - Investment Governance and Analytics for QICGRE, explains how it is positively transforming our sector at an unprecedented pace.
Carleen Fitzsimon, QICGRE Global Director - Investment Governance and Analytics
A version of this article first appeared on LinkedIn on 31 May 2019 under the headline 'Another step to securing the future of Australian shopping centres'.
Once the focus of a rare few, environmental, social and governance initiatives are now widely recognised as business-critical priorities. Around the world, ESG thinking is shaping the way that large corporations operate; driven by factors including shifting consumer and investor expectations, changes in global energy markets and the risks associated with climate change.
For some time now, the retail real estate sector has been rethinking the way in which it consumes and manages its resources to achieve the triple bottom line benefits of improved economic, environmental and social outcomes that can result from responsible investment. Coupled with this, today’s investors, tenants and prospective employees all hold increasingly high expectations for ESG performance, with advanced ESG-related reporting systems now providing transparency and insight into companies’ environmental footprint and their preparedness for the future.
Critical to this shift is a focus on renewable energy sources and the new breed of intelligent automation technology, which is revolutionising building and facilities management systems worldwide. By retrofitting existing systems and integrating high-performing, cost-competitive environmental principles into new builds, shopping centre operators globally are embracing more sustainable approaches to heating, cooling, lighting, water management and waste control.
At QICGRE, environmental considerations guide all of our biggest decisions. As our shopping centre assets evolve to become more integrated mixed-use town centres, we are acutely aware of the increased opportunities to mitigate environmental risk. When implemented across our diverse portfolio, investment in initiatives that improve energy, water and waste management, for example, have the potential to dramatically reduce our energy consumption and carbon footprint in addition to delivering cost savings.
Thanks to advances in the area of ESG performance data capture and reporting, we are now able to provide QICGRE stakeholders with a very clear view of the outcomes of our responsible investment strategy. This same data also works to give us a much deeper understanding of the impact our decisions have on the places that we operate in, the people we work with and the communities we serve.
Walking the walk
In a major boost for our future-proofing ESG ambitions, QICGRE recently announced a unique collaboration with the Clean Energy Finance Corporation (CEFC) – the federal government-owned ‘Green Bank’ that invests in clean energy projects in a bid to lower Australia’s carbon emissions.
Marking the first collaboration of its kind in Australia’s retail real estate sector, the initiative saw the CEFC provide a $200m senior debt facility for the QIC Shopping Centre Fund to support the adoption of a series of major improvements in energy performance across our retail portfolio.
The loan empowers QICGRE to achieve its core environmental objective of maintaining energy security while significantly reducing energy, water and waste consumption as well as greenhouse gas emissions. In the face of continued volatility in energy supply and price, it also aligns with our broader objective to manage energy risk across our real estate portfolio – creating enduring value for our investors, communities, business partners and stakeholders.
The initiatives we are implementing now are already empowering us to achieve these objectives while aligning QICGRE with globally recognised reporting standards and benchmarks.
Namely, in 2015 we committed to a 20 per cent reduction in energy, water and waste by 2020 and a minimum 4-star NABERS rating across the portfolio by 2021; and in 2018 we committed to sourcing 30 per cent of our controllable energy consumption from renewable energy by 2025.
A key enabler in energy efficiency has been a major redesign of our property operations, including the adoption of the ACE Platform – an advanced new automation system designed by Sydney-based tech innovators CIM Enviro, which has been rolled out across all of our shopping centres.
Rated by CSIRO as ‘best in class’ in a worldwide review of software providers for fault detection and diagnostics, ACE Platform’s data-driven approach has the potential to reduce building energy consumption by up to 10-15 per cent per annum thanks to its continuous, real-time detection and diagnosis of system faults.
Using advanced automation technology to monitor complex and energy-intensive equipment such as chillers, boilers, air handling units, fan cool units and cooling towers, the ACE Platform has been described as ‘an MRI scanner for buildings.’ By interrogating real-time performance data on energy consumption and equipment maintenance, this system allows us to materially enhance operational efficiency and set a new benchmark in operational and sustainability practice in large public buildings.
Failures and deteriorations in asset energy performance instantly generate a system alert that details the location of each fault, the root cause, the cost impact and the solution. Each alert is automatically assigned a maintenance ticket for onsite teams to close out rapidly, ensuring energy wastage is addressed without delay.
An initial trial of the ACE Platform at Robina Town Centre generated compelling results: delivering a reduction in the centre’s normalised energy consumption in excess of 15 per cent (or 582 megawatt hours), and $18,000 in maintenance savings over a six-month period.
We have now onboarded the system across our shopping centre portfolio. This has helped us centralise operational management through data-driven analytics, with cost savings resulting from real-time fault identification and root cause analysis to minimise energy wastage, streamline the rectification of issues and improve the lifecycle of equipment.
Personally, I feel like there has never been a more exciting time to work in the area of retail real estate, where a single positive change made across an entire portfolio of assets has the potential to have a profound economic and environmental impact.
While our energy efficiency targets will be achieved through strategies specific to each building, future environmental initiatives look to include installation of onsite rooftop solar PV and battery energy storage systems; introduction of retrofitted LED lighting solutions; and upgrades to heating, ventilation and air-conditioning systems.
It goes without saying that there is still much to be done by energy-intensive big business to reduce carbon output and help mitigate the risks associated with climate change. But we are also now learning that astute investment in next-generation operations management technology not only delivers value for our investors; it offers the retail real estate sector the chance to make a major contribution to a greener future.
Learn more about how we are securing a sustainable future for our centres in the first of our series of papers developed in collaboration with the CEFC (pdf, 936KB).