Embedding ESG in the commercial property sector
Commercial real estate is one of the many sectors where sustainability considerations now influence lending, acquisitions, governance and social responsibility. Providers of capital want demonstrable and credible long-term plans that position a business to be resilient, cost-effective and competitive in a low emissions economy.
In an article by Bayleys Commercial, Jo Kelly said “When looking to finance, providers of capital want demonstrable and credible long-term plans that position a business to be resilient, cost-effective and competitive in a low emissions economy and, for most, it will require a fundamental re-think of current business models, products and services.”
“Organisations and businesses wanting finance should talk with their bank’s sustainable finance team, and be prepared to discuss their sustainability strategies and targets, drivers for change and any actions already taken to improve sustainability performance.” In addition to voluntary international commitments, this year around 200 entities in New Zealand will be required by law to start producing climate-related financial disclosures which include scope 1, 2 and 3 emissions across value chains and what are referred to as “financed emissions”.
“This means many small businesses, including those borrowing from banks or suppliers to listed companies caught by this new legislation, will also need to put climate reporting in place, be planning to reduce their emissions and understand their risks in other areas, for example water use and biodiversity,” explains Kelly.
“I’d encourage all New Zealand business leaders to read the disclosure guidance we have published in partnership with Deloitte and the Sustainable Business Council, available on our website.”
For sustainability to be hard-wired into the business and financial arena, attitudes, processes and systems need to be upgraded with clarity required from government on its policy and investment priorities, according to Kelly. “We know there is an increasingly high cost of inaction on climate and the scales are tipping quickly in favour of organised transition and adaptation.
“The Centre has been working with government to determine whether New Zealand needs to codify definitions of sustainable economic activity into a set of definitions that can be used for investment decision-making.
“Prioritised areas of investment have recently been highlighted by the Climate Change Commission in their advice to government and the Centre has also recommended the government develop a coordinated sustainable finance strategy.” The New Zealand Green Building Council recently released its updated guidance for financing green buildings, with Dean Spicer, head of sustainable finance for ANZ saying it provides clarity to building developers, owners, occupiers and is aligned to global best-practice green financing.