Like all of us over the Christmas and New-Year period, I’ve witnessed the devastation of our land and local communities through bush fires, and the incredible rallying of support that followed. I’ve seen first-hand the gathering of our communities, the sharing of grief, and the role of property as a place of shelter, coordination and essential services beyond the purely transactional. As global demand for a more sustainable future grows, it’s clear that an Environmental, Social and Governance (ESG) approach to investing and operating our land, buildings and portfolios is key.
Each year, our shopping centres move further away from being simply places of transaction, and more towards supporting the needs of the local community. For ISPT, this is a critical pillar in how we create and deliver our shopping centres, both now and into the future, and we’re actively consulting with our communities to ensure we’re responding to their needs.
It starts now
Shopping centres have the opportunity to play a significant and positive role in the ESG space. Whether it’s responsibly managing our carbon emissions, working with ethical retailers and supply chains or contributing to the social fabric of the community through a place to connect and support each other, we have the opportunity to embed and champion ESG practices in our industry.
The expectation for the ‘corporate’ end of town to do more can no longer be ignored, with climate action rallies around Australia demanding greater action by government and large businesses and institutions. Our industry is well-placed to effect a positive change and we’re already seeing investors respond to shifting societal values by being far more vocal in their views and ensuring alignment with best practice ESG standards.
In an article published in the Financial Review in April 2019, Andrew Gray from Australian Super indicated that “ESG is so intrinsic to long term value that the focus on it will only continue to increase. Whether that be climate change, diversity or workplace health and safety, board equality, executive remuneration – all these issues are integral to long term value”. The article went further with Greg Combet, IFM’s Investors Chairman saying, “It’s inevitable that as funds respond to longer term issues in the interests of their members, they are going to take continuing interest in how the businessess in which they are investing are addressing ESG risks”.
Through 2020 and beyond, ESG will have more influence than ever before in how we assess risk in the operations of our centres, who we partner with, where we direct our funds for investment and how we comply.
How ISPT is reducing its carbon footprint
ISPT’s alignment with the Industry Superannuation Funds means we’re committed to embracing this responsibility, reducing our footprint and continually taking steps towards a more sustainable, long-term future.
We’ve embarked on a number of ESG initiatives throughout our shopping centres and wider portfolio. One of these is our national solar PV project – a 4 stage project to install solar photovoltaic (PV) panels on 50 of our rooftops. The rollout was the first of its scale in Australia and aimed to set a benchmark for sustainable leadership while providing clean, cost-effective, low-carbon energy to our customers.
To date we’ve installed 16,000 panels on more than 22 properties and generated enough electricity to power over 800 homes. Our customers, investors and community expect us to proactively mitigate and manage our carbon impact and adaptation to climate risk and resilience, and our solar project is just one of the ways we’re achieving this. The programme will continue over the next two years as we leverage the world’s best, most efficient technology to provide a secure long-term, cleaner energy solution and meaningful outcomes for our customers and the environment.
Throughout 2020, ISPT will target an average across our retail portfolio of a 5 Star NABERS Energy equivalent rating, a 4.5 Star NABERS Water equivalent rating and a greater than 90% waste diversion rate. We’re well advanced in achieving these goals through a series of projects and improvements in how efficiently we manage the assets and, since 2014, we have reduced carbon intensity across the portfolio by 42%.
We’re looking to trial several waste reduction programs through 2020, including food recovery, on-site treatment and organic waste collection. We will be working closely with our retailers and shoppers to educate everyone on our new waste management practices and change behaviours to avoid waste from the outset. We see these initiatives as being expected from our communities and becoming ‘business as usual’ for our properties.
Continuing on with our partnership established in 2008, we’ll again work with and support Second Bite, which rescues and redistributes surplus fresh food to people in need, build community capacity in food skills and nutrition and advocate for an end to food insecurity. This partnership continues through networking opportunities and strategic advice and complements our vision to shift waste from being a problem to a resource by looking at how we reduce, recycle and repurpose at our properties.
At ISPT, we have taken a comprehensive approach to climate resilience through two streams. The first is a portfolio-wide Climate Exposure Assessment and the second is an organisational gap analysis of processes, systems and governance of climate risks against global standards. The outcomes of this assessment demonstrate that while ISPT considers climate risk as a priority, there is significant opportunity to add value through the development of a holistic approach that addresses both top-down organisational governance and property-level risk management.
The role of the shopping centre is evolving
There is much a shopping centre can do to assist with and support social wellbeing in our communities and it’s in this space where I see shopping centre owners working together. ISPT has been collaborating with the Property Council of Australia and 14 leading property organisations to develop and pilot a new online platform that evaluates against the requirements of the Modern Slavery legislation. The platform streamlines the reporting process and allows suppliers to easily share information with property organisations.
We’re partnering with current suppliers to understand, educate and help improve our supply chains while establishing relationships with new suppliers and business partners who can demonstrate fair, equitable and ethical practices. We know that socially and environmentally sustainable companies create long-term investment value and align strongly with the expectations of our community. Our involvement with the platform is in line with our work as a founding member of the Cleaning Accountability Framework (CAF), an ethical cleaning certification scheme to promote ethical labour practices. We’ve adopted the CAF in all our cleaning contracts and we’re certifying all retail and commercial properties in our portfolio.
In mid-2021, ISPT will launch the redeveloped Karingal Hub Shopping Centre in Victoria. Our consultation with the community emphasised the need for a sustainable centre with facilities that service local groups. We’re encouraged by the passion on display from these groups and look forward to delivering the new precinct.
We see through 2020, the focus for shopping centre owners will weight strongly to understanding who they are partnering with and ensuring, where possible, that business operations comply with these ever improving social standards.
A positive step towards a better future
The requirements for more rigorous governance and transparency in how we report on environmental and social standards will continue to ramp up through 2020 and will likely expand to include our dealings with business partners. For shopping centre owners, this requires a greater understanding and due diligence on the retailers we choose to partner with, extending beyond financial capability towards more transparency on supply chains and climate change exposures. Add to this the shifting public awareness and social and ethical responsibilities are top of mind for everyone. I see this as a positive step in aligning towards sustainable operations and the communities’ values.
For 2020, whilst shopping centres still need to be providing great offers and service to the customer to compel them to return, the communities awareness and requirements for owners of centres to be socially and ethically responsible in how they deliver this offer and service will fundamentally shift.
We will need to be far more engaging with our communities and share with them how we are responding to this shift in values and align better and adapt to these needs. For centres owners, this should be a seen as an enormous opportunity and cement the centres position as a key pillar in the ongoing needs of the community.
About ISPT
For 25 years our properties have been meaningful places for the retailers, companies, government departments and communities that use them.
We generate returns for our Investors, which are some of Australia’s largest industry superannuation funds, and ultimately the 50%+ of working Australians who have their retirement savings invested in property through us.
ISPT’s $19 billion portfolio invests in and develops commercial, retail, logistics, warehousing and residential property in Australia.
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