Net Zero Buildings Analysis from EY 2023
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May 03, 2024
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About This Presentation
A great study from EY on sustainable buildings.
Slide Content
Zeroing in
on net-zero
buildings
An EY Net Zero Centre report
on net-zero
buildings
An EY Net Zero Centre report
TABLE OF
CONTENTS
2
CONTENTS
2
EXECUTIVE
SUMMARY
Executive summary
The places where we live, work and play are responsible
for a quarter of Australia’s greenhouse gas emissions.
We simply cannot achieve net zero without the real
estate sector.
Australia’s property industry is a global leader in
sustainable building, and we have amassed a strong
business case over two decades.
Game-changing regulatory developments and new
reporting standards in 2023 signal a decisive shift that
places sustainability at the core of ?nancial decisions and
business operations. As climate disclosures become part of
the annual ?nancial statement, sustainability is landing on
the desk of the CFO.
Many C-suite leaders now have a burning question in the
back of their minds: How do we create advantage and value
from environmental, social and governance (ESG) and the
net zero transition?
In this report, EY teams present some of the opportunities
and unpack the obstacles that C-suite leaders will encounter
as they answer this question.
To inform this report, we surveyed and spoke to board
directors, business leaders and heads of sustainability at
some of Australia’s largest property companies and top
ASX companies who occupy some of the country’s largest
commercial tenancies.
From this, we identi?ed ?ve ‘big rocks to crack’ to
accelerate action and uncover hidden value.
Importantly, the report ?nds that the fusion of climate
reporting and risk will change the way markets value green
buildings. When boards and C-suite leaders can draw a
direct connection between asset value, share price and
green credentials, businesses are more likely to prosper.
Net zero targets are locked and loaded
Our survey found:
• 100% of ASX 30 respondent corporate tenants have set
net zero or greenhouse gas emissions reduction targets.
The biggest challenge they have in meeting these targets
is the complexity of supply chain emissions and a lack of
supplier cooperation.
• 86% of property companies surveyed have set targets,
all of which cover both Scope 1 and 2 emissions. Their
greatest challenges were the same as those of their
customers: a complex supply chain and a lack of supplier
cooperation.
• 85% of tenants are optimistic about the property
industry’s ability to achieve signi?cant emissions
reductions in the long term, but are less so (69%) over the
next ?ve years.
Net Zero Buildings
Are they:
• Regulatorily supported?
• Technically feasible?
• Commercially compelling?
3
SUMMARY
Executive summary
The places where we live, work and play are responsible
for a quarter of Australia’s greenhouse gas emissions.
We simply cannot achieve net zero without the real
estate sector.
Australia’s property industry is a global leader in
sustainable building, and we have amassed a strong
business case over two decades.
Game-changing regulatory developments and new
reporting standards in 2023 signal a decisive shift that
places sustainability at the core of ?nancial decisions and
business operations. As climate disclosures become part of
the annual ?nancial statement, sustainability is landing on
the desk of the CFO.
Many C-suite leaders now have a burning question in the
back of their minds: How do we create advantage and value
from environmental, social and governance (ESG) and the
net zero transition?
In this report, EY teams present some of the opportunities
and unpack the obstacles that C-suite leaders will encounter
as they answer this question.
To inform this report, we surveyed and spoke to board
directors, business leaders and heads of sustainability at
some of Australia’s largest property companies and top
ASX companies who occupy some of the country’s largest
commercial tenancies.
From this, we identi?ed ?ve ‘big rocks to crack’ to
accelerate action and uncover hidden value.
Importantly, the report ?nds that the fusion of climate
reporting and risk will change the way markets value green
buildings. When boards and C-suite leaders can draw a
direct connection between asset value, share price and
green credentials, businesses are more likely to prosper.
Net zero targets are locked and loaded
Our survey found:
• 100% of ASX 30 respondent corporate tenants have set
net zero or greenhouse gas emissions reduction targets.
The biggest challenge they have in meeting these targets
is the complexity of supply chain emissions and a lack of
supplier cooperation.
• 86% of property companies surveyed have set targets,
all of which cover both Scope 1 and 2 emissions. Their
greatest challenges were the same as those of their
customers: a complex supply chain and a lack of supplier
cooperation.
• 85% of tenants are optimistic about the property
industry’s ability to achieve signi?cant emissions
reductions in the long term, but are less so (69%) over the
next ?ve years.
Net Zero Buildings
Are they:
• Regulatorily supported?
• Technically feasible?
• Commercially compelling?
3
Green buildings earn a premium
We ?nd 92% of tenants are more likely to stay in a property
with strong green credentials and sustainability features,
with a similar share reporting they are willing to pay a
rental premium.
Observed market data shows buildings with green ratings
achieve higher rents and lower vacancy rates, longer
weighted average lease expiries and higher annual returns
than non-rated assets. This demonstrates a willingness in
the market to pay a premium for sustainable commercial
space.
But tenants will only pay that premium when
the numbers add up
When we asked tenants speci?cs about green premiums,
they were slightly more cautious. Nearly half (46%) said
they were prepared to pay a premium of up to 5%. On the
other hand, one in 10 tenants said occupying a better-
performing building was generally cost-neutral, as savings
from energy ef?ciency offset any rental premium.
Tenant expectations and willingness to pay will remain front
and centre in investment decisions of building owners and
developers, who report the main barriers to uptake of green
technologies are generally cost, return on investment and
access to capital.
To paraphrase economist Paul Krugman, while the returns
on investing in greener buildings is not the only thing that
matters, in the long run it is almost everything. Widespread
transformation of commercial buildings can only be
achieved when the numbers are seen to add up.
As climate reporting obligations become the direct
responsibility of the CFO and audit committee chair,
aligning total shareholder returns with green building
performance should become key in creating new value from
the net zero transition.
Source: GBCA and Real Investment Analytics, 2023.
Exhibit 1: Buildings with Green Star ratings outperform the market
Occupancy
rate
WALE Price/sqm Investment
count/
sample size
Capitalisation
rate
To ta l r e t u r n
(annual)
Green Star Design and
As Built certi?ed assets
94.00% 5.9 years $18,500 100 4.83% 4.20%
Non-rated assets 91.5% 4.8 years $15,900 218 5.06% 3.70%
Percentage difference 2.73% 23% 16.35% 4.55% 13.51%
Percentage-point
difference
2.50% 1.1 years $2,600 -0.23% 0.50%
NABERS buildings Green Star buildings
16.4%
rental premium
1.1
year longer WALE
(weighted average lease expiry)
0.5%
Greater annual return
42%
decrease in energy intensity
for of?ces rated over a 14-year period
10%
higher net face rents
(for NABERS 5.5 star or above)
2.7%
lower vacancy rates
(for NABERS 5.5 star or above).
Source: NABERS 2024, JLL 2023 Source: NABERS, 2023.
4
We ?nd 92% of tenants are more likely to stay in a property
with strong green credentials and sustainability features,
with a similar share reporting they are willing to pay a
rental premium.
Observed market data shows buildings with green ratings
achieve higher rents and lower vacancy rates, longer
weighted average lease expiries and higher annual returns
than non-rated assets. This demonstrates a willingness in
the market to pay a premium for sustainable commercial
space.
But tenants will only pay that premium when
the numbers add up
When we asked tenants speci?cs about green premiums,
they were slightly more cautious. Nearly half (46%) said
they were prepared to pay a premium of up to 5%. On the
other hand, one in 10 tenants said occupying a better-
performing building was generally cost-neutral, as savings
from energy ef?ciency offset any rental premium.
Tenant expectations and willingness to pay will remain front
and centre in investment decisions of building owners and
developers, who report the main barriers to uptake of green
technologies are generally cost, return on investment and
access to capital.
To paraphrase economist Paul Krugman, while the returns
on investing in greener buildings is not the only thing that
matters, in the long run it is almost everything. Widespread
transformation of commercial buildings can only be
achieved when the numbers are seen to add up.
As climate reporting obligations become the direct
responsibility of the CFO and audit committee chair,
aligning total shareholder returns with green building
performance should become key in creating new value from
the net zero transition.
Source: GBCA and Real Investment Analytics, 2023.
Exhibit 1: Buildings with Green Star ratings outperform the market
Occupancy
rate
WALE Price/sqm Investment
count/
sample size
Capitalisation
rate
To ta l r e t u r n
(annual)
Green Star Design and
As Built certi?ed assets
94.00% 5.9 years $18,500 100 4.83% 4.20%
Non-rated assets 91.5% 4.8 years $15,900 218 5.06% 3.70%
Percentage difference 2.73% 23% 16.35% 4.55% 13.51%
Percentage-point
difference
2.50% 1.1 years $2,600 -0.23% 0.50%
NABERS buildings Green Star buildings
16.4%
rental premium
1.1
year longer WALE
(weighted average lease expiry)
0.5%
Greater annual return
42%
decrease in energy intensity
for of?ces rated over a 14-year period
10%
higher net face rents
(for NABERS 5.5 star or above)
2.7%
lower vacancy rates
(for NABERS 5.5 star or above).
Source: NABERS 2024, JLL 2023 Source: NABERS, 2023.
4
Source: EY, 2024.
Note: ‘Other’ included response to investor demands; links to debt facility;
ESG leadership; meeting market standards.
Exhibit 2: Biggest bene?ts of acting on emissions
Lower environmental
impact
Brand and
reputation
Futureproo?ng
and resilience
Regulatory
compliance
Competitive
advantage
Ta l e n t a tt ra c t i o n
and retention
Cost savings
Create
new value
Enhanced
asset value
Other
Improved health and
wellbeing
77%
62%
54%
31%
23%
23%
23%
8%
0%
0%
0%
Corporate tenants
Property leaders - heads of sustainability
50%
72%
50%
17%
22%
17%
11%
11%
28%
22%
0%
The full commercial opportunity of net zero
buildings is yet to be seized
When asked about the biggest bene?ts of acting on
emissions for their organisation, the opportunity to create
new value was identi?ed by just 8% of corporate tenants
and 11% of property heads of sustainability. This tells
us that people are yet to seize the full opportunity that
sustainable buildings present.
Digging deeper, our survey uncovered two ‘archetypes’ in
the property sector. One subset of property companies
is compliance-oriented and stepping up their ESG efforts
to stay on the right side of regulation. These compliance-
oriented companies are investing in green buildings
to minimise downside risk and reduce costs. They are
less motivated by new opportunities within the net zero
transition.
The other subset sees sustainability as a brand booster and
a way to communicate and connect with their customers.
These brand-oriented companies are willing to take risks
with green buildings to win new business and customers.
They see new standards and regulations as a chance to
showcase their leadership, rather than an opportunity to
drive down costs.
These are both worthy goals; however, the next opportunity
lies in a net zero strategy, executed well, that can achieve
both ambitions and also create new value simultaneously.
As sustainability emerges as a strategy to enhance
reputation, improve operational ef?ciencies and lower
costs, we expect the market to re?ect this in valuations in
the future.
Changing reporting standards, shifting expectations of
tenants and industry competition, we believe, will sharpen
the focus on how to drive pro?ts and create greener
buildings. In fact, our research suggests sustainable
buildings can be the interlock between ?nancial
performance and value creation.
Corporate tenants have spent the last few years setting net zero targets. But now, as the rubber hits the road,
many companies are not moving fast enough. The decision of the Science Based Targets initiative to rescind
its endorsement of more than 500 companies for failing to lay out credible goals aligned with the Paris
Agreement is a clear sign of the times.
Australia’s leading property companies have spent two decades learning how to deliver the world’s greenest
buildings, driven by emissions targets, investor and tenant demand, and cost savings. This EY report proves
that sustainability credentials attract rental premiums and post higher annual returns. Now, we need the
market to recognise green buildings for what they also are – a risk mitigation strategy, a brand booster, a
talent attractor and a value creator.
Davina Rooney
Chief Executive Of?cer, Green Building Council of Australia
5
Note: ‘Other’ included response to investor demands; links to debt facility;
ESG leadership; meeting market standards.
Exhibit 2: Biggest bene?ts of acting on emissions
Lower environmental
impact
Brand and
reputation
Futureproo?ng
and resilience
Regulatory
compliance
Competitive
advantage
Ta l e n t a tt ra c t i o n
and retention
Cost savings
Create
new value
Enhanced
asset value
Other
Improved health and
wellbeing
77%
62%
54%
31%
23%
23%
23%
8%
0%
0%
0%
Corporate tenants
Property leaders - heads of sustainability
50%
72%
50%
17%
22%
17%
11%
11%
28%
22%
0%
The full commercial opportunity of net zero
buildings is yet to be seized
When asked about the biggest bene?ts of acting on
emissions for their organisation, the opportunity to create
new value was identi?ed by just 8% of corporate tenants
and 11% of property heads of sustainability. This tells
us that people are yet to seize the full opportunity that
sustainable buildings present.
Digging deeper, our survey uncovered two ‘archetypes’ in
the property sector. One subset of property companies
is compliance-oriented and stepping up their ESG efforts
to stay on the right side of regulation. These compliance-
oriented companies are investing in green buildings
to minimise downside risk and reduce costs. They are
less motivated by new opportunities within the net zero
transition.
The other subset sees sustainability as a brand booster and
a way to communicate and connect with their customers.
These brand-oriented companies are willing to take risks
with green buildings to win new business and customers.
They see new standards and regulations as a chance to
showcase their leadership, rather than an opportunity to
drive down costs.
These are both worthy goals; however, the next opportunity
lies in a net zero strategy, executed well, that can achieve
both ambitions and also create new value simultaneously.
As sustainability emerges as a strategy to enhance
reputation, improve operational ef?ciencies and lower
costs, we expect the market to re?ect this in valuations in
the future.
Changing reporting standards, shifting expectations of
tenants and industry competition, we believe, will sharpen
the focus on how to drive pro?ts and create greener
buildings. In fact, our research suggests sustainable
buildings can be the interlock between ?nancial
performance and value creation.
Corporate tenants have spent the last few years setting net zero targets. But now, as the rubber hits the road,
many companies are not moving fast enough. The decision of the Science Based Targets initiative to rescind
its endorsement of more than 500 companies for failing to lay out credible goals aligned with the Paris
Agreement is a clear sign of the times.
Australia’s leading property companies have spent two decades learning how to deliver the world’s greenest
buildings, driven by emissions targets, investor and tenant demand, and cost savings. This EY report proves
that sustainability credentials attract rental premiums and post higher annual returns. Now, we need the
market to recognise green buildings for what they also are – a risk mitigation strategy, a brand booster, a
talent attractor and a value creator.
Davina Rooney
Chief Executive Of?cer, Green Building Council of Australia
5
The transition under way points to ?ve big
rocks to crack
We asked about “strategic goals and investment plans for
the next two-to-?ve years”. Both cohorts told us they are
planning to make bold moves on emissions and energy
reduction, especially around electri?cation. Relative
to owners, tenants are showing a keen interest in grid
interactivity.
Corporate tenants Property leaders - heads of sustainability
Proportion of respondents
Support customers
to reduce their
Scope 3 emissions
Signi?cantly
reduce energy
consumption
Reduce embodied
carbon
Eliminate fossil
fuels
Maximise onsite
renewables
Implement
grid-interactive
capabilities
0%
100%
50%
75%
25%
Exhibit 3: Strategic goals and investment plans for the next 2 to 5 years
A roadmap for technology gets everyone on
the same page
Our ‘?ve rocks to crack’ also align with a Technology
Readiness Matrix which we have compiled to help land
everyone on the same page.
This reveals that tried-and-true technologies, like heat
pumps and LED lighting, can do most of the heavy lifting of
electri?cation and energy ef?ciency. Other technologies,
like photovoltaics, can generate renewable energy onsite
and support grid interactivity. But Australia also needs
leaders to step up and trial new technologies — and our
matrix covers some of those.
Source: EY Net Zero Centre, 2024.
From this feedback, and from sector interviews and
discussions, we have identi?ed ?ve ‘big rocks to crack’.
These are aligned with the Green Building Council of
Australia’s industry-agreed Climate Positive Roadmap and
are:
• Electri?cation: Catalyse the gas free future
• Energy ef?ciency: Lighten your energy load
• Grid interactivity: Use energy when it is cheapest and
cleanest
• Renewables: Power on and off site
• Embodied carbon: Repair, rather than replace,
where we can.
6
rocks to crack
We asked about “strategic goals and investment plans for
the next two-to-?ve years”. Both cohorts told us they are
planning to make bold moves on emissions and energy
reduction, especially around electri?cation. Relative
to owners, tenants are showing a keen interest in grid
interactivity.
Corporate tenants Property leaders - heads of sustainability
Proportion of respondents
Support customers
to reduce their
Scope 3 emissions
Signi?cantly
reduce energy
consumption
Reduce embodied
carbon
Eliminate fossil
fuels
Maximise onsite
renewables
Implement
grid-interactive
capabilities
0%
100%
50%
75%
25%
Exhibit 3: Strategic goals and investment plans for the next 2 to 5 years
A roadmap for technology gets everyone on
the same page
Our ‘?ve rocks to crack’ also align with a Technology
Readiness Matrix which we have compiled to help land
everyone on the same page.
This reveals that tried-and-true technologies, like heat
pumps and LED lighting, can do most of the heavy lifting of
electri?cation and energy ef?ciency. Other technologies,
like photovoltaics, can generate renewable energy onsite
and support grid interactivity. But Australia also needs
leaders to step up and trial new technologies — and our
matrix covers some of those.
Source: EY Net Zero Centre, 2024.
From this feedback, and from sector interviews and
discussions, we have identi?ed ?ve ‘big rocks to crack’.
These are aligned with the Green Building Council of
Australia’s industry-agreed Climate Positive Roadmap and
are:
• Electri?cation: Catalyse the gas free future
• Energy ef?ciency: Lighten your energy load
• Grid interactivity: Use energy when it is cheapest and
cleanest
• Renewables: Power on and off site
• Embodied carbon: Repair, rather than replace,
where we can.
6
In case you missed it:
ISSB now hardwires sustainability into
?nancial reporting; it must be part of
strategy, risk and opportunities
It’s time to step up the pace of change
We suggest actions that both corporate leaders and
property owners can take today.
Corporate leaders can:
• Send a strong message to the market by driving
demand for electric buildings.
• Set clear targets and timelines for net zero emissions.
• Rate your tenancies with NABERS or Green Star to
set a clear baseline.
• Install onsite solar to reap the bene?ts of low-energy
technology.
• Consider how your building will interact with the
electricity grid when on the hunt for new space.
• Leverage partnerships to increase your impact.
• Assess embodied carbon and ?tout impacts when
weighing up a move.
Property sustainability leaders can:
• Explicitly link your net zero strategy with ?nancial
performance and value creation.
• Consistently cover the basics.
• Embrace electri?cation.
• Invest in renewables at speed and scale.
• Prepare for grid interactivity.
• Lean in on low-carbon procurement.
• Get ready for reporting.
• Consider how executive roles may change.
This report covers a lot of ground, but if there is just
one takeaway it is this: leaders must lead.
A dual mindset — of the practical and tactical alongside
the truly trailblazing — will help Australia to cultivate
new collaborative relationships between tenants and
landlords, foster a culture of innovation, drive down
the costs of the energy transition and push us further
and faster towards a better, brighter net zero future.
Selina Short
Managing Partner
Oceania Built Environment & Resources,
Ernst & Young, Australia
Steve Hat?eld-Dodds
Associate Partner
EY Port Jackson Partners,
Ernst & Young, Australia
Emma Herd
Co-Leader EY Net Zero Centre
Partner, Climate Change and
Sustainability Services,
Ernst & Young, Australia
Just 8% of tenants and
11% of RE think of sustainability
in terms of creating new value
Of the two archetypes, which will seize
the net zero opportunity?
7
ISSB now hardwires sustainability into
?nancial reporting; it must be part of
strategy, risk and opportunities
It’s time to step up the pace of change
We suggest actions that both corporate leaders and
property owners can take today.
Corporate leaders can:
• Send a strong message to the market by driving
demand for electric buildings.
• Set clear targets and timelines for net zero emissions.
• Rate your tenancies with NABERS or Green Star to
set a clear baseline.
• Install onsite solar to reap the bene?ts of low-energy
technology.
• Consider how your building will interact with the
electricity grid when on the hunt for new space.
• Leverage partnerships to increase your impact.
• Assess embodied carbon and ?tout impacts when
weighing up a move.
Property sustainability leaders can:
• Explicitly link your net zero strategy with ?nancial
performance and value creation.
• Consistently cover the basics.
• Embrace electri?cation.
• Invest in renewables at speed and scale.
• Prepare for grid interactivity.
• Lean in on low-carbon procurement.
• Get ready for reporting.
• Consider how executive roles may change.
This report covers a lot of ground, but if there is just
one takeaway it is this: leaders must lead.
A dual mindset — of the practical and tactical alongside
the truly trailblazing — will help Australia to cultivate
new collaborative relationships between tenants and
landlords, foster a culture of innovation, drive down
the costs of the energy transition and push us further
and faster towards a better, brighter net zero future.
Selina Short
Managing Partner
Oceania Built Environment & Resources,
Ernst & Young, Australia
Steve Hat?eld-Dodds
Associate Partner
EY Port Jackson Partners,
Ernst & Young, Australia
Emma Herd
Co-Leader EY Net Zero Centre
Partner, Climate Change and
Sustainability Services,
Ernst & Young, Australia
Just 8% of tenants and
11% of RE think of sustainability
in terms of creating new value
Of the two archetypes, which will seize
the net zero opportunity?
7
Source: EY Net Zero Centre, adapted from GBCA, 2023.
Exhibit 4: Zero carbon ready buildings
Standard
Typical building
emissions pro?le
Fossil fuel free
Eliminate natural gas for
space heating, domestic
hot water and cooking
Highly ef?cient
Minimise energy
consumption through
demand reduction, energy
ef?ciency and effective
controls
Powered by renewables
Provide all electricity from
100% renewable source -
on-site and/or off-site
Built with lower
upfront carbon
Select products and
materials with lower upfront
carbon and optimise the
building’s designLegend:
Electricity
Ventilation, cooling,
lighting, pumps, small
power, lifts, security,
controls, IT systems
Natural gas
Space heating,
hot water, cooking
Other
Emergency (backup)
power, (also include
refrigerant GWP)
Materials in construction
Emissions from products
and materials used in
construction
HOW TO READ THIS REPORT
From this research, we have developed this report to
offer decision-makers and in?uencers a ‘ready reckoner’
for net zero buildings in 2024. This report includes
signposts for board and c-suite leaders thinking about
the next round of investments and organisational
strategy, because when it comes to technology and
climate change, success requires them to look through
the windscreen rather than the rearview mirror.
We include suggestions for how board directors
and business leaders can act now, plan their next
move, and what to watch for on the horizon. We also
provide insights to give property leaders a deeper
understanding of the challenges facing corporate
tenants and opportunities to address the asymmetries
to secure a new competitive advantage.
We also spoke with policymakers, ?nanciers, technology
specialists and engineers. And we drew on EY’s
international network of experts, to develop a technology
readiness roadmap.
We applied the Green Building Council of Australia’s Climate
Positive Roadmap
4
to the technologies to frame the
discussions and determine the most practical technologies
for large-scale deployment. This Climate Positive Roadmap
sets a clear direction of travel: all new buildings and ?touts
in Australia must be net zero in operation by 2030, with
existing buildings and ?touts to follow by 2050 (Exhibit 4).
Many CEOs and C-suite leaders have a burning question in
the back of their minds: How do we create value from ESG
and the net zero transition?
In this report, we present some of the opportunities and
unpack the obstacles that CEOs and C-suite leaders will
encounter as they answer this question.
This report aims to provide a clear overview of the big
picture of net zero buildings. We recognise that readers
will have varying levels of subject familiarity and need for
detail, so we start each section with the key points so you
can read this document in less than ?ve minutes. Deeper
dives can be taken in the areas of interest to you.
To inform this report, we surveyed and spoke to board
directors, business leaders, and heads of sustainability.
This gave us insights into a wide range of perspectives
on the current state and potential future evolution of the
commercial property sector, and views on priorities for
action. We report qualitative and quantitative ?ndings for
two key groups:
• Executives who lead and oversee some of Australia’s
largest corporate tenancies, who we refer to as ‘corporate
leaders’ in this report.
• Executives from some of Australia’s largest property
development companies and asset owners, most of them
in executive sustainability roles, whom we refer to as
‘property sustainability leaders’.
Other nations are investing trillions into smart energy-
saving technology, precinct-wide energy generation and
other leading-edge solutions. To understand this and the
opportunities for Australia, we talked to both domestic and
international leaders.
8
Exhibit 4: Zero carbon ready buildings
Standard
Typical building
emissions pro?le
Fossil fuel free
Eliminate natural gas for
space heating, domestic
hot water and cooking
Highly ef?cient
Minimise energy
consumption through
demand reduction, energy
ef?ciency and effective
controls
Powered by renewables
Provide all electricity from
100% renewable source -
on-site and/or off-site
Built with lower
upfront carbon
Select products and
materials with lower upfront
carbon and optimise the
building’s designLegend:
Electricity
Ventilation, cooling,
lighting, pumps, small
power, lifts, security,
controls, IT systems
Natural gas
Space heating,
hot water, cooking
Other
Emergency (backup)
power, (also include
refrigerant GWP)
Materials in construction
Emissions from products
and materials used in
construction
HOW TO READ THIS REPORT
From this research, we have developed this report to
offer decision-makers and in?uencers a ‘ready reckoner’
for net zero buildings in 2024. This report includes
signposts for board and c-suite leaders thinking about
the next round of investments and organisational
strategy, because when it comes to technology and
climate change, success requires them to look through
the windscreen rather than the rearview mirror.
We include suggestions for how board directors
and business leaders can act now, plan their next
move, and what to watch for on the horizon. We also
provide insights to give property leaders a deeper
understanding of the challenges facing corporate
tenants and opportunities to address the asymmetries
to secure a new competitive advantage.
We also spoke with policymakers, ?nanciers, technology
specialists and engineers. And we drew on EY’s
international network of experts, to develop a technology
readiness roadmap.
We applied the Green Building Council of Australia’s Climate
Positive Roadmap
4
to the technologies to frame the
discussions and determine the most practical technologies
for large-scale deployment. This Climate Positive Roadmap
sets a clear direction of travel: all new buildings and ?touts
in Australia must be net zero in operation by 2030, with
existing buildings and ?touts to follow by 2050 (Exhibit 4).
Many CEOs and C-suite leaders have a burning question in
the back of their minds: How do we create value from ESG
and the net zero transition?
In this report, we present some of the opportunities and
unpack the obstacles that CEOs and C-suite leaders will
encounter as they answer this question.
This report aims to provide a clear overview of the big
picture of net zero buildings. We recognise that readers
will have varying levels of subject familiarity and need for
detail, so we start each section with the key points so you
can read this document in less than ?ve minutes. Deeper
dives can be taken in the areas of interest to you.
To inform this report, we surveyed and spoke to board
directors, business leaders, and heads of sustainability.
This gave us insights into a wide range of perspectives
on the current state and potential future evolution of the
commercial property sector, and views on priorities for
action. We report qualitative and quantitative ?ndings for
two key groups:
• Executives who lead and oversee some of Australia’s
largest corporate tenancies, who we refer to as ‘corporate
leaders’ in this report.
• Executives from some of Australia’s largest property
development companies and asset owners, most of them
in executive sustainability roles, whom we refer to as
‘property sustainability leaders’.
Other nations are investing trillions into smart energy-
saving technology, precinct-wide energy generation and
other leading-edge solutions. To understand this and the
opportunities for Australia, we talked to both domestic and
international leaders.
8
NET ZERO BUILDINGS:
A BUSINESS CASE
THAT STACKS UP
9
A BUSINESS CASE
THAT STACKS UP
9
KEY POINTS
• Australia’s property industry is a global leader
in sustainable building, with the 2023 GRESB
assessment of 169,000-plus assets showing
Australia delivers world’s best practice.
• Multiple lines of evidence demonstrate
sustainable buildings are feasible and
commercially attractive, with Green Star-rated
buildings posting an average 16.4% rental
premium and a 13.5% percentage difference in
total annual returns, while NABERS buildings
attract 10% higher face rents and a 2.7% lower
vacancy rate.
• Game-changing regulatory developments and
new reporting standards in 2023 signal a decisive
acceleration towards sustainability; these include
amendments to the Safeguard Mechanism,
the $15 billion National Reconstruction Fund
and reporting standards from the International
Sustainability Standards Board (ISSB) and
Australian Sustainability Reporting Standards
(ASRS).
10
• Australia’s property industry is a global leader
in sustainable building, with the 2023 GRESB
assessment of 169,000-plus assets showing
Australia delivers world’s best practice.
• Multiple lines of evidence demonstrate
sustainable buildings are feasible and
commercially attractive, with Green Star-rated
buildings posting an average 16.4% rental
premium and a 13.5% percentage difference in
total annual returns, while NABERS buildings
attract 10% higher face rents and a 2.7% lower
vacancy rate.
• Game-changing regulatory developments and
new reporting standards in 2023 signal a decisive
acceleration towards sustainability; these include
amendments to the Safeguard Mechanism,
the $15 billion National Reconstruction Fund
and reporting standards from the International
Sustainability Standards Board (ISSB) and
Australian Sustainability Reporting Standards
(ASRS).
10
New buildings go up, old buildings come down; Australia’s
cities are constantly changing shape and increasing in size.
Australia has around 1,040,000 non-residential buildings
that are above 50 sqm in size. This equates to around 830
million sqm of space
1
.
WHY COMMERCIAL BUILDINGS MATTER
Exhibit 5: By 2050, commercial gross ?oor area projected to grow by around 50% compared to today.
To ta l g r o s s ? o o r a r e a (s q m) by s p a c e u s e, A u s t ra l i a
We’ve made important
incremental change in the built
environment over two decades.
But if we want step change and
scale, we must get better at
showing the linkage between
sustainability and shareholder
returns. The value is there,
and now it’s our responsibility
to clearly demonstrate the
interlock between net zero and
value creation.
Carmel Hourigan
Of?ce CEO, Charter Hall
New construction of non-residential building stock is
equivalent to 2% of Australia’s non-residential total ?oor
area per annum. In 2020, that meant 16.3 million square
metres of new space was added and 1.8 million sqm of
space demolished.
Importantly, roughly one-third of the commercial space
standing in 2050 hasn’t yet been built — so now is the time
to get this right.
1,250,000,000
1,000,000,000
2023 2035 2050
750,000,000
500,000,000
250,000,000
0
Of?ces
Warehouses
Transport buildings
Manufacturing
and industry
Entertainment and
education facilities
Other commercial
buildings
* Special purpose includes entertainment/recreation buildings, short term accommodation, education buildings, aged care facilities, religious
buildings and health facilities.
Source: EY Net Zero Centre, adapted from Commercial Buildings Energy Consumption Baseline Study, 2022.
11
1 Department of Climate Change, Energy, the Environment and Water, 2022.
cities are constantly changing shape and increasing in size.
Australia has around 1,040,000 non-residential buildings
that are above 50 sqm in size. This equates to around 830
million sqm of space
1
.
WHY COMMERCIAL BUILDINGS MATTER
Exhibit 5: By 2050, commercial gross ?oor area projected to grow by around 50% compared to today.
To ta l g r o s s ? o o r a r e a (s q m) by s p a c e u s e, A u s t ra l i a
We’ve made important
incremental change in the built
environment over two decades.
But if we want step change and
scale, we must get better at
showing the linkage between
sustainability and shareholder
returns. The value is there,
and now it’s our responsibility
to clearly demonstrate the
interlock between net zero and
value creation.
Carmel Hourigan
Of?ce CEO, Charter Hall
New construction of non-residential building stock is
equivalent to 2% of Australia’s non-residential total ?oor
area per annum. In 2020, that meant 16.3 million square
metres of new space was added and 1.8 million sqm of
space demolished.
Importantly, roughly one-third of the commercial space
standing in 2050 hasn’t yet been built — so now is the time
to get this right.
1,250,000,000
1,000,000,000
2023 2035 2050
750,000,000
500,000,000
250,000,000
0
Of?ces
Warehouses
Transport buildings
Manufacturing
and industry
Entertainment and
education facilities
Other commercial
buildings
* Special purpose includes entertainment/recreation buildings, short term accommodation, education buildings, aged care facilities, religious
buildings and health facilities.
Source: EY Net Zero Centre, adapted from Commercial Buildings Energy Consumption Baseline Study, 2022.
11
1 Department of Climate Change, Energy, the Environment and Water, 2022.
Australia’s property industry has a global reputation for
green building leadership, as the world’s sustainable real
estate indices con?rm.
GRESB
2
, the global real estate benchmark for sustainable
buildings, assessed 169,000-plus assets with a value
of more than AU$11.3 trillion in 2023 to con?rm that
Australia is delivering world’s best practice.
Oceania — which includes Australia, New Zealand and
Paci?c nations — placed highest of all regions for the design
and construction of new assets. Charter Hall, Dexus, ISPT,
Lendlease, Scape, Scentre Group and The GPT Group were
all named ‘global sector leaders’ by GRESB.
The GRESB Development Benchmark — which assesses
management and performance during the design and
construction of new assets — increased to 91, up from 88
the previous year. The global average is 83.
The energy consumption of more than 23 million square
metres of of?ce space and 10 million sqm of shopping
centre gross lettable area were assessed by NABERS in the
2023 ?nancial year, as well as apartments, hotels, data
centres, warehouses and cold stores.
The second is Green Star, developed by Australia’s property
industry and launched by the Green Building Council of
Australia in 2003. Green Star measures the design and
construction of new buildings at the tenancy, whole building
and precinct scale, as well as the operational performance
of existing buildings. The system considers a range of
environmental impacts, including energy source, energy
consumption and embodied carbon and continues to evolve
through extensive industry engagement and feedback.
Green Star sets the benchmark for sustainable building,
with a 6 Star Green Star Buildings rating representing world
leadership in design and construction. NABERS and Green
Star Performance then verify how that building is operated.
LEADERSHIP OVER TWO DECADES
The role that buildings play in the broader ?ght
against climate change is now much bigger than
it was once. In the past, our focus was on saving
energy and reducing emissions. Now, it is also
about helping other sectors of the economy to
decarbonise, including the energy sector and the
industrial sector.
Carlos Flores
Director, NABERS
To appreciate how Australia has got to this leadership
position, it is important to understand that Australia’s
building sector is underpinned by two powerful rating
systems that have worked together for more than two
decades.
The ?rst of the pair is the National Australian Built
Environment Rating System, or NABERS. This was
launched in 1999 with a philosophy of “measurement leads
to better management”.
NABERS ?rst measured the energy and greenhouse gas
emissions intensity of commercial of?ces, before expanding
to assess water consumption, indoor environment quality
and waste across a wide range of building types. Originally
voluntary, NABERS is now mandatory for commercial of?ce
buildings in Australia. NABERS has been so successful in
driving change through energy performance disclosure
that it has been adopted in the UK and New Zealand.
12
2 GRESB, 2023.
green building leadership, as the world’s sustainable real
estate indices con?rm.
GRESB
2
, the global real estate benchmark for sustainable
buildings, assessed 169,000-plus assets with a value
of more than AU$11.3 trillion in 2023 to con?rm that
Australia is delivering world’s best practice.
Oceania — which includes Australia, New Zealand and
Paci?c nations — placed highest of all regions for the design
and construction of new assets. Charter Hall, Dexus, ISPT,
Lendlease, Scape, Scentre Group and The GPT Group were
all named ‘global sector leaders’ by GRESB.
The GRESB Development Benchmark — which assesses
management and performance during the design and
construction of new assets — increased to 91, up from 88
the previous year. The global average is 83.
The energy consumption of more than 23 million square
metres of of?ce space and 10 million sqm of shopping
centre gross lettable area were assessed by NABERS in the
2023 ?nancial year, as well as apartments, hotels, data
centres, warehouses and cold stores.
The second is Green Star, developed by Australia’s property
industry and launched by the Green Building Council of
Australia in 2003. Green Star measures the design and
construction of new buildings at the tenancy, whole building
and precinct scale, as well as the operational performance
of existing buildings. The system considers a range of
environmental impacts, including energy source, energy
consumption and embodied carbon and continues to evolve
through extensive industry engagement and feedback.
Green Star sets the benchmark for sustainable building,
with a 6 Star Green Star Buildings rating representing world
leadership in design and construction. NABERS and Green
Star Performance then verify how that building is operated.
LEADERSHIP OVER TWO DECADES
The role that buildings play in the broader ?ght
against climate change is now much bigger than
it was once. In the past, our focus was on saving
energy and reducing emissions. Now, it is also
about helping other sectors of the economy to
decarbonise, including the energy sector and the
industrial sector.
Carlos Flores
Director, NABERS
To appreciate how Australia has got to this leadership
position, it is important to understand that Australia’s
building sector is underpinned by two powerful rating
systems that have worked together for more than two
decades.
The ?rst of the pair is the National Australian Built
Environment Rating System, or NABERS. This was
launched in 1999 with a philosophy of “measurement leads
to better management”.
NABERS ?rst measured the energy and greenhouse gas
emissions intensity of commercial of?ces, before expanding
to assess water consumption, indoor environment quality
and waste across a wide range of building types. Originally
voluntary, NABERS is now mandatory for commercial of?ce
buildings in Australia. NABERS has been so successful in
driving change through energy performance disclosure
that it has been adopted in the UK and New Zealand.
12
2 GRESB, 2023.
A STRONG BUSINESS CASE FOR SUSTAINABLE BUILDING
Both the GBCA and NABERS have spent more than two
decades laying a strong evidence base and business case
for green buildings.
NABERS has empirical evidence
3
to show when building
owners measure their energy performance their assets
improve over time. For instance, of?ces assessed over
14 rating periods achieved energy savings of 42%, with
greenhouse gas emissions intensity falling by 55%.
These energy ef?cient assets are also more valuable. CBD
assets with a NABERS 5.5 star rating or above also attract
10% higher net face rents, 39 basis points sharper yields
and a vacancy rate 2.7% lower than the wider market,
according to JLL analysis
4
.
Green Star certi?ed assets also outperform the market
5
,
delivering a 16.4% rental premium, a 1.1 year longer
weighted average lease expiry and a 13.5% percentage
difference in total annual returns.
This aligns with international evidence of a ‘green
premium’, including in the world’s two largest of?ce building
markets, New York and London. In 2023, investment bank
UBS
6
examined 1,453 of?ce building transactions in New
York and London between 2010 and 2022, ?nding material
green premiums of 28% and 19% respectively (all else being
equal, including location, age, renovation, occupancy and
lease length). UBS concluded these green premiums were
driven by two primary factors: tenant requirement and
legislation.
Source: GBCA and Real Investment Analytics, 2023.
Exhibit 6: Buildings with Green Star ratings outperform the market
Occupancy rate WALE Price/sqm Investment count/
sample size
Capitalisation rateTo ta l re t u r n
(annual)
Green Star Design &
As Built certi?ed assets
94.00% 5.9 years $18,500 100 4.83% 4.20%
Non-rated assets 91.5% 4.8 years $15,900 218 5.06% 3.70%
Percentage difference 2.73% 23% 16.35% 4.55% 13.51%
Percentage-point
difference
2.50% 1.1 years $2,600 -0.23% 0.50%
13
3 NABERS, 2023.
4 McFarlane, et al, 2023.
5 GBCA, May 2023.
6 UBS, 2023.
Both the GBCA and NABERS have spent more than two
decades laying a strong evidence base and business case
for green buildings.
NABERS has empirical evidence
3
to show when building
owners measure their energy performance their assets
improve over time. For instance, of?ces assessed over
14 rating periods achieved energy savings of 42%, with
greenhouse gas emissions intensity falling by 55%.
These energy ef?cient assets are also more valuable. CBD
assets with a NABERS 5.5 star rating or above also attract
10% higher net face rents, 39 basis points sharper yields
and a vacancy rate 2.7% lower than the wider market,
according to JLL analysis
4
.
Green Star certi?ed assets also outperform the market
5
,
delivering a 16.4% rental premium, a 1.1 year longer
weighted average lease expiry and a 13.5% percentage
difference in total annual returns.
This aligns with international evidence of a ‘green
premium’, including in the world’s two largest of?ce building
markets, New York and London. In 2023, investment bank
UBS
6
examined 1,453 of?ce building transactions in New
York and London between 2010 and 2022, ?nding material
green premiums of 28% and 19% respectively (all else being
equal, including location, age, renovation, occupancy and
lease length). UBS concluded these green premiums were
driven by two primary factors: tenant requirement and
legislation.
Source: GBCA and Real Investment Analytics, 2023.
Exhibit 6: Buildings with Green Star ratings outperform the market
Occupancy rate WALE Price/sqm Investment count/
sample size
Capitalisation rateTo ta l re t u r n
(annual)
Green Star Design &
As Built certi?ed assets
94.00% 5.9 years $18,500 100 4.83% 4.20%
Non-rated assets 91.5% 4.8 years $15,900 218 5.06% 3.70%
Percentage difference 2.73% 23% 16.35% 4.55% 13.51%
Percentage-point
difference
2.50% 1.1 years $2,600 -0.23% 0.50%
13
3 NABERS, 2023.
4 McFarlane, et al, 2023.
5 GBCA, May 2023.
6 UBS, 2023.
Australian businesses have fostered an industry-wide
culture of ‘competitive collaboration’.
Other markets, looking to emulate Australia’s approach,
have adopted NABERS and Green Star. Australian property
companies have also embraced other veri?cation systems,
such as the Living Building Challenge, PassiveHaus, the
WELL Building Standard, to showcase their other aspects of
leadership in sustainability.
It is easy to see why the growing “alphabet soup of
sustainability” — with its ratings and target setting
frameworks, national and international reporting standards,
indices and other benchmarks — can be confusing to
investors, tenants and building owners alike.
ALPHABET SOUP RISKS WEAKER ACCOUNTABILITY
Organisations are beginning to understand that
sustainability is more than managing reputational
risk. It is becoming about competitive advantage
and revenue growth.
Nicola Roxon
Independent director, Dexus
14
culture of ‘competitive collaboration’.
Other markets, looking to emulate Australia’s approach,
have adopted NABERS and Green Star. Australian property
companies have also embraced other veri?cation systems,
such as the Living Building Challenge, PassiveHaus, the
WELL Building Standard, to showcase their other aspects of
leadership in sustainability.
It is easy to see why the growing “alphabet soup of
sustainability” — with its ratings and target setting
frameworks, national and international reporting standards,
indices and other benchmarks — can be confusing to
investors, tenants and building owners alike.
ALPHABET SOUP RISKS WEAKER ACCOUNTABILITY
Organisations are beginning to understand that
sustainability is more than managing reputational
risk. It is becoming about competitive advantage
and revenue growth.
Nicola Roxon
Independent director, Dexus
14
The International Financial Reporting Standards (IFRS)
Sustainability Disclosure Standards developed by the
International Sustainability Standards Board (ISSB)
were released in June 2023. Together, these standards
represent one of the most signi?cant shifts in ?nancial
reporting that businesses in Australia have encountered.
IFRS Sustainability Disclosure Standards: IFRS S1 General
Requirements for Disclosure of Sustainability-related
Financial Information (IFRS S1) and IFRS S2 Climate-
related Disclosures (IFRS S2) are intended to be effective
for annual reporting periods from 1 July 2024 at the
earliest. The Australian Accounting Standards Board is
now adapting the standards, and Australia will be one
of the ?rst countries to adopt them globally with the
introduction of the Australian Sustainability Reporting
Standards (ASRS) and government amendments to
disclosure requirements under the Corporations Act.
These climate disclosures will initially apply to the
country’s biggest companies — those with more than
$1 billion in assets, $500 million in revenue or 500
employees — but will expand to smaller companies over
the following three years.
The Australian Securities and Investments Commission
(ASIC) will be enforcing climate disclosures. Commenting
on the new regime
7
, ASIC chairman Joe Longo warned that
the “biggest change to corporate reporting in a generation”
was coming.
At the same time, the Australian Sustainable Finance
Institute
8
says the nation is moving rapidly from a “laggard
to early follower” on sustainable ?nance, and work is
underway to advance a world-leading sustainable ?nance
taxonomy — a common set of de?nitions for sustainable
economic activities. This sustainable ?nance taxonomy
will guide capital towards climate positive investments,
including net zero buildings.
NEW REPORTING STANDARDS AND FINANCE
FRAMEWORKS UP THE ANTE
No one has a choice now.
It’s good to have one standard
because everyone can work to the
same metrics and set the same
baselines.
Tony Lombardo
Global Chief Executive Of?cer, Lendlease
15
7 Australian Financial Review, October 2023.
8 Australian Sustainable Finance Institute, 2023.
Sustainability Disclosure Standards developed by the
International Sustainability Standards Board (ISSB)
were released in June 2023. Together, these standards
represent one of the most signi?cant shifts in ?nancial
reporting that businesses in Australia have encountered.
IFRS Sustainability Disclosure Standards: IFRS S1 General
Requirements for Disclosure of Sustainability-related
Financial Information (IFRS S1) and IFRS S2 Climate-
related Disclosures (IFRS S2) are intended to be effective
for annual reporting periods from 1 July 2024 at the
earliest. The Australian Accounting Standards Board is
now adapting the standards, and Australia will be one
of the ?rst countries to adopt them globally with the
introduction of the Australian Sustainability Reporting
Standards (ASRS) and government amendments to
disclosure requirements under the Corporations Act.
These climate disclosures will initially apply to the
country’s biggest companies — those with more than
$1 billion in assets, $500 million in revenue or 500
employees — but will expand to smaller companies over
the following three years.
The Australian Securities and Investments Commission
(ASIC) will be enforcing climate disclosures. Commenting
on the new regime
7
, ASIC chairman Joe Longo warned that
the “biggest change to corporate reporting in a generation”
was coming.
At the same time, the Australian Sustainable Finance
Institute
8
says the nation is moving rapidly from a “laggard
to early follower” on sustainable ?nance, and work is
underway to advance a world-leading sustainable ?nance
taxonomy — a common set of de?nitions for sustainable
economic activities. This sustainable ?nance taxonomy
will guide capital towards climate positive investments,
including net zero buildings.
NEW REPORTING STANDARDS AND FINANCE
FRAMEWORKS UP THE ANTE
No one has a choice now.
It’s good to have one standard
because everyone can work to the
same metrics and set the same
baselines.
Tony Lombardo
Global Chief Executive Of?cer, Lendlease
15
7 Australian Financial Review, October 2023.
8 Australian Sustainable Finance Institute, 2023.
The ISSB’s two new global standards place climate-
related performance at the heart of ?nancial
performance and reporting.
Sustainability no longer sits alongside ?nance, as IFRS
S1 and IFRS S2 ‘hardwire’ sustainability into reporting.
Climate, emissions and sustainability more broadly
must now be considered as part of business strategy,
key risks and opportunities.
On 12 January 2024, Treasury released its Climate-
related ?nancial disclosure: exposure draft legislation,
proposing amendments to the Corporations Act 2001
to introduce a mandatory climate related ?nancial
disclosure regime. This will require companies within
scope to prepare a ‘sustainability report’ in accordance
with Australian Sustainability Reporting Standards
(ASRS Standards).
Requiring a ?nancial auditor to sign off climate
disclosures brings a new level of scrutiny to
performance reporting, and an uplift in data and
information expectations that will ?ow through
supply chains. Even companies that are not required
to report will be approached by their clients and
customers for input to verify Scope 3 emissions — and
this is particularly relevant for the built environment’s
complex and interconnected value chain.
Some emissions sources, such as commuter emissions,
will provide interesting new data points for companies to
reassess the business case for their space requirements or
to re-examine asset value.
The new reporting regime signals a shift from the binary
world of star ratings — one which incentivises knockdowns
and rebuilds in the quest for more stars — and will
encourage a more nuanced conversation about operational
ef?ciencies versus full value chain emissions.
NEW STANDARDS TO DRIVE
STEP-CHANGE IN INNOVATION
For Australia’s property industry, the reporting
requirements have other implications. Up until now,
energy ef?ciency and emissions reduction have been
viewed through the lens of operational ef?ciency and
cost reduction. Putting this at the heart of ?nancial
disclosures shifts the focus from cost to value.
This will create greater incentive for step-change
innovation and also bring this ?rmly onto the job
description of CFOs and audit committee chairs.
The leaders we spoke to in interviews universally
agreed: these new reporting standards will enhance
consistency and transparency but will also require
more effort and resourcing. The ramp up in reporting
had, one interview subject noted, already become “all
consuming” and was distracting sustainability teams
trying to deliver real value.
However, there was also general agreement that this
reporting would be a powerful lever of transformation.
“Everyone says the same thing: collecting reliable,
consistent data across the supply chain is a challenge.
This reporting will help us collect that data.”
Perhaps the most powerful comment came from the
representative of a global asset manager, who said:
“Most of our large multinational tenants have set their
own emissions reduction targets — and the easiest
way for them to achieve those is to be in buildings
that are net zero.”
To learn more, visit the EY Sustainability
Disclosure Hub.
16
related performance at the heart of ?nancial
performance and reporting.
Sustainability no longer sits alongside ?nance, as IFRS
S1 and IFRS S2 ‘hardwire’ sustainability into reporting.
Climate, emissions and sustainability more broadly
must now be considered as part of business strategy,
key risks and opportunities.
On 12 January 2024, Treasury released its Climate-
related ?nancial disclosure: exposure draft legislation,
proposing amendments to the Corporations Act 2001
to introduce a mandatory climate related ?nancial
disclosure regime. This will require companies within
scope to prepare a ‘sustainability report’ in accordance
with Australian Sustainability Reporting Standards
(ASRS Standards).
Requiring a ?nancial auditor to sign off climate
disclosures brings a new level of scrutiny to
performance reporting, and an uplift in data and
information expectations that will ?ow through
supply chains. Even companies that are not required
to report will be approached by their clients and
customers for input to verify Scope 3 emissions — and
this is particularly relevant for the built environment’s
complex and interconnected value chain.
Some emissions sources, such as commuter emissions,
will provide interesting new data points for companies to
reassess the business case for their space requirements or
to re-examine asset value.
The new reporting regime signals a shift from the binary
world of star ratings — one which incentivises knockdowns
and rebuilds in the quest for more stars — and will
encourage a more nuanced conversation about operational
ef?ciencies versus full value chain emissions.
NEW STANDARDS TO DRIVE
STEP-CHANGE IN INNOVATION
For Australia’s property industry, the reporting
requirements have other implications. Up until now,
energy ef?ciency and emissions reduction have been
viewed through the lens of operational ef?ciency and
cost reduction. Putting this at the heart of ?nancial
disclosures shifts the focus from cost to value.
This will create greater incentive for step-change
innovation and also bring this ?rmly onto the job
description of CFOs and audit committee chairs.
The leaders we spoke to in interviews universally
agreed: these new reporting standards will enhance
consistency and transparency but will also require
more effort and resourcing. The ramp up in reporting
had, one interview subject noted, already become “all
consuming” and was distracting sustainability teams
trying to deliver real value.
However, there was also general agreement that this
reporting would be a powerful lever of transformation.
“Everyone says the same thing: collecting reliable,
consistent data across the supply chain is a challenge.
This reporting will help us collect that data.”
Perhaps the most powerful comment came from the
representative of a global asset manager, who said:
“Most of our large multinational tenants have set their
own emissions reduction targets — and the easiest
way for them to achieve those is to be in buildings
that are net zero.”
To learn more, visit the EY Sustainability
Disclosure Hub.
16
In 2023, a slew of policy and regulatory developments
were hailed as ‘gamechangers’ in the market. Chief among
those were the Albanese government’s amendments to
the Safeguard Mechanism in March 2023, which adjusted
declining baselines for high-emitting facilities and created
an emissions trading system to incentivise change.
(To learn more, read the EY Net Zero Centre report,
Changing Gears: Australia’s Carbon Market
Outlook 2023.
9
)
This was complemented by a $15 billion National
Reconstruction Fund to boost investment in renewables
and low emission technologies to support Australian
industries decarbonise.
The May 2023 Budget allocated billions to supercharge
the net zero transition, taking the funding to fuel
Australia’s ‘renewable energy superpower’ ambitions to
$40 billion and establishing a new Net Zero Authority
In August, the Net Zero 2050 Plan was launched with
a commitment to develop six ‘sectoral’ plans, including
one for the built environment. This is important because
a steady trajectory towards net zero buildings will
encourage market con?dence.
And then in November, in perhaps the biggest
gamechanger, the federal government released its new
Net Zero in Government Operations Strategy. With a
footprint of more than three million sqm of space, the
federal government has outlined an ambitious plan to
achieve a net zero Australian public service by 2030.
This will introduce mandates for Green Star and NABERS
ratings over time, as well as all-electric of?ces and
calculations of embodied carbon.
FEDERAL GOVERNMENT
IS TAKING DECISIVE
ACTION ON CLIMATE
17
9 EY, 2023
were hailed as ‘gamechangers’ in the market. Chief among
those were the Albanese government’s amendments to
the Safeguard Mechanism in March 2023, which adjusted
declining baselines for high-emitting facilities and created
an emissions trading system to incentivise change.
(To learn more, read the EY Net Zero Centre report,
Changing Gears: Australia’s Carbon Market
Outlook 2023.
9
)
This was complemented by a $15 billion National
Reconstruction Fund to boost investment in renewables
and low emission technologies to support Australian
industries decarbonise.
The May 2023 Budget allocated billions to supercharge
the net zero transition, taking the funding to fuel
Australia’s ‘renewable energy superpower’ ambitions to
$40 billion and establishing a new Net Zero Authority
In August, the Net Zero 2050 Plan was launched with
a commitment to develop six ‘sectoral’ plans, including
one for the built environment. This is important because
a steady trajectory towards net zero buildings will
encourage market con?dence.
And then in November, in perhaps the biggest
gamechanger, the federal government released its new
Net Zero in Government Operations Strategy. With a
footprint of more than three million sqm of space, the
federal government has outlined an ambitious plan to
achieve a net zero Australian public service by 2030.
This will introduce mandates for Green Star and NABERS
ratings over time, as well as all-electric of?ces and
calculations of embodied carbon.
FEDERAL GOVERNMENT
IS TAKING DECISIVE
ACTION ON CLIMATE
17
9 EY, 2023
State governments have also accelerated their pace
of change, with two signi?cant policy announcements
signalling the shift ahead.
The NSW Government’s Sustainable Buildings SEPP,
introduced on 1 October 2023, sets new requirements for a
range of building types, including large commercial of?ces.
Developers must report on embodied carbon at various
stages of the development process. They must also provide
a ‘net zero statement’, veri?ed by an engineer, which
demonstrates how their building will operate without fossil
fuels by 2035. If gas is installed in large commercial of?ces,
the developer must purchase 10 years’ worth of carbon
offsets upfront to match the predicted GHG emissions.
NABERS is currently developing an embodied carbon
emissions framework to help measure, benchmark and
certify emissions from construction and building materials.
The Sustainable Buildings SEPP will align with the NABERS
framework when it is released in 2024.
In December 2023, the Victorian Government released
an updated Gas Substitution Roadmap. Among a host of
initiatives, including switching off gas to new homes and
sweeteners to encourage residents to electrify their existing
buildings, the Roadmap requires all Victorian Government
agencies to consider electri?cation for all buildings under
their control. The Victorian Government has also signalled
it will start consultation to support commercial landlords to
electrify in 2024.
STATE GOVERNMENTS ARE ALSO ACTING
Sustainability is at the core of our purpose, building
a brighter future for all. We are committed to
supporting Australia’s transition to net zero by 2050.
That’s why sustainability remains one of the most
important factors in our (commercial) property
decision-making.
Jennifer Saiz
Executive General Manager, Group Corporate Services,
Commonwealth Bank
18
of change, with two signi?cant policy announcements
signalling the shift ahead.
The NSW Government’s Sustainable Buildings SEPP,
introduced on 1 October 2023, sets new requirements for a
range of building types, including large commercial of?ces.
Developers must report on embodied carbon at various
stages of the development process. They must also provide
a ‘net zero statement’, veri?ed by an engineer, which
demonstrates how their building will operate without fossil
fuels by 2035. If gas is installed in large commercial of?ces,
the developer must purchase 10 years’ worth of carbon
offsets upfront to match the predicted GHG emissions.
NABERS is currently developing an embodied carbon
emissions framework to help measure, benchmark and
certify emissions from construction and building materials.
The Sustainable Buildings SEPP will align with the NABERS
framework when it is released in 2024.
In December 2023, the Victorian Government released
an updated Gas Substitution Roadmap. Among a host of
initiatives, including switching off gas to new homes and
sweeteners to encourage residents to electrify their existing
buildings, the Roadmap requires all Victorian Government
agencies to consider electri?cation for all buildings under
their control. The Victorian Government has also signalled
it will start consultation to support commercial landlords to
electrify in 2024.
STATE GOVERNMENTS ARE ALSO ACTING
Sustainability is at the core of our purpose, building
a brighter future for all. We are committed to
supporting Australia’s transition to net zero by 2050.
That’s why sustainability remains one of the most
important factors in our (commercial) property
decision-making.
Jennifer Saiz
Executive General Manager, Group Corporate Services,
Commonwealth Bank
18
From our interviews, it is clear that Australia’s property
leaders are world champions at reporting on ESG.
Transparent reporting has driven improvements in energy
performance because, both literally and ?guratively, there
is a sign on the door that tells occupants how their building
compares with best practice.
But Australia’s commercial buildings are still responsible
for a quarter of our national energy consumption and
10% of our emissions footprint.
10
The buildings that must
be net zero in 2030 are in design today and will be sold,
leased and occupied tomorrow. But the new ISSB climate
standards will require companies to disclose their climate
transition plans and how they intend to meet their net zero
commitments — and this means they are thinking about
their leases now.
Australia’s real estate sector must now ramp up its efforts
and investments at speed and scale.
In 2023, 70% of the ASX200 reported against the Taskforce
for Climate-related Financial Disclosures (TCFD) framework,
according to the Australian Council of Superannuation
Investors
11
and 61% had publicly committed to net zero with
targets. Large companies are moving faster and, by value,
80% of ASX200 market capitalisation is with companies
committed to net zero. However, signi?cant gaps in detail,
depth, comparability and credibility remain.
STEPPING UP AT
SPEED AND SCALE
Eliminating scopes 1,2 and 3
without o sets can’t be done alone.
We have to do it with competitors.
We have to do it with clients.
And we have to do it with the
entire supply chain.
Ann Austin
Head of Sustainability, Australia, Lendlease
19
10 Department of Climate Change, Energy, the Environment and Water, 2023.
11 Australian Council of Superannuation Investors, 2023.
leaders are world champions at reporting on ESG.
Transparent reporting has driven improvements in energy
performance because, both literally and ?guratively, there
is a sign on the door that tells occupants how their building
compares with best practice.
But Australia’s commercial buildings are still responsible
for a quarter of our national energy consumption and
10% of our emissions footprint.
10
The buildings that must
be net zero in 2030 are in design today and will be sold,
leased and occupied tomorrow. But the new ISSB climate
standards will require companies to disclose their climate
transition plans and how they intend to meet their net zero
commitments — and this means they are thinking about
their leases now.
Australia’s real estate sector must now ramp up its efforts
and investments at speed and scale.
In 2023, 70% of the ASX200 reported against the Taskforce
for Climate-related Financial Disclosures (TCFD) framework,
according to the Australian Council of Superannuation
Investors
11
and 61% had publicly committed to net zero with
targets. Large companies are moving faster and, by value,
80% of ASX200 market capitalisation is with companies
committed to net zero. However, signi?cant gaps in detail,
depth, comparability and credibility remain.
STEPPING UP AT
SPEED AND SCALE
Eliminating scopes 1,2 and 3
without o sets can’t be done alone.
We have to do it with competitors.
We have to do it with clients.
And we have to do it with the
entire supply chain.
Ann Austin
Head of Sustainability, Australia, Lendlease
19
10 Department of Climate Change, Energy, the Environment and Water, 2023.
11 Australian Council of Superannuation Investors, 2023.
KEY INSIGHTS
FROM OUR
RESEARCH
20
FROM OUR
RESEARCH
20
HOW DO WE MOVE FURTHER
AND FASTER TOGETHER?
To answer this question, we surveyed the most
signi?cant ASX30-listed organisations playing
pivotal roles in the leasing and development of major
buildings. We also surveyed heads of sustainability at
21 of the largest asset owners in the country.
We complemented this quantitative research with
one-on-one interviews with board directors and
business leaders.
The key ?ndings are summarised on the
following pages.
KEY POINTS
• 100% of corporate tenants surveyed have net
zero or greenhouse gas emission reduction
targets; and 46% are willing to pay a green
premium of up to 5%.
• Property companies are prioritising LED lighting
upgrades (95%), smart controls (86%), and
high-ef?ciency HVAC (67%). Electri?cation
technologies like EV chargers and induction
cooking appliances are also priorities.
• Just 8% of corporate tenants and 11% of
property sustainability leaders see the net zero
transition as an opportunity to create new value,
which suggests leaders are yet to seize the full
opportunity of the net zero transition.
• The changes to reporting will be an important
impetus that bind climate imperatives to value
creation.
21
AND FASTER TOGETHER?
To answer this question, we surveyed the most
signi?cant ASX30-listed organisations playing
pivotal roles in the leasing and development of major
buildings. We also surveyed heads of sustainability at
21 of the largest asset owners in the country.
We complemented this quantitative research with
one-on-one interviews with board directors and
business leaders.
The key ?ndings are summarised on the
following pages.
KEY POINTS
• 100% of corporate tenants surveyed have net
zero or greenhouse gas emission reduction
targets; and 46% are willing to pay a green
premium of up to 5%.
• Property companies are prioritising LED lighting
upgrades (95%), smart controls (86%), and
high-ef?ciency HVAC (67%). Electri?cation
technologies like EV chargers and induction
cooking appliances are also priorities.
• Just 8% of corporate tenants and 11% of
property sustainability leaders see the net zero
transition as an opportunity to create new value,
which suggests leaders are yet to seize the full
opportunity of the net zero transition.
• The changes to reporting will be an important
impetus that bind climate imperatives to value
creation.
21
Every corporate tenant we surveyed told us that they had
net zero or greenhouse gas emissions reduction targets.
The biggest challenge ahead in meeting these targets is the
complexity of supply chain emissions (Scope 3) and lack of
supplier cooperation (77%).
While 85% of tenants are optimistic about the property
industry’s ability to achieve signi?cant emissions reductions
in the long term, they are less so (69%) about the industry’s
ability in the short-term (in the next ?ve years).
Of the 21 property companies surveyed, 18 have set
targets, all of which cover both Scope 1 and 2 emissions.
Their greatest challenges were the same as their
customers: a complex supply chain and lack of supplier
cooperation.
Scrutiny from the corporate regulator and the rise in
climate litigation, both in Australia and overseas, sharpen
the risks associated with greenwashing. All companies
must carefully consider this risk when setting targets and
reporting on them.
We ?nd 92% of tenants are more likely to stay in a property
with strong green credentials and sustainability features,
with a similar share reporting they are willing to pay a
rental premium.
Observed market data shows buildings with green ratings
achieve higher rents and lower vacancy rates, longer
weighted average lease expiries and higher annual returns
than non-rated assets. This demonstrates a willingness in
the market to pay a premium for sustainable commercial
space.
When we asked tenants speci?cs about green premiums,
they were slightly more cautious. Nearly half (46%) said
they were prepared to pay a premium of up to 5%. On
the other hand, one in 10 tenants said occupying better-
performing buildings was generally cost-neutral, as savings
from energy ef?ciency offset any rental premium. The rest
weren’t sure what they would pay.
More than 90% of corporate tenants also believe talent
values net zero targets when considering whether to join
their organisation.
A myriad of factors contributes to a building’s value, from
its location to its age, its ratings to its rental returns, the
quality of its tenants to the speed at which it is leased.
To isolate and measure the value of its sustainability is
technically very dif?cult.
NET ZERO TARGETS
ARE COMPLEX DUE TO
DIFFICULTY IN IDENTIFYING
SCOPE 3 EMISSIONS
GREEN PREMIUMS WILL BE A
FUNCTION OF THE FUTURE,
OFFERING INCENTIVES FOR
BUILDING OWNERS
ESG requirements have been a
core driver for major tenants, and
these requirements are evolving
in scale and sophistication.
Campbell Hannan
Group CEO and Managing Director, Mirvac
22
net zero or greenhouse gas emissions reduction targets.
The biggest challenge ahead in meeting these targets is the
complexity of supply chain emissions (Scope 3) and lack of
supplier cooperation (77%).
While 85% of tenants are optimistic about the property
industry’s ability to achieve signi?cant emissions reductions
in the long term, they are less so (69%) about the industry’s
ability in the short-term (in the next ?ve years).
Of the 21 property companies surveyed, 18 have set
targets, all of which cover both Scope 1 and 2 emissions.
Their greatest challenges were the same as their
customers: a complex supply chain and lack of supplier
cooperation.
Scrutiny from the corporate regulator and the rise in
climate litigation, both in Australia and overseas, sharpen
the risks associated with greenwashing. All companies
must carefully consider this risk when setting targets and
reporting on them.
We ?nd 92% of tenants are more likely to stay in a property
with strong green credentials and sustainability features,
with a similar share reporting they are willing to pay a
rental premium.
Observed market data shows buildings with green ratings
achieve higher rents and lower vacancy rates, longer
weighted average lease expiries and higher annual returns
than non-rated assets. This demonstrates a willingness in
the market to pay a premium for sustainable commercial
space.
When we asked tenants speci?cs about green premiums,
they were slightly more cautious. Nearly half (46%) said
they were prepared to pay a premium of up to 5%. On
the other hand, one in 10 tenants said occupying better-
performing buildings was generally cost-neutral, as savings
from energy ef?ciency offset any rental premium. The rest
weren’t sure what they would pay.
More than 90% of corporate tenants also believe talent
values net zero targets when considering whether to join
their organisation.
A myriad of factors contributes to a building’s value, from
its location to its age, its ratings to its rental returns, the
quality of its tenants to the speed at which it is leased.
To isolate and measure the value of its sustainability is
technically very dif?cult.
NET ZERO TARGETS
ARE COMPLEX DUE TO
DIFFICULTY IN IDENTIFYING
SCOPE 3 EMISSIONS
GREEN PREMIUMS WILL BE A
FUNCTION OF THE FUTURE,
OFFERING INCENTIVES FOR
BUILDING OWNERS
ESG requirements have been a
core driver for major tenants, and
these requirements are evolving
in scale and sophistication.
Campbell Hannan
Group CEO and Managing Director, Mirvac
22
CURRENT ACTIONS FOCUS PRIMARILY ON WELL-KNOWN
ENERGY EFFICIENCY TECHNOLOGIES
When heads of sustainability in property companies were asked what their current priorities were, they fell
into several clear categories (Exhibit 7). Clearly, energy ef?ciency is a core priority with nearly all respondents
indicating technologies such as LED lighting upgrades and smart controls for lighting and HVAC are being
deployed and becoming standard. Renewable energy technologies show the greatest variance within any of the
categories, re?ecting the speed of innovation in this space. At the lowest end of the learning curve, building
design technologies such as solar glass and integrated thin ?lm PV are on the radar of property leaders but not
yet deployed at scale.
With 61% of ASX200 companies publicly disclosing
targets, chief ?nancial of?cers around the country are
thinking about how they will fund their companies’
ambitions. Energy ef?ciency is almost always the least
cost approach to net zero in the immediate term, and
delivers ongoing cost reductions. We expect over time
the green premium — or conversely the brown
discount — among tenants at the top end of the
market will grow.
Long-term holders and investors in
property want ‘sticky’ tenants — and that
means provisioning for net zero carbon and
sustainability, otherwise, your tenants will
seek alternative accommodation. It is hard to
pinpoint a premium because there are so many
variables. But what we do know is that if we do
not supply what tenants are looking for in terms
of wellbeing, sustainability and community, our
buildings will not hold their value in the long
term. There might not be a premium on green
but there is a discount for brown.
Adrian Pozzo
Chief Executive Of?cer, Cbus Property
Chair, Green Building Council of Australia
Chair, Green Building Council of Austral
Exhibit 7: Energy ef?ciency technologies are being deployed by a majority of building owners
Te c h n o l o g i e s c u r re n t l y b e i n g d e p l oye d by p r o p e r ty l e a d e rs
Source: EY Net Zero Centre, 2024. Underlying data can be found in Appendix A.
Energy ef?ciency
Lifts
Heat pump
Grid-interactive controls
Masonry
Film
LED upgrades
EV chargers
Rooftop solar
Steel
PV
52%
38%
14%
10%
5%
95%
76%
86%
48%
57%
Electri?cation technologies
Renewable energy and
responsive technologies
Te c h n o l o g i es to ta c k l e
embodied carbon emissions
Enhanced building design
0% 25% 50% 75% 100%
23
ENERGY EFFICIENCY TECHNOLOGIES
When heads of sustainability in property companies were asked what their current priorities were, they fell
into several clear categories (Exhibit 7). Clearly, energy ef?ciency is a core priority with nearly all respondents
indicating technologies such as LED lighting upgrades and smart controls for lighting and HVAC are being
deployed and becoming standard. Renewable energy technologies show the greatest variance within any of the
categories, re?ecting the speed of innovation in this space. At the lowest end of the learning curve, building
design technologies such as solar glass and integrated thin ?lm PV are on the radar of property leaders but not
yet deployed at scale.
With 61% of ASX200 companies publicly disclosing
targets, chief ?nancial of?cers around the country are
thinking about how they will fund their companies’
ambitions. Energy ef?ciency is almost always the least
cost approach to net zero in the immediate term, and
delivers ongoing cost reductions. We expect over time
the green premium — or conversely the brown
discount — among tenants at the top end of the
market will grow.
Long-term holders and investors in
property want ‘sticky’ tenants — and that
means provisioning for net zero carbon and
sustainability, otherwise, your tenants will
seek alternative accommodation. It is hard to
pinpoint a premium because there are so many
variables. But what we do know is that if we do
not supply what tenants are looking for in terms
of wellbeing, sustainability and community, our
buildings will not hold their value in the long
term. There might not be a premium on green
but there is a discount for brown.
Adrian Pozzo
Chief Executive Of?cer, Cbus Property
Chair, Green Building Council of Australia
Chair, Green Building Council of Austral
Exhibit 7: Energy ef?ciency technologies are being deployed by a majority of building owners
Te c h n o l o g i e s c u r re n t l y b e i n g d e p l oye d by p r o p e r ty l e a d e rs
Source: EY Net Zero Centre, 2024. Underlying data can be found in Appendix A.
Energy ef?ciency
Lifts
Heat pump
Grid-interactive controls
Masonry
Film
LED upgrades
EV chargers
Rooftop solar
Steel
PV
52%
38%
14%
10%
5%
95%
76%
86%
48%
57%
Electri?cation technologies
Renewable energy and
responsive technologies
Te c h n o l o g i es to ta c k l e
embodied carbon emissions
Enhanced building design
0% 25% 50% 75% 100%
23
DECISION MAKERS REQUIRE
A RAPID PAYBACK,
POTENTIALLY IMPACTING
INVESTMENT INTO CERTAIN
TECHNOLOGIES
An acceptable payback period, for a majority of heads of
sustainability, was less than seven years. Nearly one in
?ve, however, wanted an ROI within one to three years.
This need is likely to be a deterrent for investment in those
technologies with a long payoff.
Exhibit 8: Most building owners have set a payback period
of less than seven years
Acceptable payback period for green technology investments
Between 1 to 3 years
Between 4 to 5 years
Between 6 to 7 years
Between 8 to 10 years
More than 10 years
19%
24%
38%
10%
10%
Source: EY Net Zero Centre, 2024.
24
A RAPID PAYBACK,
POTENTIALLY IMPACTING
INVESTMENT INTO CERTAIN
TECHNOLOGIES
An acceptable payback period, for a majority of heads of
sustainability, was less than seven years. Nearly one in
?ve, however, wanted an ROI within one to three years.
This need is likely to be a deterrent for investment in those
technologies with a long payoff.
Exhibit 8: Most building owners have set a payback period
of less than seven years
Acceptable payback period for green technology investments
Between 1 to 3 years
Between 4 to 5 years
Between 6 to 7 years
Between 8 to 10 years
More than 10 years
19%
24%
38%
10%
10%
Source: EY Net Zero Centre, 2024.
24
When asked about their strategic goals and investment
plans for the next two to ?ve years, the two cohorts
revealed common priorities, with the order of priorities
identical between the groups. However, the level of priority
signi?cantly varied (Exhibit 9).
While the data shows a shared emphasis and consensus
between the groups on the need for emissions and
energy reduction, the use of onsite renewables and
grid interactivity are where the groups clearly diverge.
Building owners are twice as likely to be planning for onsite
renewables in the near term. Tenants are twice as likely to
be considering how their tenancy could better interact with
the grid, which we think is most likely to take advantage of
renewable energy when it is at its cheapest.
We unpack these further in Section 3: ‘The big rocks to
crack’.
Exhibit 9: The relative priority of onsite renewables and grid
interactivity may be a source of tension between owners and tenants
Strategic goals and investment plans for the next 2 to 5 years.
Source: EY Net Zero Centre, 2024.
WHILE RELATIVE PRIORITIES
FOR TENANTS AND BUILDING
OWNERS ARE ALIGNED,
THE DEGREE OF PRIORITY
SIGNIFICANTLY DIFFERS
Proportion of respondents
Reduce waste and
help customers
reduce their Scope
3 emissions
Signi?cantly
reduce energy
consumption
Reduce embodied
carbon
Eliminate fossil
fuels
Maximise onsite
renewables
Implement
grid-interactive
capabilities
0%
100%
50%
75%
25%
Corporate tenants Property leaders - heads of sustainability
25
plans for the next two to ?ve years, the two cohorts
revealed common priorities, with the order of priorities
identical between the groups. However, the level of priority
signi?cantly varied (Exhibit 9).
While the data shows a shared emphasis and consensus
between the groups on the need for emissions and
energy reduction, the use of onsite renewables and
grid interactivity are where the groups clearly diverge.
Building owners are twice as likely to be planning for onsite
renewables in the near term. Tenants are twice as likely to
be considering how their tenancy could better interact with
the grid, which we think is most likely to take advantage of
renewable energy when it is at its cheapest.
We unpack these further in Section 3: ‘The big rocks to
crack’.
Exhibit 9: The relative priority of onsite renewables and grid
interactivity may be a source of tension between owners and tenants
Strategic goals and investment plans for the next 2 to 5 years.
Source: EY Net Zero Centre, 2024.
WHILE RELATIVE PRIORITIES
FOR TENANTS AND BUILDING
OWNERS ARE ALIGNED,
THE DEGREE OF PRIORITY
SIGNIFICANTLY DIFFERS
Proportion of respondents
Reduce waste and
help customers
reduce their Scope
3 emissions
Signi?cantly
reduce energy
consumption
Reduce embodied
carbon
Eliminate fossil
fuels
Maximise onsite
renewables
Implement
grid-interactive
capabilities
0%
100%
50%
75%
25%
Corporate tenants Property leaders - heads of sustainability
25
Note: Participants were asked: “What do you perceive as the top three bene?ts to your organisation by acting on emissions?” Results ‘by orientation’ adjusted to
give equal weight to corporate tenants and property sustainability leaders. Cost and futureproo?ng group de?ned as respondents who did not nominate brand and
reputation. ‘Other’ included response to investor demands; links to debt facility; ESG leadership; meeting market standards.
Source: EY Net Zero Centre, 2024.
Brand and reputation
-11
Lower environmental
impact
Futureproo?ng and
resilience
Regulatory
compliance
Competitive
advantage
Ta l e n t a tt ra c t i o n /
retention
Cost savings
Create or
enhance value
Three in four building owners consider regulatory
compliance and standards as one of the most important
drivers of net zero buildings. While these drivers catalyse
change, most building owners don’t see compliance as a
core bene?t. Rather, most building owners see the potential
impact to brand and reputation as the biggest bene?t of
acting on emissions (Exhibit 10).
Digging deeper, our survey uncovered two ‘archetypes’ in
the property sector. One subset of property companies
is compliance-oriented and stepping up their ESG efforts
to stay on the right side of regulation. These compliance-
oriented companies are investing in green buildings to
minimise downside risk and reduce costs. They are less
motivated by new opportunities hidden within the net zero
transition.
The other subset sees sustainability as a brand booster and
a way to communicate and connect with their customers.
These brand-oriented companies are willing to take risks
with green buildings to win new business and customers.
But they see new standards and regulations as a chance to
showcase their leadership, rather than an opportunity to
drive down costs.
None of the real estate companies we surveyed had aligned
the two objectives. A net zero strategy, executed well,
can achieve both ambitions and also create new value
simultaneously.
THERE IS A DIFFERENCE BETWEEN WHAT’S DRIVING CHANGE VERSUS THE BENEFIT OF CHANGE
100%
Exhibit 10: Perceived bene?ts vary more by orientation than by sector
0% 100%50% 75%25% 0% 50% 75%25%
-100%
-27%
31%
-4%
-18%
10%
4%
0%
8%
-14%
-1%
-6%
-12% 36%
Corporate tenants
By sector By orientation
Brand and reputation important
Property leaders - heads of sustainability Cost and risk management important
difference
in corporate
tenants vs
propery leaders
difference in cost
and risk orientaiton
vs brand and
reputation oriented
56%
26
give equal weight to corporate tenants and property sustainability leaders. Cost and futureproo?ng group de?ned as respondents who did not nominate brand and
reputation. ‘Other’ included response to investor demands; links to debt facility; ESG leadership; meeting market standards.
Source: EY Net Zero Centre, 2024.
Brand and reputation
-11
Lower environmental
impact
Futureproo?ng and
resilience
Regulatory
compliance
Competitive
advantage
Ta l e n t a tt ra c t i o n /
retention
Cost savings
Create or
enhance value
Three in four building owners consider regulatory
compliance and standards as one of the most important
drivers of net zero buildings. While these drivers catalyse
change, most building owners don’t see compliance as a
core bene?t. Rather, most building owners see the potential
impact to brand and reputation as the biggest bene?t of
acting on emissions (Exhibit 10).
Digging deeper, our survey uncovered two ‘archetypes’ in
the property sector. One subset of property companies
is compliance-oriented and stepping up their ESG efforts
to stay on the right side of regulation. These compliance-
oriented companies are investing in green buildings to
minimise downside risk and reduce costs. They are less
motivated by new opportunities hidden within the net zero
transition.
The other subset sees sustainability as a brand booster and
a way to communicate and connect with their customers.
These brand-oriented companies are willing to take risks
with green buildings to win new business and customers.
But they see new standards and regulations as a chance to
showcase their leadership, rather than an opportunity to
drive down costs.
None of the real estate companies we surveyed had aligned
the two objectives. A net zero strategy, executed well,
can achieve both ambitions and also create new value
simultaneously.
THERE IS A DIFFERENCE BETWEEN WHAT’S DRIVING CHANGE VERSUS THE BENEFIT OF CHANGE
100%
Exhibit 10: Perceived bene?ts vary more by orientation than by sector
0% 100%50% 75%25% 0% 50% 75%25%
-100%
-27%
31%
-4%
-18%
10%
4%
0%
8%
-14%
-1%
-6%
-12% 36%
Corporate tenants
By sector By orientation
Brand and reputation important
Property leaders - heads of sustainability Cost and risk management important
difference
in corporate
tenants vs
propery leaders
difference in cost
and risk orientaiton
vs brand and
reputation oriented
56%
26
Building owners indicated ?nancial support is most likely
to encourage innovation in green technology (Exhibit
11) with a preference for direct funding (i.e. grants)
over concessional ?nance (i.e. green loans). Grants may
be preferred because they allow owners to take more
risks, as the funding is not necessarily tied to achieving a
performance outcome, as it is with a green loan.
Not all incentives need necessarily be ?nancial, with
over a third still indicating a role for collaborative forums
and education in encouraging innovation within their
organisation. This underscores the role of associations and
connectors like the Green Building Council of Australia,
Property Council of Australia and CitySwitch.
Tenant expectations and willingness to pay will remain front
and centre in investment decisions of building owners and
developers, who report the main barriers to uptake of green
technologies are generally cost, return on investment and
access to capital.
Indeed, when asked what the predominant barrier for
implementation of certain green technologies were, the
leading barrier was cost, return on investment and access
to capital.
To paraphrase famous economist Paul Krugman, while the
returns on investing in greener buildings is not the only
thing that matters, in the long run it is almost everything.
Widespread transformation can only be achieved when the
numbers add up.
As climate reporting obligations become the direct
responsibility for the CFO and audit committee chair,
aligning total shareholder returns with green building
performance should become key in creating new value from
the net zero transition.
FINANCIAL INCENTIVES ARE LIKELY TO
CATALYSE INNOVATION AND ACTION
Source: EY Net Zero Centre, 2024.
Exhibit 11: Three in four building owners believe that direct funding will encourage innovation
Incentives that would be most effective to encourage innovation in green technology.
Grants or programmes for
sustainable building projects
Increased tax incentives Green loans and ?nanceCollaborative forums
and education
0%
100%
50%
75%
25%
27
to encourage innovation in green technology (Exhibit
11) with a preference for direct funding (i.e. grants)
over concessional ?nance (i.e. green loans). Grants may
be preferred because they allow owners to take more
risks, as the funding is not necessarily tied to achieving a
performance outcome, as it is with a green loan.
Not all incentives need necessarily be ?nancial, with
over a third still indicating a role for collaborative forums
and education in encouraging innovation within their
organisation. This underscores the role of associations and
connectors like the Green Building Council of Australia,
Property Council of Australia and CitySwitch.
Tenant expectations and willingness to pay will remain front
and centre in investment decisions of building owners and
developers, who report the main barriers to uptake of green
technologies are generally cost, return on investment and
access to capital.
Indeed, when asked what the predominant barrier for
implementation of certain green technologies were, the
leading barrier was cost, return on investment and access
to capital.
To paraphrase famous economist Paul Krugman, while the
returns on investing in greener buildings is not the only
thing that matters, in the long run it is almost everything.
Widespread transformation can only be achieved when the
numbers add up.
As climate reporting obligations become the direct
responsibility for the CFO and audit committee chair,
aligning total shareholder returns with green building
performance should become key in creating new value from
the net zero transition.
FINANCIAL INCENTIVES ARE LIKELY TO
CATALYSE INNOVATION AND ACTION
Source: EY Net Zero Centre, 2024.
Exhibit 11: Three in four building owners believe that direct funding will encourage innovation
Incentives that would be most effective to encourage innovation in green technology.
Grants or programmes for
sustainable building projects
Increased tax incentives Green loans and ?nanceCollaborative forums
and education
0%
100%
50%
75%
25%
27
While most building owners and developers are yet to
tackle embodied carbon, green materials such as green
concrete and steel ranked in the top ?ve for both building
owners and tenants. Not surprisingly, owners ranked green
materials and energy storage (such as batteries) with the
greatest potential. Tenants indicated the most potential
bene?t in technologies that would support greater energy
ef?ciencies, and thus savings, such as smart controls and
ef?cient building services.
Comparing current technologies being prioritised by
building owners (Exhibit 12) with those deemed as having
the greatest potential if barriers are removed, shows that
green materials are on a ‘watch-list’. While they are seen as
desirable in the future, the data suggests they are currently
plagued by barriers including cost and maturity.
Armed with this information, and after re?ecting deeply on
the insights gathered from the qualitative interviews, EY
teams have identi?ed ?ve areas of action for both corporate
tenants and property companies, which is found in Section 3.
Exhibit 12: Green materials and energy ef?ciency technologies are seen as those with the
greatest potential, provided barriers are removed.
Breakthrough technologies that have the biggest potential bene?t to support net zero in the real estate sector
once barriers are addressed.
BOTH OWNERS AND
TENANTS SEE THE
GREATEST POTENTIAL
IN THE SAME TOP FIVE
“BREAKTHROUGH
TECHNOLOGIES”, ALBEIT IN
DIFFERENT ORDER
Corporate tenants
Property leaders
- heads of
sustainability
Green concrete
Energy storage
Smart controls
Green steel
High ef?ciency
HVAC
Heat pumps
(space heating)
Heat pumps
(hot water)
Solar glass
Grid-interactive
controls
Induction
appliances
Bi-directional EV
chargers
Masonry
Thin ?lm PV
0%
100%
50%
75%
25%
28
tackle embodied carbon, green materials such as green
concrete and steel ranked in the top ?ve for both building
owners and tenants. Not surprisingly, owners ranked green
materials and energy storage (such as batteries) with the
greatest potential. Tenants indicated the most potential
bene?t in technologies that would support greater energy
ef?ciencies, and thus savings, such as smart controls and
ef?cient building services.
Comparing current technologies being prioritised by
building owners (Exhibit 12) with those deemed as having
the greatest potential if barriers are removed, shows that
green materials are on a ‘watch-list’. While they are seen as
desirable in the future, the data suggests they are currently
plagued by barriers including cost and maturity.
Armed with this information, and after re?ecting deeply on
the insights gathered from the qualitative interviews, EY
teams have identi?ed ?ve areas of action for both corporate
tenants and property companies, which is found in Section 3.
Exhibit 12: Green materials and energy ef?ciency technologies are seen as those with the
greatest potential, provided barriers are removed.
Breakthrough technologies that have the biggest potential bene?t to support net zero in the real estate sector
once barriers are addressed.
BOTH OWNERS AND
TENANTS SEE THE
GREATEST POTENTIAL
IN THE SAME TOP FIVE
“BREAKTHROUGH
TECHNOLOGIES”, ALBEIT IN
DIFFERENT ORDER
Corporate tenants
Property leaders
- heads of
sustainability
Green concrete
Energy storage
Smart controls
Green steel
High ef?ciency
HVAC
Heat pumps
(space heating)
Heat pumps
(hot water)
Solar glass
Grid-interactive
controls
Induction
appliances
Bi-directional EV
chargers
Masonry
Thin ?lm PV
0%
100%
50%
75%
25%
28
The three scopes of emissions, as de?ned by the Greenhouse Gas Protocol
12
, can be applied to buildings as follows:
SCOPES 1, 2 AND 3 AND WHAT THEY MEAN FOR BUILDINGS
These are direct greenhouse gas emissions that
come from sources that are owned or controlled
by the organisation. For example, the combustion
of fossil fuels on-site, such as natural gas used
for heating, hot water and cooking. Buildings can
reduce Scope 1 emissions by switching to all-electric
technologies such as heat pumps and induction.
Refrigerant leakage is also a Scope 1 emission, so
switching to refrigerant systems with low global
warming potential will reduce these.
Scope 1: Direct emissions
These emissions are primarily associated with
the purchase of electricity from the grid to power
buildings. Buildings can decrease Scope 2 emissions
by reducing electricity consumption through passive
design, energy ef?ciency and smart controls,
generating renewable electricity on site, changing
the time of use of electricity to maximise use of
solar and wind energy in the grid, and entering into
commercial contracts to procure 100% renewable
electricity.
Scope 2: Indirect emissions
These are indirect emissions that occur in the value
chain, including both upstream and downstream
activities. For example, emissions from the
manufacturing and transportation of building
materials, employee commuting and tenant
activities. Building owners and users can reduce
Scope 3 emissions by selecting low-carbon building
materials, encouraging sustainable commuting
options, reducing waste generation and disposal
to land?ll, and encouraging others to reduce their
Scope 1 and 2 emissions (see above).
The boundaries of these scopes can be blurry.
Several of our interview subjects noted the challenge
of mapping globally accepted standards and
methodologies, especially for Scope 3 emissions, to
Australia’s reporting regime.
Reporting is evolving rapidly, but taking
responsibility for emissions can’t wait for us to settle
on comprehensive de?nitions. As one of our experts
noted: “The climate doesn’t audit ESG reports.”
Therefore, both landlords and tenants can focus on
their areas of control and in?uence today.
Scope 3: Other indirect emissions
29
12 Greenhouse Gas Protocol, 2023
12
, can be applied to buildings as follows:
SCOPES 1, 2 AND 3 AND WHAT THEY MEAN FOR BUILDINGS
These are direct greenhouse gas emissions that
come from sources that are owned or controlled
by the organisation. For example, the combustion
of fossil fuels on-site, such as natural gas used
for heating, hot water and cooking. Buildings can
reduce Scope 1 emissions by switching to all-electric
technologies such as heat pumps and induction.
Refrigerant leakage is also a Scope 1 emission, so
switching to refrigerant systems with low global
warming potential will reduce these.
Scope 1: Direct emissions
These emissions are primarily associated with
the purchase of electricity from the grid to power
buildings. Buildings can decrease Scope 2 emissions
by reducing electricity consumption through passive
design, energy ef?ciency and smart controls,
generating renewable electricity on site, changing
the time of use of electricity to maximise use of
solar and wind energy in the grid, and entering into
commercial contracts to procure 100% renewable
electricity.
Scope 2: Indirect emissions
These are indirect emissions that occur in the value
chain, including both upstream and downstream
activities. For example, emissions from the
manufacturing and transportation of building
materials, employee commuting and tenant
activities. Building owners and users can reduce
Scope 3 emissions by selecting low-carbon building
materials, encouraging sustainable commuting
options, reducing waste generation and disposal
to land?ll, and encouraging others to reduce their
Scope 1 and 2 emissions (see above).
The boundaries of these scopes can be blurry.
Several of our interview subjects noted the challenge
of mapping globally accepted standards and
methodologies, especially for Scope 3 emissions, to
Australia’s reporting regime.
Reporting is evolving rapidly, but taking
responsibility for emissions can’t wait for us to settle
on comprehensive de?nitions. As one of our experts
noted: “The climate doesn’t audit ESG reports.”
Therefore, both landlords and tenants can focus on
their areas of control and in?uence today.
Scope 3: Other indirect emissions
29
12 Greenhouse Gas Protocol, 2023
In Australia’s property industry, innovation and
sustainability are synonymous. Here are some
examples …
Charter Hall
In 2023, NABERS singled out Charter Hall
13
for its
commitment to “sustainability at scale” for using
NABERS to assess a record 12 portfolios of commercial
assets. Charter Hall’s Of?ce Sector portfolio is
illustrative, with 81 assets that add up to more than
1.4 million square metres of space — equivalent to
7,500 average Australian homes laid end to end.
From 2025, all Charter Hall’s assets will operate on
100% renewable energy. Charter Hall signed a Power
Purchase Agreement in 2022, with 152 assets powered
through 151GWh wind and solar energy each year. This
is the equivalent to the annual energy consumption of
26,000 average Australian homes.
Frasers Property Australia
To achieve the world’s ?rst Living Building Challenge
rating
14
for a retail centre, the development team at Frasers
Property spent upwards of 20,000 hours investigating
products and materials that were low in embodied carbon.
After creating a list of 1,400-plus materials that were
vetted against the Living Building Challenge’s seven
criteria, Frasers Property released the information to the
industry to amplify its impact.
Goodman Group
The Eumemmerring Business Park in Melbourne’s
Dandenong South is one of the ?rst industrial buildings to
be registered under the new Green Star Buildings rating
tool. The park, with an end value exceeding $100 million,
was once a former electrical parts site built in the 1970s.
Goodman repurposed two small ’pods’ at the front of
the site into a single 2,500 sqm of?ce with a cafe and an
aerobridge connecting to its warehouse operations. CEO
Jason Little has said
15
Goodman Group felt “strongly about
retaining whatever buildings it could” as this approach
“enables us to recycle and reuse ?nite materials, reducing
waste to land?ll and upfront embodied carbon during
construction”. Upfront carbon emissions have been reduced
by over 10% through low-carbon material selection.
Lendlease
Around 90% of Lendlease’s total carbon emissions fall
in the Scope 3 category. In 2023, Lendlease released
its Scope 3 Emissions Protocol
16
which outlines the
company’s current reporting boundaries and provides a
useful model for other real estate developers, investors
and constructors. Lendlease is also looking for solutions
to eliminate upfront embodied carbon in building
materials. At 25 King in Brisbane, for example, the
decision to replace concrete and steel with low-carbon
options like engineered timber reduced upfront carbon
emissions by almost 40%.
17
Stockland
In December 2023, Stockland announced a market-
leading scheme
18
to trade solar energy among more
than 50 of its shopping centre and logistics assets.
Distributed energy resources company Energy Bay will
operate embedded networks on Stockland’s roof space
for the next 30 years allowing it to sell energy services.
Energy Bay will purchase Stockland’s existing 17 MWp
of solar panels, mostly located at town centres, and
install and own an additional 34 MWp of solar by 2025.
Stockland expects this partnership to mitigate around
50,000 tonnes of carbon emissions annually by 2025
and generate as much power as the portfolio consumes.
Around 250,000 sqm of solar panels will be installed,
the equivalent of around 35 football ?elds. The
partnership uses existing rooftops rather than requiring
additional land for solar farms, and allows Stockland
to create a recurring income stream and trade excess
energy across its portfolio.
LESSONS FROM THE LIGHTHOUSES
30
13 NABERS, 2023.
14 Frasers Property, 2021.
15 Cummins, 2023.
16 Lendlease, 2023.
17 GBCA, May 2023A.
18 Stockland, 2023.
sustainability are synonymous. Here are some
examples …
Charter Hall
In 2023, NABERS singled out Charter Hall
13
for its
commitment to “sustainability at scale” for using
NABERS to assess a record 12 portfolios of commercial
assets. Charter Hall’s Of?ce Sector portfolio is
illustrative, with 81 assets that add up to more than
1.4 million square metres of space — equivalent to
7,500 average Australian homes laid end to end.
From 2025, all Charter Hall’s assets will operate on
100% renewable energy. Charter Hall signed a Power
Purchase Agreement in 2022, with 152 assets powered
through 151GWh wind and solar energy each year. This
is the equivalent to the annual energy consumption of
26,000 average Australian homes.
Frasers Property Australia
To achieve the world’s ?rst Living Building Challenge
rating
14
for a retail centre, the development team at Frasers
Property spent upwards of 20,000 hours investigating
products and materials that were low in embodied carbon.
After creating a list of 1,400-plus materials that were
vetted against the Living Building Challenge’s seven
criteria, Frasers Property released the information to the
industry to amplify its impact.
Goodman Group
The Eumemmerring Business Park in Melbourne’s
Dandenong South is one of the ?rst industrial buildings to
be registered under the new Green Star Buildings rating
tool. The park, with an end value exceeding $100 million,
was once a former electrical parts site built in the 1970s.
Goodman repurposed two small ’pods’ at the front of
the site into a single 2,500 sqm of?ce with a cafe and an
aerobridge connecting to its warehouse operations. CEO
Jason Little has said
15
Goodman Group felt “strongly about
retaining whatever buildings it could” as this approach
“enables us to recycle and reuse ?nite materials, reducing
waste to land?ll and upfront embodied carbon during
construction”. Upfront carbon emissions have been reduced
by over 10% through low-carbon material selection.
Lendlease
Around 90% of Lendlease’s total carbon emissions fall
in the Scope 3 category. In 2023, Lendlease released
its Scope 3 Emissions Protocol
16
which outlines the
company’s current reporting boundaries and provides a
useful model for other real estate developers, investors
and constructors. Lendlease is also looking for solutions
to eliminate upfront embodied carbon in building
materials. At 25 King in Brisbane, for example, the
decision to replace concrete and steel with low-carbon
options like engineered timber reduced upfront carbon
emissions by almost 40%.
17
Stockland
In December 2023, Stockland announced a market-
leading scheme
18
to trade solar energy among more
than 50 of its shopping centre and logistics assets.
Distributed energy resources company Energy Bay will
operate embedded networks on Stockland’s roof space
for the next 30 years allowing it to sell energy services.
Energy Bay will purchase Stockland’s existing 17 MWp
of solar panels, mostly located at town centres, and
install and own an additional 34 MWp of solar by 2025.
Stockland expects this partnership to mitigate around
50,000 tonnes of carbon emissions annually by 2025
and generate as much power as the portfolio consumes.
Around 250,000 sqm of solar panels will be installed,
the equivalent of around 35 football ?elds. The
partnership uses existing rooftops rather than requiring
additional land for solar farms, and allows Stockland
to create a recurring income stream and trade excess
energy across its portfolio.
LESSONS FROM THE LIGHTHOUSES
30
13 NABERS, 2023.
14 Frasers Property, 2021.
15 Cummins, 2023.
16 Lendlease, 2023.
17 GBCA, May 2023A.
18 Stockland, 2023.
THE BIG ROCKS
TO CRACK
31
TO CRACK
31
KEY POINTS
• Fossil gas contributes up to 30% of a typical
commercial building’s greenhouse gas emissions.
• The technologies to eliminate gas and electrify
buildings — like heat pumps and induction cook
tops — are proven and available now.
• Tenants are specifying electri?cation in leases
to achieve net-zero targets, reduce exposure to
energy market ?uctuations, improve indoor air
quality and lower energy bills.
• 71% of property leaders and 54% of corporate
leaders, according to our survey, are looking
to eliminate gas, but logistical and technical
barriers stand in the way. These include a lack of
regulation, skills, capacity and, for some buildings,
suf?cient space.
• Cracking this rock starts by auditing buildings and
systems to determine the age of equipment and
develop a timeline for electri?cation.
ELECTRIFICATION:
CATALYSE THE
GAS FREE FUTURE
1
32
• Fossil gas contributes up to 30% of a typical
commercial building’s greenhouse gas emissions.
• The technologies to eliminate gas and electrify
buildings — like heat pumps and induction cook
tops — are proven and available now.
• Tenants are specifying electri?cation in leases
to achieve net-zero targets, reduce exposure to
energy market ?uctuations, improve indoor air
quality and lower energy bills.
• 71% of property leaders and 54% of corporate
leaders, according to our survey, are looking
to eliminate gas, but logistical and technical
barriers stand in the way. These include a lack of
regulation, skills, capacity and, for some buildings,
suf?cient space.
• Cracking this rock starts by auditing buildings and
systems to determine the age of equipment and
develop a timeline for electri?cation.
ELECTRIFICATION:
CATALYSE THE
GAS FREE FUTURE
1
32
Fossil gas represents between 10% and 30%
19
of a typical
commercial building’s greenhouse gas emissions. As the
electricity grid decarbonises, buildings can be powered
by 100% renewable electricity. Every piece of research,
therefore, draws the same conclusion: the only sensible
choice is to electrify.
A survey led by EY found 71% of property leaders and 54%
of corporate leaders were already thinking about how to
eliminate fossil fuels from their buildings.
The Australian Sustainable Built Environment Council’s
Unlocking the Pathway
20
report has shown that more than
80% of fossil gas use in buildings is concentrated in Victoria
and New South Wales, and that larger buildings, especially
of?ces, are more likely to use gas than smaller ones.
The technologies to eliminate gas and electrify buildings —
like heat pumps and induction cook tops — are proven and
available now and are prioritised in our technology matrix.
When we asked heads of sustainability at property
companies, just 38% were investing in heat pumps for
space heating. This technology is not just tried-and-true.
It was invented in the 1850s
21
and has been used in
homes since the 1960s. Chillers, fridges and home air-
conditioning systems are all types of heat pumps.
The big change for Australian commercial buildings is the
increasing use of heat pumps to heat hot water instead
of using gas boilers. Heat pumps require more space and
natural ventilation than gas boilers, and this can be a
challenge for existing buildings. Heat pumps also typically
generate heating hot water at lower temperatures, so
modi?cation to existing pipework and pumps may also be
required.
Unlocking the Pathway also found that electri?cation in
large buildings can be constrained by physical barriers, like
the size of the plant room, and that there are cases where
the capital costs to upgrade could be considerable. Getting
the right advice will be important.
Our interviews with industry experts noted the logistical
challenges of incentivising building owners to invest capital
to replace existing gas equipment, some of which may be
years before it would otherwise need to be replaced — and
to do so on a vast scale when international case studies are
rare and skills shortages in some trades acute.
We do not have a national policy to decarbonise our existing
buildings. While some states and territories have banned
gas connections to new developments, a clear roadmap to
eliminate gas from existing buildings is yet to materialise.
There are skills and capacity gaps in the market; we
currently don’t have enough plumbers, electricians and
heat pump suppliers to electrify hundreds of thousands
of commercial buildings each year between now and
2050. Policy plays a critical role in supporting an orderly
transition by building industry capacity.
According to research from the GBCA, around 80% of
tenants are specifying electri?cation
22
in their leases
to meet net zero targets, reduce their exposure to
international energy market ?uctuations, improve indoor
air quality and reduce their energy bills.
As one of our property leaders noted: “If I was a corporate
tenant, I would be looking at electri?cation because unless
you’re in a building that’s full-electri?ed, you can never
eradicate your Scope 1 emissions. You’ll always be stuck
with some gas.”
The challenge of electri?cation
is a logistical one. How do we
get millions of building owners
to replace equipment and invest
in capital at a scale and pace
that we’ve never done before?
And we can’t ask people in
other countries how they solved
this, because no country has
completely solved this yet.
Carlos Flores
Director, NABERS
33
19 Clean Energy Finance Corporation, 2023.
20 Australian Sustainable Built Environment Council, 2022.
21 Crownhart, 2023.
22 GBCA, March 2023.
19
of a typical
commercial building’s greenhouse gas emissions. As the
electricity grid decarbonises, buildings can be powered
by 100% renewable electricity. Every piece of research,
therefore, draws the same conclusion: the only sensible
choice is to electrify.
A survey led by EY found 71% of property leaders and 54%
of corporate leaders were already thinking about how to
eliminate fossil fuels from their buildings.
The Australian Sustainable Built Environment Council’s
Unlocking the Pathway
20
report has shown that more than
80% of fossil gas use in buildings is concentrated in Victoria
and New South Wales, and that larger buildings, especially
of?ces, are more likely to use gas than smaller ones.
The technologies to eliminate gas and electrify buildings —
like heat pumps and induction cook tops — are proven and
available now and are prioritised in our technology matrix.
When we asked heads of sustainability at property
companies, just 38% were investing in heat pumps for
space heating. This technology is not just tried-and-true.
It was invented in the 1850s
21
and has been used in
homes since the 1960s. Chillers, fridges and home air-
conditioning systems are all types of heat pumps.
The big change for Australian commercial buildings is the
increasing use of heat pumps to heat hot water instead
of using gas boilers. Heat pumps require more space and
natural ventilation than gas boilers, and this can be a
challenge for existing buildings. Heat pumps also typically
generate heating hot water at lower temperatures, so
modi?cation to existing pipework and pumps may also be
required.
Unlocking the Pathway also found that electri?cation in
large buildings can be constrained by physical barriers, like
the size of the plant room, and that there are cases where
the capital costs to upgrade could be considerable. Getting
the right advice will be important.
Our interviews with industry experts noted the logistical
challenges of incentivising building owners to invest capital
to replace existing gas equipment, some of which may be
years before it would otherwise need to be replaced — and
to do so on a vast scale when international case studies are
rare and skills shortages in some trades acute.
We do not have a national policy to decarbonise our existing
buildings. While some states and territories have banned
gas connections to new developments, a clear roadmap to
eliminate gas from existing buildings is yet to materialise.
There are skills and capacity gaps in the market; we
currently don’t have enough plumbers, electricians and
heat pump suppliers to electrify hundreds of thousands
of commercial buildings each year between now and
2050. Policy plays a critical role in supporting an orderly
transition by building industry capacity.
According to research from the GBCA, around 80% of
tenants are specifying electri?cation
22
in their leases
to meet net zero targets, reduce their exposure to
international energy market ?uctuations, improve indoor
air quality and reduce their energy bills.
As one of our property leaders noted: “If I was a corporate
tenant, I would be looking at electri?cation because unless
you’re in a building that’s full-electri?ed, you can never
eradicate your Scope 1 emissions. You’ll always be stuck
with some gas.”
The challenge of electri?cation
is a logistical one. How do we
get millions of building owners
to replace equipment and invest
in capital at a scale and pace
that we’ve never done before?
And we can’t ask people in
other countries how they solved
this, because no country has
completely solved this yet.
Carlos Flores
Director, NABERS
33
19 Clean Energy Finance Corporation, 2023.
20 Australian Sustainable Built Environment Council, 2022.
21 Crownhart, 2023.
22 GBCA, March 2023.
CASE STUDY: PIONEERING PERSPECTIVES
When it ?rst opened its doors in 2008, 1 Bligh Street in
Sydney was heralded a “lighthouse” by the Australian
Financial Review
28
for setting “a new benchmark” for
sustainable commercial buildings. The pioneering Dexus
project boasted Australia’s ?rst double-skin façade – a
technology innovation that delivered unparalleled
energy ef?ciency for a building of its size. It also
featured Sydney’s ?rst blackwater recycling system, and
Australia’s largest green wall.
Lighthouse projects are beacons of brand, magnets for
talent, and competitive differentiators. These buildings
also light the way for new and innovative technologies
that sometimes, in a matter of a few short years, become
business-as-usual.
In 2024, Dexus’s latest development offers a new
lighthouse: Atlassian’s $1.54 billion 39-storey hybrid
timber skyscraper next to Sydney’s Central Station. An
innovation precinct demands a high-tech building, and
this 186-metre tower will be the tallest commercial
hybrid timber building in the world.
Dexus hopes the all-electric Atlassian Central will be a
“gamechanger” for low-carbon construction, with 50%
less embodied carbon compared to a conventionally
constructed building.
“It’s important to have the lighthouse projects that
demonstrate what is possible. They give people hope,”
says Dexus Head of Sustainability Ramana James.
“Sometimes the solutions in these visionary projects are
too far ahead of their time and too costly to do at scale.
Sometimes the solutions are unspectacular and small
scale, but just need to be done everywhere. But for every
technology that doesn’t pay off there will be 10 that do.
“For innovation to make its way into the mainstream,
we need a combination of lighthouse projects with
smaller interventions that can happen everywhere. Our
challenge is to make these interventions easier and
incentivised. That requires everyone working together –
investors, developers, tenants and governments.”
JLL’s research
23
, published in November 2023 is clear:
74% of Sydney and 67% Melbourne CBD occupiers (of more
than 5,000 sqm of space) have net zero carbon targets, but
“there are very few highly energy ef?cient and fully electric
buildings either under construction or in the pipeline”.
There are policy, ?nance, strategy and skills gap — but now is
the time for corporate tenants to step up and drive demand
for electric buildings.
Starting today…
Do you know where you stand? Cracking this rock
starts by scheduling an audit of your buildings and
systems — or asking your landlord to. This will help
you to determine the age of your equipment and
develop a timeline for electri?cation.
Our oldest odce building is now rv years
old. For us, that is an advantage – however,
the downside is our plant and equipment
has not yet reached its end-of-life. The
electri?cation of our existing portfolio is
part of our longer-term zero carbon strategy
and we have to consider the cost to divest
or dispose of ‘newer’ plant and equipment
prior to the expiry of its ‘useful lives’.
That being said, we are doing a lot of work
preparing so that when the time is right,
we can transition these newer buildings to
achieve our ongoing sustainability goals.
Our recent completed development at 83
Pirie Street, Adelaide, was one of Australia’s
?rst all-electric, net zero odce towers.
Moving forward, our odce developments
will be all-electric.
Adrian Pozzo
Chief Executive Of?cer, Cbus Property
Chair, Green Building Council of Australia
34
23 McFarlane et al, 2023.
24 Hanley, 2008.
When it ?rst opened its doors in 2008, 1 Bligh Street in
Sydney was heralded a “lighthouse” by the Australian
Financial Review
28
for setting “a new benchmark” for
sustainable commercial buildings. The pioneering Dexus
project boasted Australia’s ?rst double-skin façade – a
technology innovation that delivered unparalleled
energy ef?ciency for a building of its size. It also
featured Sydney’s ?rst blackwater recycling system, and
Australia’s largest green wall.
Lighthouse projects are beacons of brand, magnets for
talent, and competitive differentiators. These buildings
also light the way for new and innovative technologies
that sometimes, in a matter of a few short years, become
business-as-usual.
In 2024, Dexus’s latest development offers a new
lighthouse: Atlassian’s $1.54 billion 39-storey hybrid
timber skyscraper next to Sydney’s Central Station. An
innovation precinct demands a high-tech building, and
this 186-metre tower will be the tallest commercial
hybrid timber building in the world.
Dexus hopes the all-electric Atlassian Central will be a
“gamechanger” for low-carbon construction, with 50%
less embodied carbon compared to a conventionally
constructed building.
“It’s important to have the lighthouse projects that
demonstrate what is possible. They give people hope,”
says Dexus Head of Sustainability Ramana James.
“Sometimes the solutions in these visionary projects are
too far ahead of their time and too costly to do at scale.
Sometimes the solutions are unspectacular and small
scale, but just need to be done everywhere. But for every
technology that doesn’t pay off there will be 10 that do.
“For innovation to make its way into the mainstream,
we need a combination of lighthouse projects with
smaller interventions that can happen everywhere. Our
challenge is to make these interventions easier and
incentivised. That requires everyone working together –
investors, developers, tenants and governments.”
JLL’s research
23
, published in November 2023 is clear:
74% of Sydney and 67% Melbourne CBD occupiers (of more
than 5,000 sqm of space) have net zero carbon targets, but
“there are very few highly energy ef?cient and fully electric
buildings either under construction or in the pipeline”.
There are policy, ?nance, strategy and skills gap — but now is
the time for corporate tenants to step up and drive demand
for electric buildings.
Starting today…
Do you know where you stand? Cracking this rock
starts by scheduling an audit of your buildings and
systems — or asking your landlord to. This will help
you to determine the age of your equipment and
develop a timeline for electri?cation.
Our oldest odce building is now rv years
old. For us, that is an advantage – however,
the downside is our plant and equipment
has not yet reached its end-of-life. The
electri?cation of our existing portfolio is
part of our longer-term zero carbon strategy
and we have to consider the cost to divest
or dispose of ‘newer’ plant and equipment
prior to the expiry of its ‘useful lives’.
That being said, we are doing a lot of work
preparing so that when the time is right,
we can transition these newer buildings to
achieve our ongoing sustainability goals.
Our recent completed development at 83
Pirie Street, Adelaide, was one of Australia’s
?rst all-electric, net zero odce towers.
Moving forward, our odce developments
will be all-electric.
Adrian Pozzo
Chief Executive Of?cer, Cbus Property
Chair, Green Building Council of Australia
34
23 McFarlane et al, 2023.
24 Hanley, 2008.
KEY POINTS
• 86% of property leaders and 69% of corporate leaders want
to reduce the energy consumption in their buildings.
• Slowing the growth curve in electricity consumption in
Australia’s built environment will give us time to build
the energy transmission infrastructure we need for other
sectors of economy and to ?nd solutions to decarbonise
other hard-to-abate sectors, while providing cost savings.
• Building owners and tenants can take responsibility for
their energy consumption; the ?rst step is to measure a
building or tenancy through NABERS to set a baseline.
ENERGY EFFICIENCY:
LIGHTEN YOUR
ENERGY LOAD
2
35
• 86% of property leaders and 69% of corporate leaders want
to reduce the energy consumption in their buildings.
• Slowing the growth curve in electricity consumption in
Australia’s built environment will give us time to build
the energy transmission infrastructure we need for other
sectors of economy and to ?nd solutions to decarbonise
other hard-to-abate sectors, while providing cost savings.
• Building owners and tenants can take responsibility for
their energy consumption; the ?rst step is to measure a
building or tenancy through NABERS to set a baseline.
ENERGY EFFICIENCY:
LIGHTEN YOUR
ENERGY LOAD
2
35
The de?nition of an ‘energy ef?cient’ building is evolving.
There is a perception that, as the grid electri?es, energy
consumption won’t matter because it will be 100%
renewable.
But Australia’s electricity network will be under pressure
for decades. As we electrify buildings, roll out ?eets of
electric vehicles and step into the hydrogen superpower
opportunity we will need a lot more renewable electricity
in future decades than we need today. How much is not
yet clear — but “unbounded” is how one of our informed
interview subjects described the demand.
Up to 50% of electricity usage in commercial buildings is for
heating, ventilation and air conditioning. We can reduce the
demand for energy in our buildings with simple technology
interventions — from digital systems to smart controls —
that exist today.
If Australia can slow the growth curve in electricity
consumption in the built environment, that will give us
more time to build the energy transmission infrastructure
we need for other areas of the economy and ?nd solutions
to decarbonise other hard-to-abate sectors, as well as
provide cost savings for building operators. It’s a win-win
for all.
There is no silver bullet technology.
Instead, we need a quiver full of
multi-dimensional arrows to come at
the challenge from all di erent angles.
Shantanu Pai
Vice President, Portfolio Management,
Brook?eld Asset Management
36
There is a perception that, as the grid electri?es, energy
consumption won’t matter because it will be 100%
renewable.
But Australia’s electricity network will be under pressure
for decades. As we electrify buildings, roll out ?eets of
electric vehicles and step into the hydrogen superpower
opportunity we will need a lot more renewable electricity
in future decades than we need today. How much is not
yet clear — but “unbounded” is how one of our informed
interview subjects described the demand.
Up to 50% of electricity usage in commercial buildings is for
heating, ventilation and air conditioning. We can reduce the
demand for energy in our buildings with simple technology
interventions — from digital systems to smart controls —
that exist today.
If Australia can slow the growth curve in electricity
consumption in the built environment, that will give us
more time to build the energy transmission infrastructure
we need for other areas of the economy and ?nd solutions
to decarbonise other hard-to-abate sectors, as well as
provide cost savings for building operators. It’s a win-win
for all.
There is no silver bullet technology.
Instead, we need a quiver full of
multi-dimensional arrows to come at
the challenge from all di erent angles.
Shantanu Pai
Vice President, Portfolio Management,
Brook?eld Asset Management
36
Starting today…
As building owners or tenants, you can take
responsibility for the energy you consume. Start
cracking this rock by measuring your building or
tenancy through NABERS to set a baseline, compare
with best practice and identify the lowest of energy
ef?ciency’s low hanging fruit.
Exhibit 13: Typical uses and factors in?uencing energy consumption in a building
Source: Adapted from Clark, 2023.
Domestic hot water
Pumps
Building fabric
Heating
Cooling
Fans
Lighting
Vertical transport
Renewable energy
Special functions
Plug-in equipment
Other services (not in NCC)
Cooking
Hours of use
No. of occupants/users
Control systems
User behaviours
Expectations*
Actual building energy consumption
NCC Section J energy ef?ciency
Operational factors
These factors in?uence actual energy consumption.
* expectations include lighting levels, thermal comfort criteria, use of natural ventilation, etc
Unregulated energy
This covers energy uses that are not included in Section J such as plug-in loads,
cooking, external lighting, EV charging, IT servers, security systems, etc.
Regulated energy
Energy modelling for NCC Section J compliance is based on comparing total
energy consumption of regulated items compared to a reference deemed-to-
satisfy building. The energy models are based on the same ?xed assumptions
and building layout/geometry.
Renewable energy generated and consumed on site can be included in
the assessment
Exhibit 13 illustrates the energy use covered by Section J
of the National Construction Code and the energy uses and
factors that are outside the Code, but which impact on the
total energy consumption of buildings. It shows the areas
of responsibility that landlords have beyond regulation, and
how tenants also in?uence total energy consumption.
37
As building owners or tenants, you can take
responsibility for the energy you consume. Start
cracking this rock by measuring your building or
tenancy through NABERS to set a baseline, compare
with best practice and identify the lowest of energy
ef?ciency’s low hanging fruit.
Exhibit 13: Typical uses and factors in?uencing energy consumption in a building
Source: Adapted from Clark, 2023.
Domestic hot water
Pumps
Building fabric
Heating
Cooling
Fans
Lighting
Vertical transport
Renewable energy
Special functions
Plug-in equipment
Other services (not in NCC)
Cooking
Hours of use
No. of occupants/users
Control systems
User behaviours
Expectations*
Actual building energy consumption
NCC Section J energy ef?ciency
Operational factors
These factors in?uence actual energy consumption.
* expectations include lighting levels, thermal comfort criteria, use of natural ventilation, etc
Unregulated energy
This covers energy uses that are not included in Section J such as plug-in loads,
cooking, external lighting, EV charging, IT servers, security systems, etc.
Regulated energy
Energy modelling for NCC Section J compliance is based on comparing total
energy consumption of regulated items compared to a reference deemed-to-
satisfy building. The energy models are based on the same ?xed assumptions
and building layout/geometry.
Renewable energy generated and consumed on site can be included in
the assessment
Exhibit 13 illustrates the energy use covered by Section J
of the National Construction Code and the energy uses and
factors that are outside the Code, but which impact on the
total energy consumption of buildings. It shows the areas
of responsibility that landlords have beyond regulation, and
how tenants also in?uence total energy consumption.
37
KEY POINTS
• A solar boom is underway, with 19% of Australia’s energy needs
met by solar in 2023.
• But just 14% of property leaders surveyed and 31% of tenants are
thinking about how to use energy when it is cheapest and cleanest.
• By shifting energy demand to times when power is cleaner and
more affordable — when the sun is shining — landlords could
better balance load demand, lower costs for tenants and save an
estimated $1.7 billion each year.
GRID INTERACTIVITY:
USE ENERGY WHEN IT IS
CHEAPEST AND CLEANEST
3
38
• A solar boom is underway, with 19% of Australia’s energy needs
met by solar in 2023.
• But just 14% of property leaders surveyed and 31% of tenants are
thinking about how to use energy when it is cheapest and cleanest.
• By shifting energy demand to times when power is cleaner and
more affordable — when the sun is shining — landlords could
better balance load demand, lower costs for tenants and save an
estimated $1.7 billion each year.
GRID INTERACTIVITY:
USE ENERGY WHEN IT IS
CHEAPEST AND CLEANEST
3
38
Once our cities are bristling with electri?ed, energy
ef?cient buildings, we must consider the times of
day when we are consuming energy.
Buildings consume around 50% of Australia’s
electricity, but they consume around 77% of energy
system capacity
25
in peak periods.
Australia is already a global solar superpower. A
third of Australian homes have rooftop photovoltaics
(the highest globally) and, together with utility scale
solar, supplied 19% of all energy consumed
26
across
the National Electricity Market in 2023.
Solar energy is reducing wholesale electricity
prices during daylight hours; average prices were
“negative or zero”, according to the Australian
Energy Market Operator
27
(AEMO), 20% of the time
during the last three months of 2023, and roughly a
third of the time in Victoria and South Australia.
Australians will continue investing in solar, and
commercial businesses are starting to ramp up solar
investments too.
Smart property leaders and tenants can take advantage
of the solar boom by enabling our buildings to use energy
when it is at its cheapest and cleanest. But just 14% of the
property leaders we surveyed and 31% of tenants were
thinking about how they would do this.
Incremental improvements can make a big difference. The
GBCA has estimated that shifting one third of the load in
buildings for just three hours a day, ?ve days a week, would
reduce Australia’s annual greenhouse gas emissions by
0.6%. That doesn’t sound like much, but it is the equivalent
to the emissions generated by 180,000 homes in one year.
By shifting demand to times when ample cleaner, more
affordable power is available, landlords can provide a
more balanced load demand and lower costs for tenant
customers. This could, the GBCA estimates, save $1.7
billion each year.
Starting today…
Check the time of use pricing and incentives from
your existing energy providers, and what is on offer
from others. Investigate digitalisation technologies
and partnerships, that can support demand ?exibility
in one (or more) of your buildings, and look for
commercial outcomes from real-time carbon and
cost management that you can scale at speed.
CASE STUDY:
TENANTS DRIVE DEMAND
FOR GREEN
Heritage Lanes at 80 Ann Street in Brisbane is
Mirvac’s ?rst large-scale net zero carbon in operation
of?ce development. Powered by 100% renewable
electricity, the all-electric base building achieved a 6
Star Green Star Buildings rating in 2023, meaning that
all operational carbon is eliminated.
State-of-the-art smart building technology collects
more than 90 billion data points daily, delivering one
of Australia’s most intelligent and responsive buildings.
“Access to data is critical,” Campbell notes. “We
have invested in ?bre optic building communication
networks and integrated platforms that bring together
all buildings systems to make data accessible. This is
the way to make better decisions about our buildings.”
Campbell Hannan
Group CEO and Managing Director, Mirvac
39
25 GBCA, June 2023.
26 Vorrath, 2024.
27 AEMO, January 2024.
ef?cient buildings, we must consider the times of
day when we are consuming energy.
Buildings consume around 50% of Australia’s
electricity, but they consume around 77% of energy
system capacity
25
in peak periods.
Australia is already a global solar superpower. A
third of Australian homes have rooftop photovoltaics
(the highest globally) and, together with utility scale
solar, supplied 19% of all energy consumed
26
across
the National Electricity Market in 2023.
Solar energy is reducing wholesale electricity
prices during daylight hours; average prices were
“negative or zero”, according to the Australian
Energy Market Operator
27
(AEMO), 20% of the time
during the last three months of 2023, and roughly a
third of the time in Victoria and South Australia.
Australians will continue investing in solar, and
commercial businesses are starting to ramp up solar
investments too.
Smart property leaders and tenants can take advantage
of the solar boom by enabling our buildings to use energy
when it is at its cheapest and cleanest. But just 14% of the
property leaders we surveyed and 31% of tenants were
thinking about how they would do this.
Incremental improvements can make a big difference. The
GBCA has estimated that shifting one third of the load in
buildings for just three hours a day, ?ve days a week, would
reduce Australia’s annual greenhouse gas emissions by
0.6%. That doesn’t sound like much, but it is the equivalent
to the emissions generated by 180,000 homes in one year.
By shifting demand to times when ample cleaner, more
affordable power is available, landlords can provide a
more balanced load demand and lower costs for tenant
customers. This could, the GBCA estimates, save $1.7
billion each year.
Starting today…
Check the time of use pricing and incentives from
your existing energy providers, and what is on offer
from others. Investigate digitalisation technologies
and partnerships, that can support demand ?exibility
in one (or more) of your buildings, and look for
commercial outcomes from real-time carbon and
cost management that you can scale at speed.
CASE STUDY:
TENANTS DRIVE DEMAND
FOR GREEN
Heritage Lanes at 80 Ann Street in Brisbane is
Mirvac’s ?rst large-scale net zero carbon in operation
of?ce development. Powered by 100% renewable
electricity, the all-electric base building achieved a 6
Star Green Star Buildings rating in 2023, meaning that
all operational carbon is eliminated.
State-of-the-art smart building technology collects
more than 90 billion data points daily, delivering one
of Australia’s most intelligent and responsive buildings.
“Access to data is critical,” Campbell notes. “We
have invested in ?bre optic building communication
networks and integrated platforms that bring together
all buildings systems to make data accessible. This is
the way to make better decisions about our buildings.”
Campbell Hannan
Group CEO and Managing Director, Mirvac
39
25 GBCA, June 2023.
26 Vorrath, 2024.
27 AEMO, January 2024.
KEY POINTS
• Renewables are expected to supply 82% of Australia’s
electricity by 2030.
• But 62% of landlords and 31% of tenants don’t see
onsite renewables as an important opportunity,
despite the potential cost and carbon savings,
and the ability to secure a stable, predictable and
independent source of energy.
• Solar energy can also unlock new revenue streams,
especially when combined with onsite battery
storage and virtual power plants, and can be more
attractive to tenants with net zero targets.
• Cracking this rock starts by forming new
partnerships — and 77% of corporate tenants and
81% of property companies are looking to collaborate
with renewable energy providers to capitalise on the
new energy economy.
RENEWABLES:
POWER ON
AND OFF SITE
4
40
• Renewables are expected to supply 82% of Australia’s
electricity by 2030.
• But 62% of landlords and 31% of tenants don’t see
onsite renewables as an important opportunity,
despite the potential cost and carbon savings,
and the ability to secure a stable, predictable and
independent source of energy.
• Solar energy can also unlock new revenue streams,
especially when combined with onsite battery
storage and virtual power plants, and can be more
attractive to tenants with net zero targets.
• Cracking this rock starts by forming new
partnerships — and 77% of corporate tenants and
81% of property companies are looking to collaborate
with renewable energy providers to capitalise on the
new energy economy.
RENEWABLES:
POWER ON
AND OFF SITE
4
40
Wind and solar power broke all records in 2023 and
renewables are now expected to supply 82% of electricity
in the National Energy Market by 2030. Australia’s power
system is transforming to drive the economy’s net zero
transition by 2050.
This re?ects global trends. The amount of renewable
energy capacity added to energy systems around the
world grew by 50% in 2023, according to the International
Energy Agency.
28
Solar PV and wind accounted for 95% of
the expansion, with renewables overtaking coal to become
the largest source of global electricity generation by early
2025.
AEMO
29
,
under the ‘step change scenario’, expects onsite
renewables to supply over half of residential electricity
consumption, and 12% of commercial and industrial
demand, by 2050.
And yet the survey led by EY shows that around two-thirds
of property leaders (62%) and one third of tenants (31%)
don’t currently see onsite renewables as an important
opportunity for their organisation.
What are the bene?ts of investing in onsite renewables?
Aside from the cost and carbon savings, there is energy
resilience and a stable, predictable source of energy that
hedges against future ?uctuations in energy prices.
Roof space, especially on shopping centres and
warehouses, may open doors to new revenue streams,
especially when combined with onsite battery storage
and participation in a Virtual Power Plant (VPP) that uses
customer assets to sell electricity services via the grid.
Onsite generation can support the electric vehicle
transition, enabling customers or building occupants to
charge their electric vehicles using cheap solar energy
produced locally. Local generation also reduces the need
for large scale generation and transmission infrastructure,
making the power system more ef?cient for everyone.
Then there’s the tenant attraction and retention story, as
properties with onsite renewables become more appealing
to tenants with net zero targets. Owners of industrial
buildings and shopping centres are already investing
in solar at speed. But the challenge for of?ce towers —
with their small roof space relative to their size — means
investment in offsite renewables through power purchase
agreements is the most obvious option until technologies,
such as solar glass featured in our Technology Readiness
Matrix, can step in.
Starting today…
There are huge opportunities to establish
collaborative partnerships — something
foreshadowed in our survey, with 77% of corporate
tenants and 81% of property companies planning
to explore a partnership or collaboration with
renewable energy providers to capitalise on the new
energy economy. The message here is simple. You
don’t need to start running a solar farm on your
rooftop. You simply need to ?nd a partner who can.
Capacity (GW)
Rooftop solar and other distributed solar
Utility solar
Onshore wind
Offshore wind
Passive CE storage
Dispatchable capacity
Coordinated CE storage
Utility storage
Hydro
Flexible gas
Demand-side participation
Mid-merit gas
Brown coal
Black coal
350
300
250
200
150
100
50
0
2009-10 2019-20 2029-30 2039-40 2049-50
Source: AEMO, 2024
Exhibit 14: : Forecast generation capacity in the National Electricity Market to 2050, step change scenario
41
28 International Energy Agency, 2024.
29 AEMO, 2024.
renewables are now expected to supply 82% of electricity
in the National Energy Market by 2030. Australia’s power
system is transforming to drive the economy’s net zero
transition by 2050.
This re?ects global trends. The amount of renewable
energy capacity added to energy systems around the
world grew by 50% in 2023, according to the International
Energy Agency.
28
Solar PV and wind accounted for 95% of
the expansion, with renewables overtaking coal to become
the largest source of global electricity generation by early
2025.
AEMO
29
,
under the ‘step change scenario’, expects onsite
renewables to supply over half of residential electricity
consumption, and 12% of commercial and industrial
demand, by 2050.
And yet the survey led by EY shows that around two-thirds
of property leaders (62%) and one third of tenants (31%)
don’t currently see onsite renewables as an important
opportunity for their organisation.
What are the bene?ts of investing in onsite renewables?
Aside from the cost and carbon savings, there is energy
resilience and a stable, predictable source of energy that
hedges against future ?uctuations in energy prices.
Roof space, especially on shopping centres and
warehouses, may open doors to new revenue streams,
especially when combined with onsite battery storage
and participation in a Virtual Power Plant (VPP) that uses
customer assets to sell electricity services via the grid.
Onsite generation can support the electric vehicle
transition, enabling customers or building occupants to
charge their electric vehicles using cheap solar energy
produced locally. Local generation also reduces the need
for large scale generation and transmission infrastructure,
making the power system more ef?cient for everyone.
Then there’s the tenant attraction and retention story, as
properties with onsite renewables become more appealing
to tenants with net zero targets. Owners of industrial
buildings and shopping centres are already investing
in solar at speed. But the challenge for of?ce towers —
with their small roof space relative to their size — means
investment in offsite renewables through power purchase
agreements is the most obvious option until technologies,
such as solar glass featured in our Technology Readiness
Matrix, can step in.
Starting today…
There are huge opportunities to establish
collaborative partnerships — something
foreshadowed in our survey, with 77% of corporate
tenants and 81% of property companies planning
to explore a partnership or collaboration with
renewable energy providers to capitalise on the new
energy economy. The message here is simple. You
don’t need to start running a solar farm on your
rooftop. You simply need to ?nd a partner who can.
Capacity (GW)
Rooftop solar and other distributed solar
Utility solar
Onshore wind
Offshore wind
Passive CE storage
Dispatchable capacity
Coordinated CE storage
Utility storage
Hydro
Flexible gas
Demand-side participation
Mid-merit gas
Brown coal
Black coal
350
300
250
200
150
100
50
0
2009-10 2019-20 2029-30 2039-40 2049-50
Source: AEMO, 2024
Exhibit 14: : Forecast generation capacity in the National Electricity Market to 2050, step change scenario
41
28 International Energy Agency, 2024.
29 AEMO, 2024.
KEY POINTS
• Without action, up to 85% of the emissions generated in Australia’s built
environment could come from construction, rather than operations.
• By retaining an existing building’s structure, rather than knocking it
down, we can save around 60% of its embodied carbon footprint.
• This realisation is changing attitudes and expectations; as more tenants
choose retro?ts, over new buildings, developers must rethink business
models and mindsets.
EMBODIED CARBON: REPAIR,
RATHER THAN REPLACE,
WHERE WE CAN
5
42
• Without action, up to 85% of the emissions generated in Australia’s built
environment could come from construction, rather than operations.
• By retaining an existing building’s structure, rather than knocking it
down, we can save around 60% of its embodied carbon footprint.
• This realisation is changing attitudes and expectations; as more tenants
choose retro?ts, over new buildings, developers must rethink business
models and mindsets.
EMBODIED CARBON: REPAIR,
RATHER THAN REPLACE,
WHERE WE CAN
5
42
Retro?tting, rather than knocking down, will rapidly become
the default as carbon adds a new dimension to the value
equation. Setting Scope 3 targets and mandatory reporting
are emerging drivers requiring greater focus on emissions
in the value chain.
In 2019, the World Green Building Council
30
laid down the
gauntlet. Around half of all the carbon emissions in?uenced
by the world’s built environment in 2050 will be locked in
before anyone enters the front door, turns on a light or
rides in a lift.
In Australia’s case, the embodied carbon emissions —
those generated during the manufacture and transport
of materials, in construction, maintenance and
demolition — could be responsible for 85% of the built
environment’s carbon footprint
31
in 2050.
Therefore, the decisions we make during design and
construction of buildings today will be ‘locked in’ to a
building’s carbon footprint and carbon operating budget for
decades to come.
We must build green from the get-go. That means ensuring
all new buildings are designed to reach best practice
standards for energy ef?ciency today, and are future ready
so they can adapt, evolve and accommodate much higher
standards in the years to come.
But several of our interview subjects noted that companies
are unlikely to move as frequently to new of?ce space
as they have in the past, and this will in?uence the
construction of new buildings. Without core tenants
committed, new developments will be riskier propositions.
On the other hand, the vast majority of our existing
buildings are inef?cient, and we can’t afford to squander
the embodied carbon we have already expended
knocking them down and starting again. The Opportunity
Knocks
32
report found as many as 80,000 lower-grade
of?ces around Australia are poorly performing.
If our buildings are broken, we must ?x them. According
to ?nancial institution UBS
33
, current retro?t rates are
far too slow to achieve the world’s net zero targets.
Owners of B-, C- and D-grade o ce buildings will
need to determine whether these buildings can be
‘re-?tted’ or ‘re-purposed’, as in many instances,
achieving net zero carbon may be quite di cult.
We often do not know what we are dealing with
until we ‘pull back the curtains’; that is, assess the
building for a refurbishment or re-?t.
Adrian Pozzo
Chief Executive Of?cer, Cbus Property
Chair, Green Building Council of Australia
At around 1% of the building stock each year, the current
rate of global retro?ts needs to at least triple. This requires
an “unprecedented ramp-up” in the retro?t supply chain.
Every leader we spoke to was thinking deeply about the
enormous challenge of measuring and managing embodied
carbon — both in new buildings and in retro?ts. In fact, 71%
of property leaders and 69% of corporate leaders surveyed
saw embodied carbon as a big rock to crack.
43
30 World Green Building Council, 2019.
31 Vickers, et al, 2021.
32 GBCA, 2018.
33 UBS, 2023.
the default as carbon adds a new dimension to the value
equation. Setting Scope 3 targets and mandatory reporting
are emerging drivers requiring greater focus on emissions
in the value chain.
In 2019, the World Green Building Council
30
laid down the
gauntlet. Around half of all the carbon emissions in?uenced
by the world’s built environment in 2050 will be locked in
before anyone enters the front door, turns on a light or
rides in a lift.
In Australia’s case, the embodied carbon emissions —
those generated during the manufacture and transport
of materials, in construction, maintenance and
demolition — could be responsible for 85% of the built
environment’s carbon footprint
31
in 2050.
Therefore, the decisions we make during design and
construction of buildings today will be ‘locked in’ to a
building’s carbon footprint and carbon operating budget for
decades to come.
We must build green from the get-go. That means ensuring
all new buildings are designed to reach best practice
standards for energy ef?ciency today, and are future ready
so they can adapt, evolve and accommodate much higher
standards in the years to come.
But several of our interview subjects noted that companies
are unlikely to move as frequently to new of?ce space
as they have in the past, and this will in?uence the
construction of new buildings. Without core tenants
committed, new developments will be riskier propositions.
On the other hand, the vast majority of our existing
buildings are inef?cient, and we can’t afford to squander
the embodied carbon we have already expended
knocking them down and starting again. The Opportunity
Knocks
32
report found as many as 80,000 lower-grade
of?ces around Australia are poorly performing.
If our buildings are broken, we must ?x them. According
to ?nancial institution UBS
33
, current retro?t rates are
far too slow to achieve the world’s net zero targets.
Owners of B-, C- and D-grade o ce buildings will
need to determine whether these buildings can be
‘re-?tted’ or ‘re-purposed’, as in many instances,
achieving net zero carbon may be quite di cult.
We often do not know what we are dealing with
until we ‘pull back the curtains’; that is, assess the
building for a refurbishment or re-?t.
Adrian Pozzo
Chief Executive Of?cer, Cbus Property
Chair, Green Building Council of Australia
At around 1% of the building stock each year, the current
rate of global retro?ts needs to at least triple. This requires
an “unprecedented ramp-up” in the retro?t supply chain.
Every leader we spoke to was thinking deeply about the
enormous challenge of measuring and managing embodied
carbon — both in new buildings and in retro?ts. In fact, 71%
of property leaders and 69% of corporate leaders surveyed
saw embodied carbon as a big rock to crack.
43
30 World Green Building Council, 2019.
31 Vickers, et al, 2021.
32 GBCA, 2018.
33 UBS, 2023.
NABERS is currently developing a framework to measure,
benchmark and certify the embodied emissions from
construction and building materials, and this is likely to be
released in 2024.
The Every Building Counts
34
report, released by the
Property Council of Australia and Green Building Council
of Australia in 2023, calls on the federal government to
adopt the NABERS framework, set new minimum reporting
requirements within the National Construction Code, and
create a national embodied carbon database for products
and materials.
But it is early days.
Slattery
35
estimates around 500 kilograms of upfront
embodied carbon can be saved for every square metre
Materials such as steel, cement, aluminium and glass make up a
signi?cant portion of a building’s carbon footprint. As part of our
journey to Absolute Zero by 2040 we are working towards driving
down the embodied carbon of buildings. However, until increased
investment and new production technologies make lower embodied
carbon materials ubiquitous, sometimes the better way to reduce
embodied carbon is to refurbish an existing building, rather than
knock it down. We are already seeing this in other markets.
To ny Lo m ba rd o
Global Chief Executive Of?cer, Lendlease
retained from an existing commercial of?ce, when
compared to an equivalent new-build project.
Exhibit 15 shows us that around 60% of a building’s
carbon content comes from ‘superstructure’ — the
structural elements including slabs, columns, beams,
?oors and external walls. This con?rms that retaining
our existing structures is one of the best ways to save
carbon emissions when redeveloping.
However, here’s the complexity. While retro?tting older
stock will save some emissions, even refurbishments
will require new materials. This suggests that
embodied carbon will require the supply chain to step
up. But this doesn’t mean property leaders can afford
to wait for manufacturers to take action. They must
step up too.
Source: Slattery, 2024.
Substructure
6.9%
Columns
7.3%
Upper ?oors
28.0%
Stairs - 0.5%
Roof - 2.2%
External walls/
windows/doors -
12.1%
Internal core walls
17.0%
Internal core
partitions/screens
6.0%
Internal doors
0.2%
Finishes
10.8%
Fitments
1.1%
Building services
7.8%
Exhibit 15: Percentage breakdown of global warming
potential in new building projects
44
34 Property Council et al, 2023.
35 Slattery, 2024.
benchmark and certify the embodied emissions from
construction and building materials, and this is likely to be
released in 2024.
The Every Building Counts
34
report, released by the
Property Council of Australia and Green Building Council
of Australia in 2023, calls on the federal government to
adopt the NABERS framework, set new minimum reporting
requirements within the National Construction Code, and
create a national embodied carbon database for products
and materials.
But it is early days.
Slattery
35
estimates around 500 kilograms of upfront
embodied carbon can be saved for every square metre
Materials such as steel, cement, aluminium and glass make up a
signi?cant portion of a building’s carbon footprint. As part of our
journey to Absolute Zero by 2040 we are working towards driving
down the embodied carbon of buildings. However, until increased
investment and new production technologies make lower embodied
carbon materials ubiquitous, sometimes the better way to reduce
embodied carbon is to refurbish an existing building, rather than
knock it down. We are already seeing this in other markets.
To ny Lo m ba rd o
Global Chief Executive Of?cer, Lendlease
retained from an existing commercial of?ce, when
compared to an equivalent new-build project.
Exhibit 15 shows us that around 60% of a building’s
carbon content comes from ‘superstructure’ — the
structural elements including slabs, columns, beams,
?oors and external walls. This con?rms that retaining
our existing structures is one of the best ways to save
carbon emissions when redeveloping.
However, here’s the complexity. While retro?tting older
stock will save some emissions, even refurbishments
will require new materials. This suggests that
embodied carbon will require the supply chain to step
up. But this doesn’t mean property leaders can afford
to wait for manufacturers to take action. They must
step up too.
Source: Slattery, 2024.
Substructure
6.9%
Columns
7.3%
Upper ?oors
28.0%
Stairs - 0.5%
Roof - 2.2%
External walls/
windows/doors -
12.1%
Internal core walls
17.0%
Internal core
partitions/screens
6.0%
Internal doors
0.2%
Finishes
10.8%
Fitments
1.1%
Building services
7.8%
Exhibit 15: Percentage breakdown of global warming
potential in new building projects
44
34 Property Council et al, 2023.
35 Slattery, 2024.
As a start, tracking emissions from ?touts, de?ts and
furniture will allow us to understand the scope of the
challenge, identify opportunities to improve design and
speci?cation, and apply pressure to the supply chain to
start thinking about solutions.
There was consensus among the property sustainability
leaders we interviewed that a rapid increase in lifecycle
assessments and Environmental Product Declarations
(EPDs) is ahead. Just as consumers have a choice when
they buy products, building owners and tenants have a
choice when they procure materials. This means both
landlords and tenants can have a powerful in?uence on the
market. Asking suppliers to disclose the carbon content of
their products is a good starting point.
The market for low-emissions materials is nascent, and a
product with an Environmental Product Declaration isn’t
necessarily low-carbon. But an EPD does tell us that the
supplier has measured the carbon footprint of the
product — and measurement leads to better management.
In Europe we are already seeing a change in mindset and
we are looking towards a future where every building is
considered a ‘heritage’ building because of its embodied
carbon footprint. We won’t be able to knock down poor quality
stock because we won’t be able to a ord the cost of carbon.
Dan Labbad
Chief Executive Of?cer, Crown Estates
45
furniture will allow us to understand the scope of the
challenge, identify opportunities to improve design and
speci?cation, and apply pressure to the supply chain to
start thinking about solutions.
There was consensus among the property sustainability
leaders we interviewed that a rapid increase in lifecycle
assessments and Environmental Product Declarations
(EPDs) is ahead. Just as consumers have a choice when
they buy products, building owners and tenants have a
choice when they procure materials. This means both
landlords and tenants can have a powerful in?uence on the
market. Asking suppliers to disclose the carbon content of
their products is a good starting point.
The market for low-emissions materials is nascent, and a
product with an Environmental Product Declaration isn’t
necessarily low-carbon. But an EPD does tell us that the
supplier has measured the carbon footprint of the
product — and measurement leads to better management.
In Europe we are already seeing a change in mindset and
we are looking towards a future where every building is
considered a ‘heritage’ building because of its embodied
carbon footprint. We won’t be able to knock down poor quality
stock because we won’t be able to a ord the cost of carbon.
Dan Labbad
Chief Executive Of?cer, Crown Estates
45
CASE STUDY:
THE EMBODIED CARBON QUESTION: STAY OR GO?
When Commonwealth Bank moved into its headquarters
at Sydney’s Darling Quarter in 2012, it laid claim to
Australia’s most sustainable of?ce.
The two eight-storey commercial buildings across
58,000 square metres were applauded for achieving the
?rst ‘quadrella’ of 6 Star Green Star ratings
36
for design,
construction, interior ?tout and performance.
Commonwealth Bank Place at Darling Quarter featured
leading-edge technology, including high-performance
lighting, heating, ventilation and air-conditioning,
rainwater harvesting and re-use, as well as trigeneration
and onsite blackwater treatment systems.
Fast forward more than a decade, and Commonwealth
Bank’s sustainability considerations have broadened
in scope and ambition, and are guiding their decisions
about whether they stay in existing premises or move to
new buildings.
As Jennifer Saiz, Executive General Manager, Group
Corporate Services, notes: “We are now making
decisions about tenancies with embodied carbon in
mind. It’s not the only decision criteria. We are also
thinking about the post-pandemic workplace experience,
quality, location and cost. But embodied carbon now
plays a role where it didn’t three years ago.”
When weighing up the ‘stay or go’ decision for
Commonwealth Bank Place, embodied carbon
calculations “weren’t exhaustive but they were
considered”.
“We learnt so much through this exercise that now it’s a
key part of our decision process. It poses a new hurdle
in any decision to move buildings now that we know so
much more about embodied carbon.”
In fact, CBA chose its new Melbourne address at 435
Bourke Street, at least in part, after the building’s owner
Cbus Property, “could prove that they were reducing
embodied carbon by around 35%” relative to business-
as-usual building practices.
The commitment to trial and test new technologies – in
the case of 435 Bourke Street its solar façade – was a
powerful attractor. “We want to partner with people and
property companies that are thinking about new ways to
bene?t the environment.”
Starting today…
Take embodied carbon calculations seriously.
Emissions aren’t the only criteria from which a
business will make its decisions. The expectations
among informed stakeholders to take account
of embodied carbon will weigh heavily on a stay
or go decision, as well as asset selection if a move
is decided.
46
36 Architecture and Design, 2012.
THE EMBODIED CARBON QUESTION: STAY OR GO?
When Commonwealth Bank moved into its headquarters
at Sydney’s Darling Quarter in 2012, it laid claim to
Australia’s most sustainable of?ce.
The two eight-storey commercial buildings across
58,000 square metres were applauded for achieving the
?rst ‘quadrella’ of 6 Star Green Star ratings
36
for design,
construction, interior ?tout and performance.
Commonwealth Bank Place at Darling Quarter featured
leading-edge technology, including high-performance
lighting, heating, ventilation and air-conditioning,
rainwater harvesting and re-use, as well as trigeneration
and onsite blackwater treatment systems.
Fast forward more than a decade, and Commonwealth
Bank’s sustainability considerations have broadened
in scope and ambition, and are guiding their decisions
about whether they stay in existing premises or move to
new buildings.
As Jennifer Saiz, Executive General Manager, Group
Corporate Services, notes: “We are now making
decisions about tenancies with embodied carbon in
mind. It’s not the only decision criteria. We are also
thinking about the post-pandemic workplace experience,
quality, location and cost. But embodied carbon now
plays a role where it didn’t three years ago.”
When weighing up the ‘stay or go’ decision for
Commonwealth Bank Place, embodied carbon
calculations “weren’t exhaustive but they were
considered”.
“We learnt so much through this exercise that now it’s a
key part of our decision process. It poses a new hurdle
in any decision to move buildings now that we know so
much more about embodied carbon.”
In fact, CBA chose its new Melbourne address at 435
Bourke Street, at least in part, after the building’s owner
Cbus Property, “could prove that they were reducing
embodied carbon by around 35%” relative to business-
as-usual building practices.
The commitment to trial and test new technologies – in
the case of 435 Bourke Street its solar façade – was a
powerful attractor. “We want to partner with people and
property companies that are thinking about new ways to
bene?t the environment.”
Starting today…
Take embodied carbon calculations seriously.
Emissions aren’t the only criteria from which a
business will make its decisions. The expectations
among informed stakeholders to take account
of embodied carbon will weigh heavily on a stay
or go decision, as well as asset selection if a move
is decided.
46
36 Architecture and Design, 2012.
A ROADMAP FOR
INVESTMENT:
OUR TECHNOLOGY
READINESS MATRIX
47
INVESTMENT:
OUR TECHNOLOGY
READINESS MATRIX
47
KEY POINTS
• Tried-and-true technologies, like heat pumps
and LED lighting, can do most of the heavy
lifting of electri?cation and energy ef?ciency.
Other technologies, like photovoltaics, can
generate renewable energy onsite and support
grid interactivity.
• But Australia also needs leaders to step up and
trial new technologies because this fosters a
culture of innovation, drives down costs over
time and build momentum for change.
48
• Tried-and-true technologies, like heat pumps
and LED lighting, can do most of the heavy
lifting of electri?cation and energy ef?ciency.
Other technologies, like photovoltaics, can
generate renewable energy onsite and support
grid interactivity.
• But Australia also needs leaders to step up and
trial new technologies because this fosters a
culture of innovation, drives down costs over
time and build momentum for change.
48
We then analysed these technologies to assess their
suitability for the Australian market. We looked at
these technologies through the lenses of scalability,
suitability, sustainability, human-centricity and
readiness. Then we applied those to the GBCA’s
Climate Positive Roadmap to determine technologies
that could and should be deployed:
• Now: The technology is ready to deploy immediately
and you should be incorporating into your designs,
developments, procurement or leasing strategies.
• Next: The technology has promise, is already being
used in some buildings today, will be re?ned and
mainstreamed, and will bene?t from testing where
good use cases can be identi?ed.
• Future: The technology is one to keep on a
‘watching brief’ to periodically reassess in line with
future developments.
In many sectors, the answers to many of our trickiest
climate change challenges are yet to be revealed.
Some zero carbon pathways are predicated on
technologies that do not exist or are not currently
commercially viable. However, in buildings, most of the
technologies we need are available today and will only
improve over time. We don’t need to wait for unicorns —
we already have reliable workhorses today.
Technology remains the ‘great unlock’ of this most pressing
of problems — and the investment community is holding the
key. Cumulative green ?nance topped US$2.33 trillion in
2023, according to the Climate Bonds Initiative (CBI).
The Climate Bonds Standard
37
was updated in December
2023 to give investors additional clarity and guidance
to direct funds towards what CBI calls “transformative
technologies”.
But where should investors allocate their capital?
In looking for the technology unlock, EY teams have
developed a Technology Readiness Matrix.
EY research of overseas projects identi?ed more than 100
innovative technologies that can support decarbonisation,
distributed energy generation, energy ef?ciency and more.
We consulted EY international energy professionals and
some of Australia’s most experienced green building
technology practitioners to gain a consensus view.
Our conversations with engineers and energy ef?ciency
experts uncovered a crystal-clear insight. Tried-and-true
technologies, like more ef?cient building envelopes, heat
pumps, LED lighting and smart controls, can do most of the
heavy lifting of electri?cation and energy ef?ciency. Other
technologies, like photovoltaics, can generate renewable
energy onsite and reduce consumption from the grid,
particularly if combined with energy storage solutions.
But we also need leaders to step up and trial new
technologies. As we’ve noted earlier, experimentation
fosters a culture of innovation, drives down costs over time
and builds momentum for change.
Several leaders acknowledged they were piloting
technology solutions but are still building the “scaffolding”
to scale across their entire portfolios. As one leader noted:
“We need to collectively pick some tech solutions, work
together to do them everywhere to get the bene?t of
scale.”
Businesses that partner to bring together the real estate
and energy sectors can accelerate the net zero transition
and capture ?rst mover advantage of commercial returns.
More work is needed to make the decarbonisation of
the real estate supply chain commercially viable, but
new technologies and practices are emerging to support
industry meeting net zero goals well before 2050.
See Appendix B for our Technology Readiness Matrix.
49
37 Climate Bonds Initiative, 2023.
suitability for the Australian market. We looked at
these technologies through the lenses of scalability,
suitability, sustainability, human-centricity and
readiness. Then we applied those to the GBCA’s
Climate Positive Roadmap to determine technologies
that could and should be deployed:
• Now: The technology is ready to deploy immediately
and you should be incorporating into your designs,
developments, procurement or leasing strategies.
• Next: The technology has promise, is already being
used in some buildings today, will be re?ned and
mainstreamed, and will bene?t from testing where
good use cases can be identi?ed.
• Future: The technology is one to keep on a
‘watching brief’ to periodically reassess in line with
future developments.
In many sectors, the answers to many of our trickiest
climate change challenges are yet to be revealed.
Some zero carbon pathways are predicated on
technologies that do not exist or are not currently
commercially viable. However, in buildings, most of the
technologies we need are available today and will only
improve over time. We don’t need to wait for unicorns —
we already have reliable workhorses today.
Technology remains the ‘great unlock’ of this most pressing
of problems — and the investment community is holding the
key. Cumulative green ?nance topped US$2.33 trillion in
2023, according to the Climate Bonds Initiative (CBI).
The Climate Bonds Standard
37
was updated in December
2023 to give investors additional clarity and guidance
to direct funds towards what CBI calls “transformative
technologies”.
But where should investors allocate their capital?
In looking for the technology unlock, EY teams have
developed a Technology Readiness Matrix.
EY research of overseas projects identi?ed more than 100
innovative technologies that can support decarbonisation,
distributed energy generation, energy ef?ciency and more.
We consulted EY international energy professionals and
some of Australia’s most experienced green building
technology practitioners to gain a consensus view.
Our conversations with engineers and energy ef?ciency
experts uncovered a crystal-clear insight. Tried-and-true
technologies, like more ef?cient building envelopes, heat
pumps, LED lighting and smart controls, can do most of the
heavy lifting of electri?cation and energy ef?ciency. Other
technologies, like photovoltaics, can generate renewable
energy onsite and reduce consumption from the grid,
particularly if combined with energy storage solutions.
But we also need leaders to step up and trial new
technologies. As we’ve noted earlier, experimentation
fosters a culture of innovation, drives down costs over time
and builds momentum for change.
Several leaders acknowledged they were piloting
technology solutions but are still building the “scaffolding”
to scale across their entire portfolios. As one leader noted:
“We need to collectively pick some tech solutions, work
together to do them everywhere to get the bene?t of
scale.”
Businesses that partner to bring together the real estate
and energy sectors can accelerate the net zero transition
and capture ?rst mover advantage of commercial returns.
More work is needed to make the decarbonisation of
the real estate supply chain commercially viable, but
new technologies and practices are emerging to support
industry meeting net zero goals well before 2050.
See Appendix B for our Technology Readiness Matrix.
49
37 Climate Bonds Initiative, 2023.
STEPPING UP THE
PACE OF CHANGE
50
PACE OF CHANGE
50
CORPORATE LEADERS
Send a strong message.
Don’t underestimate your in?uence on the market. When
Australia’s biggest tenants — banks and corporations, major
consulting ?rms and governments — say they will only move
into buildings without fossil fuels, that will send a message
to every landlord in the country. Big change will take time,
but start by setting a timetable with clear targets.
Set clear targets and timelines.
If you haven’t already done so, set targets, backed by
science and aligned with the Paris Agreement, with speci?c
objectives to reduce energy consumption, emissions and
overall environmental impact. Regularly assess and report
on your progress towards these targets.
Rate your tenancies. Remember NABERS’
mantra “measure to manage”.
More than half the energy consumption of any building
comes from tenancies. As a tenant, you can send a
strong signal to the market that you are serious about
sustainability. Getting a NABERS or a Green Star rating for
tenancies is very simple and a low-cost way to measure —
and then better manage — your energy consumption. This
will give you a starting point for how much you are using,
but also how much you should be using by benchmarking
your energy consumption against your peers.
Your landlord is in the business of buildings and should be
able to help you.
Install onsite solar.
New technologies enable lightweight, ?exible PV to be
installed on warehouses, in glass and on any surface
exposed to sustained sunlight. The vast majority of
applications are cheaper than grid delivered electricity, and
commercial models exist to enable tenants to partner with
landlords to reap the bene?ts.
Think about the grid.
Grid-interactive buildings are energy ef?cient, fully
electri?ed and ‘smart’. This means they use technology —
equipment, sensors and controls — to optimise energy use
based on occupancy, weather and other factors. These are
the features you should be looking for when you are on the
hunt for space.
Leverage partnerships to increase
your impact.
Engage with your landlords to address joint sustainability
goals whether that’s through energy-ef?cient technologies
within your tenancies or power purchase agreements.
Join forces with other corporate tenants to form strategic
alliances, share resources and in?uence industry standards
and practices.
Assess embodied carbon.
As we’ve said earlier, emissions aren’t the only criteria
from which a business will make its decisions. But begin to
consider how embodied carbon may change your future
decision making when upgrading or moving to new space,
or even whether you move at all.
51
Send a strong message.
Don’t underestimate your in?uence on the market. When
Australia’s biggest tenants — banks and corporations, major
consulting ?rms and governments — say they will only move
into buildings without fossil fuels, that will send a message
to every landlord in the country. Big change will take time,
but start by setting a timetable with clear targets.
Set clear targets and timelines.
If you haven’t already done so, set targets, backed by
science and aligned with the Paris Agreement, with speci?c
objectives to reduce energy consumption, emissions and
overall environmental impact. Regularly assess and report
on your progress towards these targets.
Rate your tenancies. Remember NABERS’
mantra “measure to manage”.
More than half the energy consumption of any building
comes from tenancies. As a tenant, you can send a
strong signal to the market that you are serious about
sustainability. Getting a NABERS or a Green Star rating for
tenancies is very simple and a low-cost way to measure —
and then better manage — your energy consumption. This
will give you a starting point for how much you are using,
but also how much you should be using by benchmarking
your energy consumption against your peers.
Your landlord is in the business of buildings and should be
able to help you.
Install onsite solar.
New technologies enable lightweight, ?exible PV to be
installed on warehouses, in glass and on any surface
exposed to sustained sunlight. The vast majority of
applications are cheaper than grid delivered electricity, and
commercial models exist to enable tenants to partner with
landlords to reap the bene?ts.
Think about the grid.
Grid-interactive buildings are energy ef?cient, fully
electri?ed and ‘smart’. This means they use technology —
equipment, sensors and controls — to optimise energy use
based on occupancy, weather and other factors. These are
the features you should be looking for when you are on the
hunt for space.
Leverage partnerships to increase
your impact.
Engage with your landlords to address joint sustainability
goals whether that’s through energy-ef?cient technologies
within your tenancies or power purchase agreements.
Join forces with other corporate tenants to form strategic
alliances, share resources and in?uence industry standards
and practices.
Assess embodied carbon.
As we’ve said earlier, emissions aren’t the only criteria
from which a business will make its decisions. But begin to
consider how embodied carbon may change your future
decision making when upgrading or moving to new space,
or even whether you move at all.
51
PROPERTY LEADERS
Prepare for grid interactivity.
By investing in onsite renewables (including through
partnerships) building owners can match demand and
supply, and, at times, supply power to the grid. To
prepare, building owners can explore the possibilities
across four dimensions: onsite renewables; thermal
storage; batteries; and controls.
Lean in on low-carbon procurement.
Building owners and tenants both wield the power of
choice in their procurement. The ?rst proactive step
is to ask suppliers to share the carbon content of their
products. As the market for low-emission materials
evolves, an Environmental Product Declaration signi?es
that a supplier has conducted a thorough measurement
of the product’s carbon footprint.
Get ready for reporting.
The new ISSB reporting standards represent a step
change that will require your customers consider how
climate risk in?uences their long-term prospects.
Disclosure will drive further demand for net zero building.
Consider how executive roles may change.
The overlapping roles and responsibilities of C-suite
leaders, especially between the CFO and CSO, or the
audit committee chairs and sustainability committee
chairs, can be the pivot point for bringing value and
sustainability together.
CONCLUSION:
LEADERS MUST LEAD
This report covers a lot of ground, but if there is just
one takeaway it is this: net zero means zero.
It doesn’t matter how we divide a building’s
emissions — by occupancy or square meterage or
energy usage — net zero means we have eliminated
carbon emissions.
This means changing behaviours, practices and
thinking to reduce emissions across the entire value
chain.
Leaders must lead. They must accelerate their
adoption of existing technologies while also
embracing the opportunity to experiment with new
ideas and innovations.
This dual mindset — of the practical and tactical
alongside the truly trailblazing — will help Australia
to cultivate new collaborative relationships between
tenants and landlords, foster a culture of innovation,
drive down the costs of the energy transition and
push us further and faster towards a better, brighter
net zero future.
Explicitly link your net zero strategy,
?nancial performance and value creation.
The business case is strong. Demand for net zero space is
high and availability is low. Tenants are willing to pay for
high-quality, sustainable space. Sustainable buildings can
be the interlock between ?nancial performance and
value creation.
Consistently cover the basics.
As a building owner, you control anything you own,
operate or purchase — and that means you can address
the emissions in your portfolio and in the products and
services you procure. You have direct control over many
of the technologies that can drive down emissions in your
building. Start with an audit to understand
the opportunities.
Accelerate electri?cation.
This is where the market is going and leaders must meet
the market.
Invest in renewables at speed and scale.
Investigate opportunities to introduce solar photovoltaic
systems on building rooftops, and clearly communicate the
bene?ts with your tenants. Explore opportunities to create
new revenue streams or sweeteners for your tenants.
52
Prepare for grid interactivity.
By investing in onsite renewables (including through
partnerships) building owners can match demand and
supply, and, at times, supply power to the grid. To
prepare, building owners can explore the possibilities
across four dimensions: onsite renewables; thermal
storage; batteries; and controls.
Lean in on low-carbon procurement.
Building owners and tenants both wield the power of
choice in their procurement. The ?rst proactive step
is to ask suppliers to share the carbon content of their
products. As the market for low-emission materials
evolves, an Environmental Product Declaration signi?es
that a supplier has conducted a thorough measurement
of the product’s carbon footprint.
Get ready for reporting.
The new ISSB reporting standards represent a step
change that will require your customers consider how
climate risk in?uences their long-term prospects.
Disclosure will drive further demand for net zero building.
Consider how executive roles may change.
The overlapping roles and responsibilities of C-suite
leaders, especially between the CFO and CSO, or the
audit committee chairs and sustainability committee
chairs, can be the pivot point for bringing value and
sustainability together.
CONCLUSION:
LEADERS MUST LEAD
This report covers a lot of ground, but if there is just
one takeaway it is this: net zero means zero.
It doesn’t matter how we divide a building’s
emissions — by occupancy or square meterage or
energy usage — net zero means we have eliminated
carbon emissions.
This means changing behaviours, practices and
thinking to reduce emissions across the entire value
chain.
Leaders must lead. They must accelerate their
adoption of existing technologies while also
embracing the opportunity to experiment with new
ideas and innovations.
This dual mindset — of the practical and tactical
alongside the truly trailblazing — will help Australia
to cultivate new collaborative relationships between
tenants and landlords, foster a culture of innovation,
drive down the costs of the energy transition and
push us further and faster towards a better, brighter
net zero future.
Explicitly link your net zero strategy,
?nancial performance and value creation.
The business case is strong. Demand for net zero space is
high and availability is low. Tenants are willing to pay for
high-quality, sustainable space. Sustainable buildings can
be the interlock between ?nancial performance and
value creation.
Consistently cover the basics.
As a building owner, you control anything you own,
operate or purchase — and that means you can address
the emissions in your portfolio and in the products and
services you procure. You have direct control over many
of the technologies that can drive down emissions in your
building. Start with an audit to understand
the opportunities.
Accelerate electri?cation.
This is where the market is going and leaders must meet
the market.
Invest in renewables at speed and scale.
Investigate opportunities to introduce solar photovoltaic
systems on building rooftops, and clearly communicate the
bene?ts with your tenants. Explore opportunities to create
new revenue streams or sweeteners for your tenants.
52
APPENDIX
53
53
APPENDIX A: TECHNOLOGY DEPLOYMENT
Energy ef?ciency
LED lighting upgrades 95%
Smart controls responsive to occupancy and
demand (e.g. lighting, ventilation, heating
and cooling)
86%
High ef?ciency HVAC (at least 10% better
than NCC 2019)
67%
Energy ef?cient lifts (Class A energy
ef?ciency rating)
52%
Electri?cation technologies
EV chargers and future proo?ng demand76%
Induction cooking appliances 52%
Heat pumps for hot water 52%
Heat pumps for space heating 38%
Renewable energy and responsive technologies
Rooftop solar 86%
Energy storage (e.g. batteries, chilled water
storage, etc)
33%
Grid-interactive enabled controls 14%
Enhanced building design
High performance glazing, external shading
and appropriate window and wall ratios
57%
Solar glass (with PV either in the glass or in
the frame)
10%
Building integrated thin ?lm PV on any
surface (such as façade or external shade)
5%
Te c h n o l o g i es to ta c k l e e m b o d i e d ca r b o n e m i ss i o n s
Steel (produced using renewable energy
and scrap)
48%
Concrete (more than 40% cement
replacement or geopolymer)
43%
Cross Laminated Timber (CLT) structure24%
Masonry (recycled, hempcrete, alternatives
to concrete blocks)
10%
54
Energy ef?ciency
LED lighting upgrades 95%
Smart controls responsive to occupancy and
demand (e.g. lighting, ventilation, heating
and cooling)
86%
High ef?ciency HVAC (at least 10% better
than NCC 2019)
67%
Energy ef?cient lifts (Class A energy
ef?ciency rating)
52%
Electri?cation technologies
EV chargers and future proo?ng demand76%
Induction cooking appliances 52%
Heat pumps for hot water 52%
Heat pumps for space heating 38%
Renewable energy and responsive technologies
Rooftop solar 86%
Energy storage (e.g. batteries, chilled water
storage, etc)
33%
Grid-interactive enabled controls 14%
Enhanced building design
High performance glazing, external shading
and appropriate window and wall ratios
57%
Solar glass (with PV either in the glass or in
the frame)
10%
Building integrated thin ?lm PV on any
surface (such as façade or external shade)
5%
Te c h n o l o g i es to ta c k l e e m b o d i e d ca r b o n e m i ss i o n s
Steel (produced using renewable energy
and scrap)
48%
Concrete (more than 40% cement
replacement or geopolymer)
43%
Cross Laminated Timber (CLT) structure24%
Masonry (recycled, hempcrete, alternatives
to concrete blocks)
10%
54
APPENDIX B: TECHNOLOGY READINESS MATRIX
Rock to crack Technology Case study
1. Electri?cationHeat pumps for space
heating and hot water
Adelaide’s ?rst all-electric of?ce building, Cbus Property’s 83 Pirie Street
38
, saves tenant customers around $100,000 year in
energy costs.
Induction cooktops GPT, Lendlease, Frasers Property, Cbus Property and Scape are all partners of the Global Cooksafe Coalition
39
and have pledged to
make their kitchens gas-free by 2040.
2. Energy
ef?ciency
High performance
building fabric
Goodman Group's new Axis Alexandria warehouse
40
features an insulated Coolmax re?ective roof to create cooler working
environments.
High ef?ciency HVAC
(at least 10% better
than NCC 2019)
In 2023 more than 80 of?ce buildings achieved 6 star NABERS Energy ratings.
41
A signi?cant factor for most of these was energy
ef?cient HVAC systems.
Energy ef?cient
lifts (Class A energy
ef?ciency)
London’s The Shard
42
uses energy ef?cient, destination control elevators to transport occupants across 95 storeys.
LED lighting A $35 million commitment to retro?t an Adelaide of?ce tower
43
, backed by the Clean Energy Finance Corporation, will see the
26-storey of?ce building at 30 Pirie Street undergo energy upgrades such as solar panels and smart LED lighting. This will increase
the building’s NABERS Energy rating to 5 stars.
Smart controls Aurora Place
44
, completed in 2000, already had a 5 star NABERS rating when it underwent a smart building controls upgrade in
2023. Schneider Electric and power solutions provider GSTEC replaced the existing building management system.
Now Next FutureKey to scalability timeframe:
55
38 NABERS. October 2023.
39 Global Cooksafe Coalition, 2022.
40 Goodman Group, 2023.
41 NABERS, 2023.
42 KONE, 2022.
43 McCallister, 2023.
44 Australian Financial Review, October 2023.
Rock to crack Technology Case study
1. Electri?cationHeat pumps for space
heating and hot water
Adelaide’s ?rst all-electric of?ce building, Cbus Property’s 83 Pirie Street
38
, saves tenant customers around $100,000 year in
energy costs.
Induction cooktops GPT, Lendlease, Frasers Property, Cbus Property and Scape are all partners of the Global Cooksafe Coalition
39
and have pledged to
make their kitchens gas-free by 2040.
2. Energy
ef?ciency
High performance
building fabric
Goodman Group's new Axis Alexandria warehouse
40
features an insulated Coolmax re?ective roof to create cooler working
environments.
High ef?ciency HVAC
(at least 10% better
than NCC 2019)
In 2023 more than 80 of?ce buildings achieved 6 star NABERS Energy ratings.
41
A signi?cant factor for most of these was energy
ef?cient HVAC systems.
Energy ef?cient
lifts (Class A energy
ef?ciency)
London’s The Shard
42
uses energy ef?cient, destination control elevators to transport occupants across 95 storeys.
LED lighting A $35 million commitment to retro?t an Adelaide of?ce tower
43
, backed by the Clean Energy Finance Corporation, will see the
26-storey of?ce building at 30 Pirie Street undergo energy upgrades such as solar panels and smart LED lighting. This will increase
the building’s NABERS Energy rating to 5 stars.
Smart controls Aurora Place
44
, completed in 2000, already had a 5 star NABERS rating when it underwent a smart building controls upgrade in
2023. Schneider Electric and power solutions provider GSTEC replaced the existing building management system.
Now Next FutureKey to scalability timeframe:
55
38 NABERS. October 2023.
39 Global Cooksafe Coalition, 2022.
40 Goodman Group, 2023.
41 NABERS, 2023.
42 KONE, 2022.
43 McCallister, 2023.
44 Australian Financial Review, October 2023.
3. Grid
interactivity
Batteries Bunnings Alice Springs
45
has installed a 430 kW PV system with a 600 kWh battery that meets 80% of the store’s energy needs.
CEP.Energy
46
has launched a platform which funds and develops large-scale and distributed microgrids, rooftop solar farms and
distributed and large-scale storage on commercial and industrial assets across Australia. The model aims to offer commercial
tenants lower costs for power with greater long term certainty.
Thermal storage An 8,600 ton-hour ice-on-coil internal melt thermal energy storage system supplements the traditional air conditioning at
Rockefeller Center
47
in New York City.
Grid-interactive
enabled controls
Shell LoadFlex
48
can reduce and shift the time of energy use with automated controls using an optimisation device. Customers can
take advantage of demand management opportunities, earning additional revenues and make use of lower tariff options, where
available.
Enel X
49
is also proving demand response can deliver frequency control services as one of the largest suppliers of these services in
the National Electricity Market.
V2G electric vehicle
chargers
ARENA’s Realising Electric Vehicle to Grid Services project
50
, completed in March 2023, proved that EVs have a signi?cant purpose
beyond transport, to provide critical energy services to the grid. Australia lacks a national standard for bidirectional charging,
hindering its widespread adoption.
A UK based V2G trial
51
found that V2X smart charging could deliver a six-fold increase in demand response market value and a
three-fold reduction in carbon intensity of consumed electricity when compared with uni-directional EV charging from the grid.
Now Next FutureKey to scalability timeframe:
56
45 Smart Commercial Solar, 2023.
46 CEP, 2024.
47 US Department of Energy, 2020.
48 Shell Energy, 2024.
49 Enex X, 2024.
50 ARENA, 2024.
51 Kaluza, 2024.
interactivity
Batteries Bunnings Alice Springs
45
has installed a 430 kW PV system with a 600 kWh battery that meets 80% of the store’s energy needs.
CEP.Energy
46
has launched a platform which funds and develops large-scale and distributed microgrids, rooftop solar farms and
distributed and large-scale storage on commercial and industrial assets across Australia. The model aims to offer commercial
tenants lower costs for power with greater long term certainty.
Thermal storage An 8,600 ton-hour ice-on-coil internal melt thermal energy storage system supplements the traditional air conditioning at
Rockefeller Center
47
in New York City.
Grid-interactive
enabled controls
Shell LoadFlex
48
can reduce and shift the time of energy use with automated controls using an optimisation device. Customers can
take advantage of demand management opportunities, earning additional revenues and make use of lower tariff options, where
available.
Enel X
49
is also proving demand response can deliver frequency control services as one of the largest suppliers of these services in
the National Electricity Market.
V2G electric vehicle
chargers
ARENA’s Realising Electric Vehicle to Grid Services project
50
, completed in March 2023, proved that EVs have a signi?cant purpose
beyond transport, to provide critical energy services to the grid. Australia lacks a national standard for bidirectional charging,
hindering its widespread adoption.
A UK based V2G trial
51
found that V2X smart charging could deliver a six-fold increase in demand response market value and a
three-fold reduction in carbon intensity of consumed electricity when compared with uni-directional EV charging from the grid.
Now Next FutureKey to scalability timeframe:
56
45 Smart Commercial Solar, 2023.
46 CEP, 2024.
47 US Department of Energy, 2020.
48 Shell Energy, 2024.
49 Enex X, 2024.
50 ARENA, 2024.
51 Kaluza, 2024.
4. Powered by
renewables
Rooftop solar Narellan Town Centre
52
in Sydney has recently completed the ?rst stage of Australia's largest commercial solar and battery project,
this includes a 2.6MW solar system covering 12,577sqm, comprising more than 5,600 solar panels, that saves just under 3,000
tonnes of carbon emissions each year.
Building integrated
thin ?lm PV
Sunman, backed with funding from the Clean Energy Finance Corporation
53
, has developed innovative eArc solar panels made
from a lightweight polymer composite material. These panels are 70% lighter and up to 95% thinner than a glass panel, making
them cheaper to transport and easier to install because they can be glued to a surface.
Solar glass ClearVue, based in Perth, makes solar glass panels. Vicinity Centres launched the world’s ?rst clear glass solar trial
54
at the
Warwick Grove shopping centre in Perth in 2019.
Now Next FutureKey to scalability timeframe:
57
52 ESD News, 2023.
53 Clean Energy Finance Corporation, 2023.
54 Lenaghan, 2019.
renewables
Rooftop solar Narellan Town Centre
52
in Sydney has recently completed the ?rst stage of Australia's largest commercial solar and battery project,
this includes a 2.6MW solar system covering 12,577sqm, comprising more than 5,600 solar panels, that saves just under 3,000
tonnes of carbon emissions each year.
Building integrated
thin ?lm PV
Sunman, backed with funding from the Clean Energy Finance Corporation
53
, has developed innovative eArc solar panels made
from a lightweight polymer composite material. These panels are 70% lighter and up to 95% thinner than a glass panel, making
them cheaper to transport and easier to install because they can be glued to a surface.
Solar glass ClearVue, based in Perth, makes solar glass panels. Vicinity Centres launched the world’s ?rst clear glass solar trial
54
at the
Warwick Grove shopping centre in Perth in 2019.
Now Next FutureKey to scalability timeframe:
57
52 ESD News, 2023.
53 Clean Energy Finance Corporation, 2023.
54 Lenaghan, 2019.
5. Embodied
carbon
Low-carbon concrete Many major concrete suppliers offer low-carbon concrete products and more are being developed every year. These include:
• Holcim - EcoPact
• Boral - Envisia
• Wagner — geopolymer concrete.
Green steel Following successful trials in 2021, a demonstration plant
55
will be constructed in Sweden to produce fossil fuel free steel from iron
ore using green hydrogen.
In 2021 BlueScope
56
signed an MoU with Rio Tinto to explore low-carbon steelmaking at Port Kembla Steelworks using the DRI
process with green hydrogen to produce iron, followed by an electric arc furnace powered by 100% renewable electricity to
produce steel.
Green Steel WA
57
is currently developing two projects in WA:
• A green steel recycling mill using renewable electricity
• A green hydrogen-powered facility to produce green steel from iron ore.
Cross Laminated
Timber (CLT)
Examples of CLT in commercial of?ce buildings in Australia include:
• International House, Sydney
• 25 King Street, Brisbane
• Altlassian HQ, Sydney.
Masonry Hempcrete blocks
58
are made from hemp, lime and water and can replace traditional bricks or concrete blocks in buildings. They
have good thermal and acoustic performance, and a very low-carbon footprint.
Now Next FutureKey to scalability timeframe:
58
55 Hybrit Development, 2024.
56 BlueScope, 2021.
57 Green Steel WA, 2024.
58 HempBlock Australia, 2024.
carbon
Low-carbon concrete Many major concrete suppliers offer low-carbon concrete products and more are being developed every year. These include:
• Holcim - EcoPact
• Boral - Envisia
• Wagner — geopolymer concrete.
Green steel Following successful trials in 2021, a demonstration plant
55
will be constructed in Sweden to produce fossil fuel free steel from iron
ore using green hydrogen.
In 2021 BlueScope
56
signed an MoU with Rio Tinto to explore low-carbon steelmaking at Port Kembla Steelworks using the DRI
process with green hydrogen to produce iron, followed by an electric arc furnace powered by 100% renewable electricity to
produce steel.
Green Steel WA
57
is currently developing two projects in WA:
• A green steel recycling mill using renewable electricity
• A green hydrogen-powered facility to produce green steel from iron ore.
Cross Laminated
Timber (CLT)
Examples of CLT in commercial of?ce buildings in Australia include:
• International House, Sydney
• 25 King Street, Brisbane
• Altlassian HQ, Sydney.
Masonry Hempcrete blocks
58
are made from hemp, lime and water and can replace traditional bricks or concrete blocks in buildings. They
have good thermal and acoustic performance, and a very low-carbon footprint.
Now Next FutureKey to scalability timeframe:
58
55 Hybrit Development, 2024.
56 BlueScope, 2021.
57 Green Steel WA, 2024.
58 HempBlock Australia, 2024.
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achieves Australian ?rst for green innovation. Retrieved from
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commonwealth-bank-place-sydney-achieves-australian
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ASX200 ramps up climate goals, but major gaps remain. Retrieved
from https://acsi.org.au/media-releases/asx200-ramps-up-climate-
goals-but-major-gaps-remain/
Australian Energy Market Regulator (January 2024).
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com.au/-/media/?les/major-publications/qed/2023/quarterly-energy-
dynamics-q4-2023.f?la=en&hash=9E82966D60F4FA5050F1AF110
9D5F158
Australian Energy Market Regulator (December 2023).
Draft 2024 ISP Consultation, page 26. Retrieved from https://aemo.
com.au/consultations/current-and-closed-consultations/draft-2024-
isp-consultation
Australian Financial Review (October 2023). Smart, green buildings
can help construct net zero future. Retrieved from https://www.
afr.com/companies/infrastructure/smart-green-buildings-can-help-
construct-net-zero-future-20231016-p5ecjj
Australian Government, Australian Renewable Energy Agency
(2024). Realising electric vehicle-to-grid services. Retrieved from
https://arena.gov.au/projects/realising-electric-vehicle-to-grid-
services/
Australian Government, Bureau of Meteorology (February 2024).
Australia’s climate in 2023: Warmer with contrasting rainfall. Retrieved
from https://media.bom.gov.au/releases/1217/australias-climate-in-
2023-warmer-with-contrasting-rainfall/
Australian Government, Department of Climate Change, Energy,
the Environment and Water (2023). Quarterly Update of Australia’s
National Greenhouse Gas Inventory: June 2023. Retrieved from
https://www.dcceew.gov.au/sites/default/?les/documents/national-
greenhouse-gas-inventory-june-2023.pdf
Australian Government, Department of Climate Change, Energy,
the Environment and Water (2024). Safeguard Mechanism. Retrieved
from https://www.dcceew.gov.au/climate-change/emissions-reporting/
national-greenhouse-energy-reporting-scheme/safeguard-mechanism
Australian Government, Department of Climate Change, Energy,
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www.dcceew.gov.au/climate-change/emissions-reduction/net-zero
Australian Government, Department of Finance (2022).
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Australian Government, Department of Finance (2023). APS Net
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au/government/climate-action-government-operations/aps-net-zero-
emissions-2030
Australian Institute of Company Directors (July 2022).
AICD submissions on international standards for sustainability
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com.au/news-media/policy-submissions/2022/aicd-submissions-
on-international-standards-for-sustainability-and-climate-related-
disclosures.html
Australian Passivhaus Association (2024). Home. Retrieved from
https://www.passivhausassociation.com.au/
Australian Sustainable Built Environment Council (December 2022).
Unlocking the Pathway: Why electri?cation is the key to net zero
buildings. Retrieved from https://www.asbec.asn.au/wordpress/wp-
content/uploads/2022/12/ASBEC-Unlocking-the-pathway.pdf
Australian Sustainable Built Environment Council (2016).
Low Carbon, High Performance Summary Report. Retrieved
from https://www.asbec.asn.au/wordpress//wp-content/
uploads/2016/05/160509-ASBEC-Low-Carbon-High-Performance-
Summary-Report.pdf
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Australian Sustainable Finance Progress Tracker 2023. Retrieved from
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BlueScope (October 2021). BlueScope and Rio Tinto to explore new
technologies for low-emissions steelmaking at Port Kembla Steelworks.
Retrieved from https://www.bluescope.com/content/dam/bluescope/
corporate/bluescope-com/investor/documents/2021_BlueScope_PDF_
BSL_RT_MOU_Media_Release.pdf
CEP.Energy (2024). Home page. Retrieved from
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achieves Australian ?rst for green innovation. Retrieved from
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commonwealth-bank-place-sydney-achieves-australian
Australian Council of Superannuation Investors (August 2023).
ASX200 ramps up climate goals, but major gaps remain. Retrieved
from https://acsi.org.au/media-releases/asx200-ramps-up-climate-
goals-but-major-gaps-remain/
Australian Energy Market Regulator (January 2024).
Quarterly Energy Dynamics Q4 2023. Retrieved from https://aemo.
com.au/-/media/?les/major-publications/qed/2023/quarterly-energy-
dynamics-q4-2023.f?la=en&hash=9E82966D60F4FA5050F1AF110
9D5F158
Australian Energy Market Regulator (December 2023).
Draft 2024 ISP Consultation, page 26. Retrieved from https://aemo.
com.au/consultations/current-and-closed-consultations/draft-2024-
isp-consultation
Australian Financial Review (October 2023). Smart, green buildings
can help construct net zero future. Retrieved from https://www.
afr.com/companies/infrastructure/smart-green-buildings-can-help-
construct-net-zero-future-20231016-p5ecjj
Australian Government, Australian Renewable Energy Agency
(2024). Realising electric vehicle-to-grid services. Retrieved from
https://arena.gov.au/projects/realising-electric-vehicle-to-grid-
services/
Australian Government, Bureau of Meteorology (February 2024).
Australia’s climate in 2023: Warmer with contrasting rainfall. Retrieved
from https://media.bom.gov.au/releases/1217/australias-climate-in-
2023-warmer-with-contrasting-rainfall/
Australian Government, Department of Climate Change, Energy,
the Environment and Water (2023). Quarterly Update of Australia’s
National Greenhouse Gas Inventory: June 2023. Retrieved from
https://www.dcceew.gov.au/sites/default/?les/documents/national-
greenhouse-gas-inventory-june-2023.pdf
Australian Government, Department of Climate Change, Energy,
the Environment and Water (2024). Safeguard Mechanism. Retrieved
from https://www.dcceew.gov.au/climate-change/emissions-reporting/
national-greenhouse-energy-reporting-scheme/safeguard-mechanism
Australian Government, Department of Climate Change, Energy,
the Environment and Water (2023). Net zero. Retrieved from https://
www.dcceew.gov.au/climate-change/emissions-reduction/net-zero
Australian Government, Department of Finance (2022).
2022 Australian Government Of?ce Occupancy Report. Retrieved from
https://www.?nance.gov.au/government/property-and-construction/
leased-of?ce-accommodation/australian-government-of?ce-occupancy-
reports
Australian Government, Department of Finance (2023). APS Net
Zero Emissions by 2030. Retrieved from https://www.?nance.gov.
au/government/climate-action-government-operations/aps-net-zero-
emissions-2030
Australian Institute of Company Directors (July 2022).
AICD submissions on international standards for sustainability
and climate-related disclosures. Retrieved from https://www.aicd.
com.au/news-media/policy-submissions/2022/aicd-submissions-
on-international-standards-for-sustainability-and-climate-related-
disclosures.html
Australian Passivhaus Association (2024). Home. Retrieved from
https://www.passivhausassociation.com.au/
Australian Sustainable Built Environment Council (December 2022).
Unlocking the Pathway: Why electri?cation is the key to net zero
buildings. Retrieved from https://www.asbec.asn.au/wordpress/wp-
content/uploads/2022/12/ASBEC-Unlocking-the-pathway.pdf
Australian Sustainable Built Environment Council (2016).
Low Carbon, High Performance Summary Report. Retrieved
from https://www.asbec.asn.au/wordpress//wp-content/
uploads/2016/05/160509-ASBEC-Low-Carbon-High-Performance-
Summary-Report.pdf
REFERENCES
Australian Sustainable Finance Institute (2023).
Australian Sustainable Finance Progress Tracker 2023. Retrieved from
https://www.as?.org.au/progress-tracker-2023
BlueScope (October 2021). BlueScope and Rio Tinto to explore new
technologies for low-emissions steelmaking at Port Kembla Steelworks.
Retrieved from https://www.bluescope.com/content/dam/bluescope/
corporate/bluescope-com/investor/documents/2021_BlueScope_PDF_
BSL_RT_MOU_Media_Release.pdf
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Crownhart, C. (February 2023). Everything you need to know about
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portfolio-with-new-100m-green-star-rated-park-1229568/
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com/companies/professional-services/commuters-captured-under-
tough-climate-regime-20231022-p5ee2v
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com.au/australias-largest-commercial-solar-and-battery-project-
unveiled/
Enex X (2024). Enex X VPP FCAS market leadership. Retrieved from
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EuroAce Energy Ef?cient Buildings (July 2022). Renovation of
historic, heritage, and protected buildings: Recommendations
& case studies. Retrieved from https://euroace.org/wp-content/
uploads/2022/07/2022_06_02_EuroACE_Heritage-buildings-brief.pdf
EY Sustainability Disclosure Hub (2024). Retrieved from https://www.
ey.com/en_au/sustainability/sustainability-disclosure-hub
EY Net Zero Centre, Changing Gears: Australia’s Carbon Market
Outlook 2023. Retrieved from https://info.ey.com/Australias-Carbon-
Market-Outlook-2023.html
Fa c i l i ty M a n a g e m e nt ( 2 0 1 0 ) . Pixel: Australia’s greenest
building, but does it make a good of?ce? Retrieved from https://
www.fmmedia.com.au/sectors/pixel-australia%E2%80%99s-
%E2%80%98greenest%E2%80%99-building/
Frasers Property (October 2021). Frasers Property launches world-
?rst retail centre building materials list. Retrieved from https://www.
frasersproperty.com.au/news/2022/09/02/greensheet-launches
Global Cooksafe Coalition (2022). Dangerous fuels and the built
environment. Retrieved from https://cooksafecoalition.org/wp-content/
uploads/2022/11/23098-GCC-Factsheet-Electric-Cooking-BUILT-D4.
pdf
Goodman Group (December 2023). Goodman reaches new heights in
South Sydney. Retrieved from https://www.goodman.com/investor-
centre/announcements-media/2023/20231206-goodman-reaches-
new-heights-with-completion-of-axis-alexandria
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electri?cation for new buildings. Retrieved from https://www.cefc.com.
au/media/v21jesrl/a-practical-guide-to-electri?cation.pdf
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Positive Roadmap for the built environment. Retrieved from https://
gbca-web.s3.amazonaws.com/media/documents/carbon-positive-
roadmap-discussion-paper-rev-a.pdf
Green Building Council of Australia et al (June 2023). From net
zero to zero: A discussion paper on grid-interactive ef?cient buildings.
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documents/grid-interactive-ef?cient-buildings-discussion-paper_
Q0FoGV8.pdf
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business-case.pdf
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assets outperform the market. Retrieved from https://new.gbca.org.
au/news/gbca-news/green-star-rated-assets-outperform-the-market/
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carbon at scale. Retrieved from https://new.gbca.org.au/news/gbca-
media-releases/reducing-upfront-carbon-at-scale/
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60
the wild world of heat pumps. MIT Technology Review. Retrieved
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everything-you-need-to-know-about-heat-pumps/
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$100m green star-rated park, Commercial Real Estate. Retrieved
https://www.commercialrealestate.com.au/news/goodman-boosts-its-
portfolio-with-new-100m-green-star-rated-park-1229568/
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regime. Australian Financial Review. Retrieved from https://www.afr.
com/companies/professional-services/commuters-captured-under-
tough-climate-regime-20231022-p5ee2v
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commercial solar and battery project. Retrieved from https://esdnews.
com.au/australias-largest-commercial-solar-and-battery-project-
unveiled/
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https://www.enelx.com/au/en/resources/enel-x-vpp-fcas-leadership
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historic, heritage, and protected buildings: Recommendations
& case studies. Retrieved from https://euroace.org/wp-content/
uploads/2022/07/2022_06_02_EuroACE_Heritage-buildings-brief.pdf
EY Sustainability Disclosure Hub (2024). Retrieved from https://www.
ey.com/en_au/sustainability/sustainability-disclosure-hub
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Outlook 2023. Retrieved from https://info.ey.com/Australias-Carbon-
Market-Outlook-2023.html
Fa c i l i ty M a n a g e m e nt ( 2 0 1 0 ) . Pixel: Australia’s greenest
building, but does it make a good of?ce? Retrieved from https://
www.fmmedia.com.au/sectors/pixel-australia%E2%80%99s-
%E2%80%98greenest%E2%80%99-building/
Frasers Property (October 2021). Frasers Property launches world-
?rst retail centre building materials list. Retrieved from https://www.
frasersproperty.com.au/news/2022/09/02/greensheet-launches
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environment. Retrieved from https://cooksafecoalition.org/wp-content/
uploads/2022/11/23098-GCC-Factsheet-Electric-Cooking-BUILT-D4.
Goodman Group (December 2023). Goodman reaches new heights in
South Sydney. Retrieved from https://www.goodman.com/investor-
centre/announcements-media/2023/20231206-goodman-reaches-
new-heights-with-completion-of-axis-alexandria
Green Building Council of Australia et al (2021). A practical guide to
electri?cation for new buildings. Retrieved from https://www.cefc.com.
au/media/v21jesrl/a-practical-guide-to-electri?cation.pdf
Green Building Council of Australia et al (July 2021). A Climate
Positive Roadmap for the built environment. Retrieved from https://
gbca-web.s3.amazonaws.com/media/documents/carbon-positive-
roadmap-discussion-paper-rev-a.pdf
Green Building Council of Australia et al (June 2023). From net
zero to zero: A discussion paper on grid-interactive ef?cient buildings.
Retrieved from https://gbca-web.s3.amazonaws.com/media/
documents/grid-interactive-ef?cient-buildings-discussion-paper_
Q0FoGV8.pdf
Green Building Council of Australia (March 2023). Green Star
Buildings: The business case. Retrieved from https://gbca-web.
s3.amazonaws.com/media/documents/green-star-buildings-the-
business-case.pdf
Green Building Council of Australia (May 2023). Green Star rated
assets outperform the market. Retrieved from https://new.gbca.org.
au/news/gbca-news/green-star-rated-assets-outperform-the-market/
Green Building Council of Australia (May 2023A). Reducing upfront
carbon at scale. Retrieved from https://new.gbca.org.au/news/gbca-
media-releases/reducing-upfront-carbon-at-scale/
Green Building Council of Australia (November 2023). Biggest
increase in Green Star certi?cations shows sustainability on the rise.
Retrieved from https://new.gbca.org.au/news/gbca-media-releases/
biggest-increase-in-green-star-certi?cations-shows-sustainability-on-
the-rise/
Green Building Council of Australia (November 2023). GRESB 2023
results show Australia’s leadership in sustainability at scale. Retrieved
from https://new.gbca.org.au/news/gbca-media-releases/gresb-2023-
results-show-australias-leadership-in-sustainability-at-scale/
Green Building Council of Australia et al (2018). Opportunity knocks:
Accelerating energy ef?ciency for mid-tier buildings. https://gbca-web.
s3.amazonaws.com/media/documents/mid-tier-opportunity-knocks-
web-020318.pdf
Greenhouse Gas Protocol (2024). Home. Retrieved from
https://ghgprotocol.org/
Green Steel WA (2024). Home page. Retrieved from https://www.
greensteelwa.com.au/
Hanley, S. (June 2008). Building industry faces tall order in cutting
emissions. Australian Financial Review. Retrieved from https://www.
afr.com/markets/commodities/building-industry-faces-tall-order-in-
cutting-emissions-20080604-janxr
Harrington, P. (2022). Commercial Building Baseline Study 2022
Final Report. Retrieved from https://www.dcceew.gov.au/sites/default/
?les/documents/commercial-buildings-energy-consumption-baseline-
study-2022.pdf
HempBlock (2024). Home page. Retrieved from
https://hempblockaustralia.com/
Hybrit (2024). Home page. Retrieved from
https://www.hybritdevelopment.se/en/
International Energy Agency (January 2023). Massive expansion of
renewable power opens door to achieving global tripling goal set at
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of-renewable-power-opens-door-to-achieving-global-tripling-goal-set-
at-cop28
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Standard. Retrieved from https://standard.wellcerti?ed.com/well
60
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com.au/Images/factsheet-kone-the-shard-references_tcm46-9022.pdf
Lenaghan, N. (2019). Vicinity launches world-?rst clear glass solar
trial, Australian Financial Review. Retrieved from https://www.afr.com/
property/commercial/vicinity-launches-world?rst-clear-glass-solar-trial-
20190130-h1an4f
Lendlease (2023). Lendlease’s Scope 3 Emissions Protocol. Retrieved
from https://www.lendlease.com/au/sustainability/climate-and-
environment/scope-3-emissions-protocol/
Living Future Institute Australia (2024). The Living Building
Challenge. Retrieved from https://living-future.org.au/living-building-
challenge/
McAllister, J. (September 2023). $35 million to retro?t Adelaide of?ce
with better energy ef?ciency. Retrieved from https://minister.dcceew.
gov.au/mcallister/media-releases/35-million-retro?t-adelaide-of?ce-
better-energy-ef?ciency-0
McFarlane, A. et al (November 2023). Early Mover Advantage:
Embracing net zero carbon in our CBD of?ce markets. Jones Lang
Lasalle. Retrieved from https://www.jll.com.au/en/trends-and-insights/
research/early-mover-advantage
NABERS (2023). NABERS Annual Report 2022/23: Program
Statistics Of?ce — Energy. Retrieved from https://nabers.info/annual-
report/2022-2023/of?ce-energy/
NABERS (2023). The NSW Sustainable Buildings State Environmental
Planning Policy (SEPP): Driving transformation at speed and
scale. Retrieved from https://www.nabers.gov.au/sites/default/
?les/2023-09/Fact%20Sheet%20-%20NSW%20Sustainable%20
Buildings%20SEPP.pdf
NABERS (October 2021). NABERS Embodied emissions initiative.
Retrieved from https://www.nabers.gov.au/publications/nabers-
embodied-emissions-initiative
NABERS (October 2023). Case study: Cbus Property’s all-electric
future. Retrieved from https://www.nabers.gov.au/news/case-study-
cbus-propertys-all-electric-future
National Reconstruction Fund Corporation (2024). Home. Retrieved
from https://www.nrf.gov.au/
Peabody Group (March 2023). Retro?tting historic buildings could
generate £35bn, create new construction jobs, and support net zero
ambitions. Retrieved from https://www.peabodygroup.org.uk/media-
centre/news/corporate-news/retro?tting-historic-buildings-could-
generate-35bn-create-new-construction-jobs-and-support-net-zero-
ambitions/
Precious, B. (June 2022). Global guide: Energy Ef?ciency in
Commercial Buildings. National Australian Build Environment Rating
System. Retrieved from https://www.nabers.gov.au/publications/
energy-ef?ciency-commercial-buildings
Property Council of Australia and Green Building Council of
Australia (2023). Every Building Counts. Retrieved from https://
everybuildingcounts.com.au/
Shell Energy (2024). HVAC LoadFlex. Retrieved from https://
shellenergy.com.au/energy-solutions/demand-response/hvac-load?ex/
Slattery (July 2023). Slattery embodied carbon benchmarking report.
Retrieved from https://slattery.com.au/portfolio/slattery-embodied-
carbon-benchmarking-report/?portfolioCats=92
Slattery (2024). Slattery embodied carbon series: Retro?tting
reimagined. Retrieved from https://slattery.com.au/portfolio/slattery-
embodied-carbon-retro?tting-reimagined/?portfolioCats=92
Stockland (2023). Stockland’s logistics rooftops to power its property
portfolio in market leading renewables deal. Retrieved from
https://www.stockland.com.au/media-centre/media-releases/
stocklands-logistics-rooftops-to-power-its-property-portfolio-in-
market-leading-renewables-deal
Smart Commercial Solar (August 2023). An introduction
to commercial battery storage. Retrieved from https://www.
smartcommercialsolar.com.au/resources/an-introduction-to-
commercial-battery-storage
UBS (October 2023). UBS Sustainability and Impact Institute white
paper: Rethink, rebuild, reimagine — Laying the foundation for better
buildings. Retrieved from https://www.ubs.com/global/en/media/
display-page-ndp/en-20231003-white-paper.html
US Department of Energy, Better Buildings Solution Centre
(2020). Thermal energy storage overview. Retrieved from https://
betterbuildingssolutioncenter.energy.gov/sites/default/?les/
attachments/Thermal_Energy_Storage_Fact_Sheet_0.pdf
Vickers, J. et al (July 2022). Embodied Carbon & Embodied Energy
in Australia’s Buildings. Green Building Council of Australia and
thinkstep-anz. Retrieved from https://gbca-web.s3.amazonaws.com/
media/documents/embodied-carbon--embodied-energy-in-australias-
buildings-2021-07-22-?nal-public.pdf
Victorian Government (2023). Victoria’s Gas Substitution Roadmap.
Retrieved from https://www.energy.vic.gov.au/renewable-energy/
victorias-gas-substitution-roadmap
Vorrath, S., (January 2024). 2023 in review: Australia nears half-
way mark to 82% renewables. Renew Economy. Retrieved from
https://reneweconomy.com.au/australia-nears-half-way-mark-to-82-
renewables-as-rooftop-records-continue-to-tumble/
World Green Building Council (2019). Bringing Embodied Carbon
Upfront. Retrieved from https://worldgbc.org/news-media/bringing-
embodied-carbon-upfront
61
https://www.investa.com.au/hubfs/Investa%20Sustainability%20
Report%202023_FINAL.pdf
Kaluza (2024). What’s next for vehicle-to-everything? Retrieved from
https://info.kaluza.com/whats-next-for-vehicle-to-everything
Kone (2022). A skyline rede?ned. Retrieved from https://www.kone.
com.au/Images/factsheet-kone-the-shard-references_tcm46-9022.pdf
Lenaghan, N. (2019). Vicinity launches world-?rst clear glass solar
trial, Australian Financial Review. Retrieved from https://www.afr.com/
property/commercial/vicinity-launches-world?rst-clear-glass-solar-trial-
20190130-h1an4f
Lendlease (2023). Lendlease’s Scope 3 Emissions Protocol. Retrieved
from https://www.lendlease.com/au/sustainability/climate-and-
environment/scope-3-emissions-protocol/
Living Future Institute Australia (2024). The Living Building
Challenge. Retrieved from https://living-future.org.au/living-building-
challenge/
McAllister, J. (September 2023). $35 million to retro?t Adelaide of?ce
with better energy ef?ciency. Retrieved from https://minister.dcceew.
gov.au/mcallister/media-releases/35-million-retro?t-adelaide-of?ce-
better-energy-ef?ciency-0
McFarlane, A. et al (November 2023). Early Mover Advantage:
Embracing net zero carbon in our CBD of?ce markets. Jones Lang
Lasalle. Retrieved from https://www.jll.com.au/en/trends-and-insights/
research/early-mover-advantage
NABERS (2023). NABERS Annual Report 2022/23: Program
Statistics Of?ce — Energy. Retrieved from https://nabers.info/annual-
report/2022-2023/of?ce-energy/
NABERS (2023). The NSW Sustainable Buildings State Environmental
Planning Policy (SEPP): Driving transformation at speed and
scale. Retrieved from https://www.nabers.gov.au/sites/default/
?les/2023-09/Fact%20Sheet%20-%20NSW%20Sustainable%20
Buildings%20SEPP.pdf
NABERS (October 2021). NABERS Embodied emissions initiative.
Retrieved from https://www.nabers.gov.au/publications/nabers-
embodied-emissions-initiative
NABERS (October 2023). Case study: Cbus Property’s all-electric
future. Retrieved from https://www.nabers.gov.au/news/case-study-
cbus-propertys-all-electric-future
National Reconstruction Fund Corporation (2024). Home. Retrieved
from https://www.nrf.gov.au/
Peabody Group (March 2023). Retro?tting historic buildings could
generate £35bn, create new construction jobs, and support net zero
ambitions. Retrieved from https://www.peabodygroup.org.uk/media-
centre/news/corporate-news/retro?tting-historic-buildings-could-
generate-35bn-create-new-construction-jobs-and-support-net-zero-
ambitions/
Precious, B. (June 2022). Global guide: Energy Ef?ciency in
Commercial Buildings. National Australian Build Environment Rating
System. Retrieved from https://www.nabers.gov.au/publications/
energy-ef?ciency-commercial-buildings
Property Council of Australia and Green Building Council of
Australia (2023). Every Building Counts. Retrieved from https://
everybuildingcounts.com.au/
Shell Energy (2024). HVAC LoadFlex. Retrieved from https://
shellenergy.com.au/energy-solutions/demand-response/hvac-load?ex/
Slattery (July 2023). Slattery embodied carbon benchmarking report.
Retrieved from https://slattery.com.au/portfolio/slattery-embodied-
carbon-benchmarking-report/?portfolioCats=92
Slattery (2024). Slattery embodied carbon series: Retro?tting
reimagined. Retrieved from https://slattery.com.au/portfolio/slattery-
embodied-carbon-retro?tting-reimagined/?portfolioCats=92
Stockland (2023). Stockland’s logistics rooftops to power its property
portfolio in market leading renewables deal. Retrieved from
https://www.stockland.com.au/media-centre/media-releases/
stocklands-logistics-rooftops-to-power-its-property-portfolio-in-
market-leading-renewables-deal
Smart Commercial Solar (August 2023). An introduction
to commercial battery storage. Retrieved from https://www.
smartcommercialsolar.com.au/resources/an-introduction-to-
commercial-battery-storage
UBS (October 2023). UBS Sustainability and Impact Institute white
paper: Rethink, rebuild, reimagine — Laying the foundation for better
buildings. Retrieved from https://www.ubs.com/global/en/media/
display-page-ndp/en-20231003-white-paper.html
US Department of Energy, Better Buildings Solution Centre
(2020). Thermal energy storage overview. Retrieved from https://
betterbuildingssolutioncenter.energy.gov/sites/default/?les/
attachments/Thermal_Energy_Storage_Fact_Sheet_0.pdf
Vickers, J. et al (July 2022). Embodied Carbon & Embodied Energy
in Australia’s Buildings. Green Building Council of Australia and
thinkstep-anz. Retrieved from https://gbca-web.s3.amazonaws.com/
media/documents/embodied-carbon--embodied-energy-in-australias-
buildings-2021-07-22-?nal-public.pdf
Victorian Government (2023). Victoria’s Gas Substitution Roadmap.
Retrieved from https://www.energy.vic.gov.au/renewable-energy/
victorias-gas-substitution-roadmap
Vorrath, S., (January 2024). 2023 in review: Australia nears half-
way mark to 82% renewables. Renew Economy. Retrieved from
https://reneweconomy.com.au/australia-nears-half-way-mark-to-82-
renewables-as-rooftop-records-continue-to-tumble/
World Green Building Council (2019). Bringing Embodied Carbon
Upfront. Retrieved from https://worldgbc.org/news-media/bringing-
embodied-carbon-upfront
61
HOW CAN EY TEAMS HELP?
Authors
• Selina Short
• Steve Hat?eld-Dodds
• Emma Herd
Other authors and contributors
• Matt Armitage
• Bert Bardoel
• Tamara Monty
• Megan C. Wilson
With special thanks to
• Davina Rooney, Helen Bell and Megan Towill, Green Building Council of Australia
• David Clark, Positive Zero
Interview participants
• Lisa Brylowski and Shantanu Pai, Brook?eld
• Adrian Pozzo, Cbus Property
• Carmel Hourigan, Charter Hall
• Jennifer Saiz, Commonwealth Bank
• Dan Labbad, Crown Estates
• Nicola Roxon and Ramana James, Dexus
• Tony Lombardo and Ann Austin, Lendlease
• Campbell Hannan, Mirvac
• Carlos Flores, NABERS
The EY Net Zero Centre helps companies
cut through the complexity, help manage the
uncertainty and create clear pathways to net
zero emissions.
Headed by the region’s leading climate change
strategists, the Net Zero Centre supports EY clients
to make the right decisions at the right times and set
themselves on a pathway for success.
We can help you turn disruption into opportunity.
62
Authors
• Selina Short
• Steve Hat?eld-Dodds
• Emma Herd
Other authors and contributors
• Matt Armitage
• Bert Bardoel
• Tamara Monty
• Megan C. Wilson
With special thanks to
• Davina Rooney, Helen Bell and Megan Towill, Green Building Council of Australia
• David Clark, Positive Zero
Interview participants
• Lisa Brylowski and Shantanu Pai, Brook?eld
• Adrian Pozzo, Cbus Property
• Carmel Hourigan, Charter Hall
• Jennifer Saiz, Commonwealth Bank
• Dan Labbad, Crown Estates
• Nicola Roxon and Ramana James, Dexus
• Tony Lombardo and Ann Austin, Lendlease
• Campbell Hannan, Mirvac
• Carlos Flores, NABERS
The EY Net Zero Centre helps companies
cut through the complexity, help manage the
uncertainty and create clear pathways to net
zero emissions.
Headed by the region’s leading climate change
strategists, the Net Zero Centre supports EY clients
to make the right decisions at the right times and set
themselves on a pathway for success.
We can help you turn disruption into opportunity.
62
EY | Building a better working world
EY exists to build a better working world, helping to create long-term
value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries
provide trust through assurance and help clients grow, transform
and operate.
Working across assurance, consulting, law, strategy, tax and transactions,
EY teams ask better questions to find new answers for the complex issues
facing our world today.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young
Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited
by guarantee, does not provide services to clients. Information about how EY collects and uses personal
data and a description of the rights individuals have under data protection legislation are available via
ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information
about our organization, please visit ey.com.
© 2024 Ernst & Young Australia.
All Rights Reserved.
PH 20241-002536
EYSCORE 003003-24-AUNZ
ED None
This communication provides general information which is current at the time of production. The information contained in this
communication does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action
being taken in reliance on any of the information. Ernst & Young disclaims all responsibility and liability (including, without limitation, for
any direct or indirect or consequential costs, loss or damage or loss of profits) arising from anything done or omitted to be done by any
party in reliance, whether wholly or partially, on any of the information. Any party that relies on the information does so at its own risk.
The views expressed in this article are the views of the author, not Ernst & Young. Liability limited by a scheme approved under Professional
Standards Legislation.
ey.com
EY exists to build a better working world, helping to create long-term
value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries
provide trust through assurance and help clients grow, transform
and operate.
Working across assurance, consulting, law, strategy, tax and transactions,
EY teams ask better questions to find new answers for the complex issues
facing our world today.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young
Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited
by guarantee, does not provide services to clients. Information about how EY collects and uses personal
data and a description of the rights individuals have under data protection legislation are available via
ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information
about our organization, please visit ey.com.
© 2024 Ernst & Young Australia.
All Rights Reserved.
PH 20241-002536
EYSCORE 003003-24-AUNZ
ED None
This communication provides general information which is current at the time of production. The information contained in this
communication does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action
being taken in reliance on any of the information. Ernst & Young disclaims all responsibility and liability (including, without limitation, for
any direct or indirect or consequential costs, loss or damage or loss of profits) arising from anything done or omitted to be done by any
party in reliance, whether wholly or partially, on any of the information. Any party that relies on the information does so at its own risk.
The views expressed in this article are the views of the author, not Ernst & Young. Liability limited by a scheme approved under Professional
Standards Legislation.
ey.com
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