NABERS Sustainable Portfolios Index 2022: now published 

Available from 10 May 2022, the NABERS Sustainable Portfolios Index 2022 (SPI) is Australia’s only publicly available index showcasing the actual environmental performance of the top 53 building portfolios and funds across the country.

As we witness unprecedented climate impacts in Australia and around the world, investors and property owners are more conscious than ever of the need for building portfolios to be resilient and sustainable. This trend has been reflected in an unprecedented 34.5% increase in participating portfolios in the SPI, our biggest growth yet.

The NABERS SPI, now in its fourth edition, is globally unique. It provides a public, whole portfolio view of actual performance in terms of energy emissions, water usage, waste and indoor environment quality for offices and energy and water emissions for shopping centres. It also tracks progress over time.

The SPI provides comparative business intelligence on where property portfolios stand against their peers. It allows you to compare the percentage of the portfolios covered by the different NABERS rating types.

This year the SPI includes a revamp to the Portfolio Profile section, with new graphs helping to display the information in a clearer format. The navigation throughout the dashboard has also been improved, making it easier and faster to access each section.

We know that measuring and transparently disclosing the environmental performance of organisations is key to tackling climate change. But we also know this level of transparency can be a difficult step for many companies to take.

That is why we are so proud of all the organisations participating in this year’s SPI. This is perhaps the only place where property portfolios disclose their environmental performance so publicly, transparently and side-by-side against their competitors. Seeing so many portfolios taking this step is a powerful demonstration of their commitment to the environment, as well of how Australia leads the world in non-residential building sustainability.

We had already seen record participation in the SPI last year. So seeing a further 34.5% increase in 2022 is incredible, and a sign of how important sustainability has become to investors and the finance sector at large. This includes seven brand new property companies that have decided to join the index this year. And for the first time in the SPI, two office portfolios are 100% rated with energy, water, waste and indoor environment ratings. This is a fantastic example of industry leadership.

We also saw a whopping 50% increase in the number of portfolios disclosing NABERS Indoor Environment ratings. This reflects increasing interest from tenants in healthy and productive workspaces, and a powerful demonstration of the increased focus on occupant wellbeing since the start of the pandemic.

We have also seen 30% more shopping centre portfolios included in the SPI this year. The index now includes most large shopping centre operators in Australia, which shows just how far retail has moved in the past decade.

The SPI is a platform to showcase and celebrate portfolios that are truly committed to transparency in sustainability. Our congratulations to all these portfolios, who continue to push the boundaries of what is possible in sustainability despite all the challenges of the past two years. - Carlos Flores, Director NABERS & Building Sustainability

Interest in sustainable finance has grown

Over the past 2 years, NABERS has been working with the property and financial industries to help unlock the potential of high-quality sustainable finance instruments in the Australian property sector. We are currently developing Sustainable Finance Criteria to help banks, non-bank lenders and investors to structure sustainable finance transactions using NABERS ratings.

Parag Shinde, National Manager ESG at Australia Unity shares why his company is joining the SPI for the first time: "Australian Unity - Australian Office Fund (AU AOF) is pleased to participate in the NABERS SPI 2022 for the first time. The SPI is a fabulous, no cost initiative by NABERS Team, providing an independently verified and industry recognised platform to demonstrate and disclose property portfolio environmental performance. Participation in the NABERS SPI 2022 highlights AU AOF teams’ commitment to delivering a positive ESG impact and ongoing improvements across the portfolio.

ESG is a major driver for our investors, stakeholders, employees and customers with requirements to demonstrate leadership, commitment, and evidence-based outcomes. Market disclosure of ongoing improvements in our asset performance via the NABERS SPI platform will be one of the avenues to support Australian Unity source sustainable finance now and in the future".

Demonstrating the link between NABERS and green loans, Scott Armstrong, Active Super Head of Property, said: “NABERS provides a framework for Active Super’s property and facilities teams to manage our office and retail assets at the highest level by utilising data – not only across energy and water – but also now waste and indoor air quality. We can then compare our performance to the most sustainable portfolios in the country.”

Environmentally friendly buildings attract and retain tenants within our portfolio. We are finding that Active Super tenants are also very interested in sustainable buildings as this reflects positively on their own business, staff and shareholders.      

NABERS ratings have been the foundation of Active Super’s sustainability journey and, more recently in 2019, helped us achieve Carbon Neutral certification across our office and retail portfolio. NABERS ratings are complimentary to other sustainable rating systems including Greenstar and WELL and assisted us in obtaining sustainable finance via a green loan.”

New companies continue to jump on board

Centuria is one of the new companies participating in this year’s SPI. Grant Nichols, Centuria Head of Office and COF Fund Manager, explains why his company is joining this year: “Centuria Office REIT (ASX: COF) is pleased to be included in the NABERS Sustainable Portfolio Index. The NABERS rating scheme is an important part of demonstrating the REIT’s ongoing commitment to reducing its environmental impact.

This aligns with Centuria’s wider sustainability approach, acknowledging our part in transforming the property industry. COF is providing office workers with sustainable and healthy work environments and, by working with NABERS, we are committed to limiting our carbon footprint and climate change.”

We have seen a 30% increase in the number of shopping centre portfolios included in the SPI in 2022. This follows a long-established trend of increased sustainability action in the retail sector. Today, most major shopping centre portfolios are using NABERS to set ambitious sustainability targets and track progress at an asset level as well as across their portfolios. This year, several shopping centre portfolios have decided to take the next big step in their sustainability journey, and disclose their performance in the SPI.

Above: SPI 2022 shopping centre portfolios ranked by energy rating performance

QIC is one of the shopping centres operators which joined the SPI this year, providing data for two of their shopping centre portfolios.

Melissa Schulz, General Manager - Sustainability, QIC Real Estate said: “NABERS is a great tool for comparing our approach and performance across our assets. Being involved in the Sustainable Portfolio Index this year means we can more easily benchmark portfolio-wide strategies and outcomes against our peers. This is useful for investors and other interested stakeholders, as well as for developing our own future plans to drive continuous improvements in performance across the asset portfolio.”

More about NABERS ratings

NABERS ratings are used to measure a building’s energy efficiency, carbon emissions, water consumed, waste produced and indoor environment quality, and compare it to similar buildings.

NABERS ratings give a building a rating from one to six stars - 1 star being “Making a start” and 6 stars being “Market Leading”. 

Average star ratings by sector

Above: NABERS 6 star rating scale

When NABERS ratings are first developed three stars is the average rating for the sector. As a market matures the star rating results are not adjusted. This means that buildings can continue to measure their sustainability progress compared to the year before. As a result, some of the more mature sectors have improved to have a higher star rating average than three stars. 

Average NABERS star ratings by sector

Above: NABERS average star ratings by sector; Source: Annual report FY21; Only available ratings displayed per sector

NABERS ratings are different from other schemes because they measure actual environmental impact, not design intent or management strategies. By relying solely on measured results, there are no prescriptive methods to improve ratings and no “picking winners” – only initiatives that actually reduce the environmental impacts of a building will lead to a better rating result. 

Check out the NABERS Sustainable Portfolios Index 2022 here.