Many building owners are now using their NABERS Energy ratings as a pathway to carbon neutral certification. We checked in with AEW Capital Management to find out why carbon neutral certification is a hallmark of a rigorous sustainability strategy.
NABERS by the numbers
- 11% increase in NABERS participation in 2020/21
- 68% uplift in NABERS Carbon Neutral ratings, thanks to the 2020 Carbon Neutral Leaders program.
- 3 asset owners with 100% carbon neutral portfolios.
“We are always looking at what we can do to expand the environmental credentials of our assets, and we want to be a leader in carbon neutrality,” says AEW Capital Management’s Director and Country Manager, Jason Maxwell.
“NABERS’ Carbon Neutral Leaders program is helping us get there.”
AEW recently took part in the NABERS Carbon Neutral Leaders program, funded by the NSW Government, to achieve Climate Active carbon neutral certification for 10 Barrack Street and 19 Harris Street in Sydney.
NABERS is an easy pathway to carbon neutral status through the Australian Government-backed Climate Active program, Jason says.
“NABERS plays a big role in how we manage our buildings. Sustainability is important to us as we are stewards of real estate for a time, and we want to improve those assets while they are in our care.”
Why care about carbon neutrality?
Buildings are responsible for 50% of Australia’s electricity use and almost a quarter of our emissions, according to the Every Building Counts report.
Buildings offer the quickest, lowest-cost opportunities to reduce emissions and limit global temperature rises to below 2°C.
The Australian Sustainable Built Environment Council has found we can eliminate emissions from buildings by 2050, create healthier and more productive places for people, and save $20 billion in energy costs by 2030 – using technology that exists today.
Image:10 Barrack Street fitout
Start with energy elevation
Carbon neutrality may be the end game, but it starts with energy efficiency.
“Every building demands a bespoke strategy,” Jason explains. The strategy may vary, but one constant remains: the need to benchmark building performance.
When AEW Capital Management purchased 19 Harris Street in Pyrmont in 2018, it was “screaming out for improvements,” Jason reflects. “It was an A-grade asset with a 3.5 star NABERS Energy rating, but it needed some investment to get it up to the standard that our investors expect.”
AEW installed new mechanical systems, rolled out a LED lighting retrofit and introduced an active management approach. The result? An uplift in NABERS Energy rating to 5 stars, taking it above the industry average of 4.8 stars.
10 Barrack Street, on prime position in Martin Place, is also in AEW’s stable and has been tuned and tweaked to elevate its NABERS Energy rating.
“10 Barrack Street came with a 4.5 NABERS Energy rating. It required less intrusive capex spend than 19 Harris Street, so our focus was on making sure the building services team met our standards,” Jason explains. The strategy paid off, and AEW has raised the NABERS Energy rating, again, to 5 stars.
Measurement underpins better management. Buildings that have been rated with NABERS Energy over 14 years demonstrate average energy savings of 37%, with greenhouse gas emissions intensity dropping by 53%.
A NABERS Energy rating helps building owners to monitor and manage energy intensity – but a carbon neutrality takes that further by also assessing operational emissions generated through gas usage, water, waste and refrigerants.
Buildings with a NABERS Energy rating of 4 stars or above, and that use carbon offsets to cancel emissions, can achieve Climate Active certification.
“Carbon neutral certification didn’t require a heap of work or investment in plant and equipment. It just required focus, and we needed a smart building management system,” says Jason.
AEW purchased carbon credits with EcoAustralia, which regenerates Australian native vegetation, to offset its emissions. “We wanted to do something in Australia because these are Australian assets. By planting trees, we are soaking up carbon dioxide but also giving back to Australia’s biodiversity.”
Offices with NABERS Energy ratings of up to 4.5 stars are worth an average of 8% more than unrated buildings on a per square metre basis, according to Knight Frank’s 2021 Active Capital Report. Buildings rated between five and six stars attract an 18% premium.
While AEW has NABERS ratings and carbon neutral certification for 10 Barrack Street and 19 Harris Street, Jason agrees that the shift to net zero emissions is a “work in progress”.
“NABERS ratings are part of our business plan, and we intend to improve our ratings over time.”
“Ultimately, we think tenants want to be in buildings that lead on sustainability and investors want these assets. We are aligning our business plans to those thematics.”
Jason and his team are using the NABERS ratings as proof points in discussions with investors and tenants, as part of internal environmental reporting and of the annual GRESB process.
“Our buildings are often older-style assets but we’ve done a lot of work on them and people are surprised by how much of a punch these buildings pack in terms of sustainability,” Jason concludes.
The NABERS Carbon Neutral Leaders program, funded by the NSW Government, helped building owners take the next step on their sustainability journeys. NABERS rating certification fees were waived, and a $7,000 contribution made towards Accredited Assessor fees.