“Assets with large carbon footprints or physical climate exposure may face rising energy costs or greater insurance costs, respectively,” the analysts wrote in a recent note to clients.
“Social risks include lifestyle changes such as increasing e-commerce
trends, hybrid working and attention from bodies like ACSI [Australian Council of Superannuation Investors] seeking action on gender equity.”
On a separate front, global investment manager DWS warned this week that the Europe Union’s increasingly stringent assessment of green investing could effectively reduce the number of European investors in Australian real estate.
European investors would need to determine if they can invest in Australian developments and assets under new EU regulations, including the so-called EU Taxonomy, according to DWS’s global head of ESG for real estate, Sasha Njagulj.
“Taxonomy requires real estate portfolios promoted as sustainable to meet certain rigorous criteria. This will require Australian property owners, managers and developers to meet the performance and labelling requirements,” she said. “Otherwise, this could see some assets being ‘stranded’ for European investors.”
Buildings with the lowest energy performance are already illegal to rent in the UK, with the same concept soon likely to be adopted across Europe, according to Ms Njagulj.
“Australian property owners and managers would need to provide EU investors with more accurate asset labelling with respect to the
ESG aspects of their assets.”
But the widely used Australian sustainability rating system, NABERS, was well-placed for that role through its usage date on energy and water consumption, according to Ms Njagulj.
The building sector is estimated to produce around 40 per cent of the overall carbon footprint and Europe has to reduce its carbon output, as part of the 2050 net-zero carbon commitment, she said.