It's not easy being green

IFA cover story

By Victoria Papandrea
Mon, 29 Sep 2008

Page 1 of 4

Embracing environmental sustainability may be on the minds of most Australian corporations, but it seems much more can still be done to tackle the threat of climate change.

It is clear the threat of climate change has driven many Australian companies to gradually reduce their carbon footprint over recent years by implementing environmentally sustainable practices across their organisations.

Using less electricity, switching to green power supplies, adopting paper recycling practices and reducing water and waste consumption in the workplace are just some of the various green practices companies and their employees have embraced in a bid to tackle climate change.

However, despite the efforts of corporations to reduce their impact on the environment, new research has found Australian companies in the ASX/S&P200 Index were in fact lagging behind their global peers in a number of sustainability measures.

The Centre for Australian Ethical Research (CAER) recently undertook a study to look at the degree to which companies in Australia were taking into account greenhouse gas emissions and climate change in their management practice.

"What we're seeing in this particular piece of research is a lag between the level of responsibility taken at a senior level by corporations in Australia to deal with issues of climate change," CAER chief executive Duncan Paterson says.

"Many companies have some polices and do some carbon offset, but what we're looking for is a commitment at a senior level; links between remuneration and performance on climate change issues and concrete disclosure as to the steps and targets that the companies are undertaking to deal with greenhouse gas emissions as opposed to, for instance, signing onto an industry initiative."

Paterson says financial institutions have generally been quick to identify some of the environmental impacts of the way they do their business, such as buying green power for their offices.

However, he says the reality is this does not accurately address the major environmental impacts of their core business of funds management.

"We're not seeing clear public disclosure by financial institutions relating to polices they have in place about not lending money to greenhouse gas-intensive industries and about restricting their access to capital for environmentally damaging businesses," he says.

"It's all very well to have a green policy to have recycling bins at each desk for your staff if you're a financial institution, but that's not actually affecting the core impact of their business.

"For instance, if a coal-burning power station said 'we're going to take into account greenhouse gas emissions and we're going to give everyone a recycling bin at their desk', people would laugh and to an extent that's what the financial institutions are doing."

Therefore, he says there needs to be more evidence and transparency around the lending practices of financial institutions to show their core business functions take environmental, social and governance (ESG) issues into consideration.

"Most banks will tell us that they do take into account some ESG criteria when making loans and they do have it as part of their risk matrixes when making judgments, but they don't tell us what they are," he says.

"They're not transparent about it and we don't find out how much of their money is lent to which sectors and so forth, and part of that is because they are bound by privacy constraints."

While he says this issue of transparency remains an obstacle for the banks, the Australian financial services sector has nonetheless made headway to embrace the move towards adopting greener policies within their organisations.

"We've certainly seen a number of the larger financial institutions in Australia taking up the challenge that was laid down about five years ago by Westpac and Investa Property Group, who were early leaders in this field," he says.

"Now we're seeing organisations like ANZ and NAB doing a lot of work in different areas that are relevant to this so we are certainly seeing it pick up."

It's not easy being green

IFA cover story

By Victoria Papandrea

Page 2 of 4

While it is expected Australian organisations will have an even stronger focus on sustainability following the instruction of a carbon emissions trading scheme, some of the larger corporations have already made some progress by becoming signatories to initiatives like the CitySwitch Green Office program.

Commercial buildings have a major part to play in meeting Australia's international greenhouse targets and the CitySwitch project is a national tenant energy management program run in partnership among the cities of Sydney, Melbourne, Perth, Brisbane and Adelaide as well as state government agencies.

The program works with tenants to improve their office energy efficiency in order to reduce the carbon dioxide emissions attributed to global warming.

To date, a total of 66 high-profile organisations in Australia that cover more than 800,000 square metres of commercial office space have committed to the CitySwitch initiative.

The program has also played a significant role in helping signatories, such as global real estate firm Colliers International, achieve their sustainability goals by providing a framework to set their targets.

Colliers International's green office program has been evolving since 2001 and the firm's Asia Pacific regional head of sustainability, Simon Carter, says it has been an interesting process to change the mindsets of its employees.

"We found the best way to do it is just to declare that we're moving to a new paradigm and implement it because you've got a bell curve of people in your office and there will always be people that complain," Carter says.

"People also need to go through a period of change and soon they learn what the default is and they adjust their behaviour accordingly.
"Although a really important message for people implementing green office programs is that often you've got to go the full hog."

For example, he says there are many recycling systems in offices that give staff the paper box but also still provide the waste bins as well.

"So they're only halfway there. Often if you treat it gingerly you end up with half an initiative that doesn't really achieve the results and doesn't really confirm to people that you're doing something significant," he says.

"You've got to find a balance there. You've got to push people but also there will be instances where you don't want to push them too far."

Implementing a green office program across a corporation is not about a top-down dictatorship, according to Unisys vice president of marketing and communications Petra Buchanan.

"It's about sustainability in its truest sense in that we're always looking at what are we doing, how do we need to evolve and what do we need to change in six months' time," Buchanan says.

Unisys has been busy over the past 12 months not only implementing a comprehensive green office program in its Australian and New Zealand offices, but also educating other organsations in how they can reduce their carbon footprint. 

"As we look forward, and right now we're in the throes of our 2009 planning, environmental sustainability I feel hand on heart is now a prerequisite for our business planning because it influences our facilities, decisions and where we make investments," Buchanan says.

"I would also advise others that they really think about how they are going to sustain their business in this way and identify the steps to ensure that it's not just an initiative that feels good at a certain point in time, but something that will continue in their business planning well into the future."

It's not easy being green

IFA cover story

By Victoria Papandrea

Page 3 of 4

Valad Property Group implemented a green office program 18 months ago and the firm's product development associate, Clare Gillespie-Jones, says the initiative is still a work in progress.

"What we're doing is trying to take this entire organisation on the sustainability journey instead of just having a policy that just has lip service paid to it. It's really about changing the mindset across the whole group," Gillespie-Jones says.

"We are a slightly disjointed business in that we've got operations centralised in Europe and then operations in Australia, so we're trying to make sure that whatever we do is applicable for the whole group.

"What we don't want to have happen is have silo operations where something happens in Australia and doesn't necessarily happen in Europe."

As a result, Valad has developed a company-wide policy that guides the firm's sustainability activities and addresses the thought processes that need to happen, rather than adhering to absolute measures.

"What we've decided is it's more important that people are actually thinking about things rather than giving them a restrictive set of guidelines," Gillespie-Jones says.

"It's a long process and it's really difficult to change people's mindsets, but I think it's important to not get frustrated at the beginning when you feel like you're one little tiny drop in the ocean and what you say makes no difference.

"If you can get one person excited then the ripple effect really spreads and you can make some really big changes."

For example, Valad has recently changed the organisation's energy and carbon due diligence checklist.

"We have now come up with a notional cost of carbon and the future running cost of the asset . and the effect it will have on the value of the building," Gillespie-Jones says.

"That's actually quite a big step forward for us because it's actually factoring in the cost of carbon during the asset due diligence process, which is something that we haven't done before.

"So things are changing and it's not just a response to tenant demand and to the market; it's actually a response to our global investors as well, a lot of whom are signatories to the UN Principles for Responsible Investment and other programs."

However, while Valad has been able to implement some very positive sustainable measures across the organisation over the past few years, she says it has not always had the systems in place to measure the firm's progress until recently.

Consequently, over the past 12 months Valad has implemented an asset monitoring program to track the water energy and waste consumption at all of its commercial assets.

"We're using the trend analysis from that to help us work out what are the practical steps we need to take to improve from here," Gillespie-Jones says.

Likewise, Carter agrees collecting data and reporting early is essential for a successful green office program.

"Until you get data flowing and know exactly how much of a result you're achieving with your recycling or your paper consumption or with energy use, it's hard to really drive performance to a new level," he says.

"It can take a lot of time to collect that data and it can be surprisingly fiddly. In Australia we have 18 offices in our green office program so ultimately you want to be able to report on performance, be it internally or externally, so it's well worth starting early."

Buchanan agrees, noting that in order to set a benchmark for Unisys' green office program the firm commissioned a greenhouse gas emissions audit across all office and employee activities in Australia and New Zealand in 2007.

It's not easy being green

IFA cover story

By Victoria Papandrea

Page 4 of 4

The audit found that electricity consumption and air travel were the two main areas to improve.

"It's like the old adage: what gets measured gets done," she says.

"From our standpoint we didn't want to be espousing goodwill of greening our company and being focused on these things but not really being able to educate our employees about where change needed to happen or where improvement is being made, so that was really the first step for us.

"At the end of the day it all comes down to behaviour and we're very conscious that in the first instance it's about measurement and in the second instance it's about employee education."

As changing employee behaviour is key to the success of Unisys' green office program, she says the firm also implemented an employee education and engagement campaign to generate participation at all levels of the organisation in order to make lasting changes.

Furthermore, Gillespie-Jones says one of the challenges of implementing a green office program is getting the right framework to effectively drive the organisation's sustainability initiatives.

"Often the hard part is getting that framework in and knowing how to do things. It's all very well having the ideas but if you don't have the practical framework there to make it happen it's very difficult," she says.

"I think the big thing is you can actually do a lot without spending very much money. It doesn't have to be a very expensive and scary exercise to embrace sustainability.

"A lot of it really is how you use what you've already got and how you manage what you already have. So it's really about thinking about it rather than actually opening the chequebook and writing the enormous cheques."

Buchanan agrees.

"This is such a fast moving space that right now people are making more decisions based on cost whereas in 12 months' time that might be remarkably different," she says.

"Obviously with the emissions trading scheme and other things companies might have to be making some very different decisions in the future."