October 12, 2022
Australia is one of the largest emitters of greenhouse gas emissions (GHG) per capita in the world. Although it only accounts for 0.34% of the total global population, Australia has emitted five times (per capita) more than the global average each year since 2015 when the Paris agreement was signed in hopes to reduce CO2 emissions and get to Net Zero by 2050.
One of the biggest challenges that the country faces is that it produces more tonnes of CO2 per person (5.03) than any other country in the world, including South Korea, the US and the largest emitter in the world, China, with only 2.71 tonnes of CO2 per person.
Even though Australia has been aiming to reduce emissions since 2008, and reviewed its approach in 2015, the construction industry is still falling behind when it comes to changing its ways. One of the reasons is because of lack of information. Most companies are still unaware of the different approaches they can take to become more sustainable.
One of the biggest pieces of misinformation is that sustainability changes are expensive. And, before, it may have been true, however, that is no longer the case. With the diverse advances in technology, developers and builders no longer have to choose between saving costs and reducing their carbon footprint.
According to CEFC CEO, Ian Learmonth, “it is possible to achieve as much as an 18% reduction in embodied carbon and [still] save as much as 3% reduction in material costs”.
For companies to start changing and developing towards long term sustainability and CO2 emissions reduction, proper and reliable systems are essential. Current progress is skyrocketing as banks incentivise the industry to go green, and Green Star ratings become more popular and desirable, however, it can’t last. Better measures need to be taken in order to carry the momentum into long term improvements. But without the help of reliable systems, companies can only hope for quick and short term strategies, instead of real, industry wide GHG reduction.
A fully decarbonised building sector could reduce almost half of all carbon emissions into the atmosphere which is why global efforts are growing to help slow down climate change. Countries are starting to change their laws to punish unregulated carbon emissions instead of incentivizing businesses to start measuring and reducing.
The UK is a great example of this. In 2019, the British parliament reviewed the ‘Climate Change Act’, first passed in 2008 to commit 100% to zero emissions by 2050 which can only be met with extreme measures. Steering away from its first efforts, the UK has implemented a fine system for businesses who breach climate change schemes. By May 2022, more than 30 businesses had already been fined an average of £818,000 each and a whopping total of £27 million Pounds or $29 million USD, setting an example for others and forcing them to start planning for the future.
As the UK starts seeing results in their reduction goals, Australia and other countries are sure to follow. And so, construction companies that develop early strategies and sustainable business models that help bring them closer to zero emissions will have a competitive advantage.
In Australia, there are various benefits being granted to those making efforts to reduce their emissions. Some of them include:
According to Larry Fink, CEO of BlackRock, one of the largest money managers in the world, “climate risk is investment risk.” As consumers make more and more educated decisions, investors are forced to favour more sustainable options that will sell better down the road. They want to invest in climate conscious businesses that offer sustainable business models and emissions control.
And not only investors but banks too. Online lenders such as Loans have started to lead the movement towards discounted loan interest rates for ‘green’ homes and buildings that make a positive impact on the environment.
While most are falling behind, some businesses have already started to take advantage of the change. A great example is Frasers Property Limited which, by May 2022, had 86% of their Australian facilities financed by sustainability-linked loans. These are, of course, tied to the sustainability targets in their Net Zero roadmap.
Though this is just the beginning of a trend of ‘green’ finance options. Green is rapidly becoming the expectation for lenders, according to Jane Thomson, CommonBank’s general manager of corporate finance, private equity and ESG at the NABERS + CBD conference 2022.
As part of the Green Financing Framework, Australia’s biggest bank CommonBank has committed to provide a total of $70 billion of sustainable financing across all sectors, including property, by 2030.
Little by little, as the ‘green’ market grows, more Green loans will become available. While Loans.com.au is leading the trend with better rates with their Green Housing Loan, big banks are also jumping on the sustainability bandwagon.
But what are ‘Green’ Loans?
Defined by The World Bank as “a form of financing that enables borrowers to use the proceeds to exclusively fund projects that make a substantial contribution to an environmental objective”, green loans are for businesses that are committed to making changes to help the environment and can prove it.
This is where businesses fail to deliver. Seeing as sustainability-linked loans have lower interest rates and better conditions than other common loans, securing them requires documented commitment to sustainability.
According to the World Bank, in order for a loan to be qualified as ‘Green’ it has to comply with the Green Loan Principles:
Green projects need to clearly show how proceeds are being used to benefit the environment by assessing, measuring and reporting on the whole process.
The borrower should clearly communicate how it will assess and select projects that will receive loan proceeds.
All proceeds should be credited to one dedicated account that can be tracked by the borrower to maintain transparency.
Qualitative performance indicators and, where feasible, quantitative performance measures (eg. GHG emissions reduced/avoided, energy capacity, electricity generation, etc.)
Before businesses can qualify for a green loan, owners have to submit documents proving they have the resources required to track, assess and control carbon emissions of all operations and after the project is finished. Of course, lenders know Green loans give space for foul play which is why some information sheets and applications come with a warning against false sustainability claims.
In tha last quarter of 2021, Oxford Properties Group secured a Green loan from CommonBank to develop Australia’s first build-to-rent building in Sydney CBD. The $130 million loan was only granted after Oxford and the owner of Indi, Investa, worked together on a Green Financing Framework that “clearly outlined use and management of proceeds, with borrowings transparently earmarked for eligible green assets”.
Another example is leader in sustainability Frasers Property’s who secured a combined $600 million in sustainability-linked loans earlier this year thanks to its running commitment to Net Zero by 2028. Of course, all their operations are certified carbon neutral, and they have maintained a 5 star GRESB rating for the past 5 years.
Even with all the technological advances and other countries, such as the UK, leading the transition to Net Zero, how to better start reducing emissions is an answer that has been escaping the Australian construction sector for a while now. Here are our tips to start your journey to zero emissions.
There is no reduction without knowledge which is why researching and educating yourself and your employees is the first step. Dive into the world of sustainability and learn about other companies, what they are doing to meet their targets and how they are preparing for long term changes. Allow yourself time to set attainable targets and goals for your business. Though something to be careful of is popular strategies that focus on big but short term goals that hinge on unsustainable business models.
Setting targets and goals is the best way to identify what needs to be done in order to achieve them. However, make sure you start planning on how to meet these goals before the project starts or in the early stages of the project’s life cycle.
Some companies set targets and goals but forget about them until it’s time to submit evidence of emissions tracking and reduction to Green Building in order to get a good Green Star Rating and are left scrambling around to gather information or pay good money for a consultant. The problem is not that it is expensive but that the information is inaccurate, mistakes are made and omissions are common.
Although most sustainability investments are expensive and aimed at long term cost reductions, investing in embodied carbon reduction can also help bring down costs in the short term.
Cost effective solutions already exist. Sustainable materials, eco friendly initiatives and digital tracking systems are great solutions that will help you hit your long term targets while saving you money short term.
According to Green Building, it is possible to reduce 5%-18% of the total embodied carbon in a project and save 0.4%-3% in costs.
As the construction sector remains reluctant to adopt technology and go digital, companies are opting to either hire third party consultants to gather data and create roadmaps for them or adopt manual, mostly error-prone systems, that require subcontractors to gather their own emissions data and hand it in to the site manager.
In the Uk, some industry titans are hiring an in-house tracker. A person who takes the details of each delivery vehicle that arrives on site and annually searches their route and materials to calculate their emissions. Needless to say, it is a tedious, slow and expensive process.
One of the problems with trusting subcontractors with their own data is that it leaves room for mistakes and omissions. It also puts more strain on site managers as they are required to gather all the data. On the other hand, even though hiring a consultant is costly but mostly effective, it isn’t the best solution. The problem lies in companies rushing at the end of a project to get consultants to gather the data before submitting it to Green Building for a green star rating. Once the project is finished, if no tracking was responsibly done since the beginning, the data can’t be completely trusted.
The data doesn’t lie, so why would you in your reports?
In order for it to be meaningful and helpful in our collective journey to Net Zero, CO2 emissions need to be properly identified, tracked, analysed and archived. At present, there aren’t many platforms targeted at the construction sector that help companies have an easy start. Not to mention, the platforms that do cater for the construction industry are expensive and very specific, leaving no room for other features.
But Veyor has THE SOLUTION. A seamless way to track emissions and gather all the data in one easy to use app. Veyor’s collaborative scheduling system digitises the whiteboard allowing contractors to organise and manage deliveries through online bookings, cut wasted time with live delivery ETA’s and enforce CoR with live truck tracking; all while tracking every individual subcontractor’s CO2 emissions and embodied carbon emissions of the materials being delivered. All bottled in one user-friendly and easy to use platform beloved by subbies and contractors alike.
When making a booking, Veyor allows drivers to input their details, where they are coming from and which vehicle they are driving, plus, what materials they are delivering. It’s just that easy. After that, you can save time by knowing exactly where the delivery truck is and when it will arrive with Veyor’s live tracking and ETA feature. And, when you’re ready, visualise the data and hand in everything to Green Building for assessment by clicking one button and exporting all reports into a PDF.
Start managing your goals and targets even before your project begins. Mitigate the risk of getting huge fines for misreporting. And avoid overwhelming your site managers with more work. With our streamlined reports and visual data dashboard, make sure you’re following the guidelines and easily see where emissions are spiking and why. We are the tool that measures so you can improve and grow.
The future is coming, and there is nothing we can do to prevent it. Climate change is already affecting the planet but with the efforts of everyone, we can reduce GHG emissions. Although there is no reason why those efforts have to come as a punishment to businesses. Don’t wait for laws to force you to comply with net zero emissions. Get ahead of the game with Veyor, start reducing now and enjoy the perks of going green.
1 Reshaping Infrastructure for a Net Zero Emissions Future - Climate Works Australia, March 2020.
2 Australia remains dependent on coal despite the recent wind and solar boom - Ember Data, March 2022
3 Frasers Property reaches 86% in sustainable financing for Australian platform - Frasers Property, May 2022